Johnson & Johnson (JNJ), SCANA Corporation (SCG): 5 Potential Retirement Stocks

Page 1 of 3

Passive investing in equities for retirement requires prudent, conservative allocation of resources into those equity securities that assure stable or consistently rising income streams with little volatility of price returns over time; discover one particular market-beating strategy here. Preferable are stocks of companies that have earnings power and consistency through all business cycles. Boring and defensive is what generally has been the norm among conservative retirement investments in stocks.

Johnson & Johnson (JNJ)

The details

Focusing on stocks that can deliver a combination of dependable dividend income and capital appreciation over time, here is a list of five potential retirement stocks. These stocks were selected based on the following characteristics:

1). Dividend yields of at least 3%, above the current 10-Year Treasury bond yield of 2.16%
2).
Long-term historical dividend growth above the rate of inflation
3).
Low variability of returns
4).
Betas below that of the broader market
5).
Capacity to sustain earnings and dividends through business cycles
6).
Diversification across several industries

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ), a pharmaceutical giant boasting 51 years of consistent dividend growth, is as dependable for dividend income as it gets. The company has been in operation since 1886, and has a record of 29 years of consecutive increases in adjusted EPS. It is poised for additional years of EPS expansion, driven by its diversified product mix (comprising of drugs, medical devices, and consumer products) and a robust development pipeline. In addition to its earnings consistency, Johnson & Johnson (NYSE:JNJ)’s low-volatility of returns, beta of only 0.48, dividend yield of 3.0%, and consistent dividend growth—averaging 7.9% over the past five years—make it a strong candidate for long-term retirement portfolios. Its balance sheet is rock solid, and features low debt relative to equity. The company is a free cash flow powerhouse, as it converts 114% of its net income into free cash flow.

Johnson & Johnson (NYSE:JNJ) has several catalysts for continued growth in the future, which should support its earnings and total returns. These catalysts include aging demographics, rising incidence of chronic diseases, and growing incomes in emerging markets. With the pharmaceutical market expected to grow at a CAGR of 4.5% through 2017, according to IMS Health, Johnson & Johnson (NYSE:JNJ) is planning to submit 10 new products filings by 2017. Drug introduced over the past few years, including Zytiga for prostate cancer and Invokana for diabetes, have already mitigated revenue losses from Johnson & Johnson (NYSE:JNJ)’s patent cliff. These and other products introduced since 2009 are expected to account for nearly half the overall sales by 2017. Contributions to growth will also come from the medical devices and consumer goods markets. The global medical devices market is expected to expand at a CAGR of 6.1% for the next five years, according to Lucintel, a global market research firm, while demand for consumer goods will receive a major boost from emerging markets.

Scana

SCANA Corporation (NYSE:SCG), an electric utility company with operations in South Carolina, North Carolina, and Georgia, is another candidate for retirement portfolios. The company has been in operation for 160 years. Its consistent earnings performance has enabled it to increase dividends for 12 consecutive years now. The company operates in a favorable regulatory environment, whereby regulated earnings from electricity and natural gas utilities provide stability to cash flows and, thus, to dividends. Utilities are generally the least economically sensitive sectors, characterized by low operational risk, which is the case with SCANA Corporation (NYSE:SCG). Moreover, as a utility stock, SCANA Corporation (NYSE:SCG) has low variability of returns relative to its own average return and the market’s returns as measured by the stock’s beta that is only half the metric for the overall market.

Page 1 of 3
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!