In this article, we discuss the 10 best retirement stocks to buy now.
A comfortable retirement is something many Americans dream of, and spend their lives working towards. However, retiring comfortably requires more than simply dreaming — it often means being strategic with your money and savings, usually through investments. While the average age of retirement in the United States is 62, longer life expectancies mean that someone retiring at age 65 can expect to live 22.9 additional years on average. According to a 2020 report by the Federal Reserve, 27% of adults considered themselves to be retired, despite a few of them still working in some form.
Although 77% of American workers are saving for retirement through employer-sponsored retirement plans as well as other options, that still leaves 33% of workers without any real retirement savings plan. A survey conducted by the Transamerica Institute revealed that many workers are dreaming of an active retirement. Traveling is their most frequently cited retirement dream, followed by spending time with family and friends, and pursuing hobbies. On the other hand, some of the most frequently cited retirement fears include outliving savings and investments, declining health that requires long-term care and a reduction in or elimination of Social Security in the future. While a majority of workers have some form of financial strategy for retirement, of these, only a few have the means to enact their plans, while 24% of the survey participants reported not having any retirement plan at all.
Retirees, lacking a paycheck from a job, must find a different way to generate sufficient income to make ends meet while also ensuring they do not outlast their income stream. In order to successfully navigate retirement in increasingly uncertain situations, it is important to have more sources of passive income other than pension and Social Security. This is where dividend stocks truly shine. As a proven way to amass a reliable stream of income that will make retirement more comfortable, owning a portfolio of quality businesses can deliver predictable, growing dividend income in all manner of market environments. Some of the best retirement dividend stocks to consider include The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP), among others listed below.
Photo by Ovidiu Gruescu on Unsplash
Our Methodology
For our list, we selected dividend stocks that recently received optimistic analyst ratings, are strong industry players with a reliable performance record, and have a proven history of resilience in the face of a volatile macro environment.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 912 hedge funds as of the first quarter of 2022.
Best Retirement Stocks To Buy Now
10. McDonald’s Corporation (NYSE:MCD)
Dividend Yield as of June 7: 2.22%
Number of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) is an American-based multinational fast food chain, founded in 1940 as a restaurant by Richard and Maurice McDonald. Alongside a strong foothold in the real estate industry, the fast food corporation has a solid history of consistent dividend increases for 45 years.
On May 26, McDonald’s Corporation (NYSE:MCD) declared a $1.38 per share quarterly dividend, in line with previous. The dividend will be distributed to shareholders on June 20. The company’s dividend yield on June 7 stood at 2.22%.
On June 7, UBS analyst Dennis Geiger maintained a Buy rating and $290 price target on McDonald’s Corporation (NYSE:MCD), saying that the company is well positioned as a “high quality, defensive compounder” that should prove resilient thanks to the relative benefits from pressured consumer spending and drivers that support solid sales momentum.
Earlier this April, McDonald’s Corporation (NYSE:MCD) released its earnings report for the first fiscal quarter of 2022. The company announced an EPS of $2.28, beating estimates by $0.11. Revenue for the year grew 10.56% on a year-over-year basis to $5.67 billion, topping market consensus by $94.35 million.
According to Insider Monkey’s Q1 data, 58 hedge funds were long McDonald’s Corporation (NYSE:MCD), with collective stakes valued at $2.73 billion. Jim Simons’ Renaissance Technologies is the biggest shareholder of the company, with 2.53 million shares worth $625.96 million.
Similar to The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP), McDonald’s Corporation (NYSE:MCD) is a decent stock for a retirement portfolio.
9. The Procter & Gamble Company (NYSE:PG)
Dividend Yield as of June 7: 2.49%
Number of Hedge Fund Holders: 72
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio. Involved in the manufacturing and distribution of a broad range of personal care and hygiene products, the company ranks among the lists of dividend kings, with 65 consecutive years of dividend increases and a 2.49% yield as of June 7.
On June 1, Deutsche Bank analyst Steve Powers lowered his price target on The Procter & Gamble Company (NYSE:PG) to $171 from $177 and maintained a Buy rating on the shares of the company. Based on the analyst’s remarks, he feels like something “has to break” across the U.S. consumer products space after six months of outperformance against an increasingly difficult cost, consumer, supply, and macro backdrop.
The consumer goods giant released its quarterly earnings report for the third quarter of 2022 on April 20. Based on the report, The Procter & Gamble Company (NYSE:PG) had earnings per share of $1.33, beating estimates by $0.04. Additionally, the revenue for the quarter was reported at $19.38 billion, surpassing estimates by $687.8 million.
The Procter & Gamble Company (NYSE:PG) was held by 72 hedge funds at the end of Q1 2022, compared to 67 hedge funds in the previous quarter. Rajiv Jain’s GQG Partners, was the company’s largest shareholder for the quarter, with 9.91 million shares worth $1.51 billion.
8. PepsiCo, Inc. (NASDAQ:PEP)
Dividend Yield as of June 7: 2.79%
Number of Hedge Fund Holders: 62
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York. A leader in the bottled beverage industry, PepsiCo, Inc. (NASDAQ:PEP) has paid consecutive quarterly cash dividends since 1965, and this year marks the company’s 50th consecutive annual dividend increase.
Earlier this April, JPMorgan analyst Andrea Teixeira raised the price target on PepsiCo, Inc. (NASDAQ:PEP) to $186 from $183 and kept an Overweight rating on the shares. The analyst views the company’s updated the 2022 guidance as conservative and says its underlying performance continues to impress.
On April 26, PepsiCo, Inc. (NASDAQ:PEP) posted its earnings for the first fiscal quarter of 2022. The company reported an EPS of $1.29, beating consensus estimates by $0.06. The company also reported a revenue of $16.20 billion, an increase of 9.31% on a year-over-year basis, surpassing market forecasts by $658.69 million.
By the end of the first quarter of 2022, 62 hedge funds held stakes in the company worth around $4.86 billion. This is compared to 60 funds in the fourth quarter of 2021, with stakes worth $4.65 billion. The company has been an investor’s favorite for quite some time now, with Donald Yacktman’s Yacktman Asset Management being one of the largest shareholders in PepsiCo, Inc. (NASDAQ:PEP) owning over 4.2 million shares of the stock, valued at roughly $715.4 million.
Here is what ClearBridge Investments had to say about PepsiCo, Inc. (NYSE:PEP) in its fourth-quarter 2021 investor letter:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
7. MetLife Inc. (NYSE:MET)
Dividend Yield as of June 7: 2.95%
Number of Hedge Fund Holders: 39
The Metropolitan Life Insurance Company, better known as MetLife Inc. (NYSE:MET), is among the largest global providers of insurance, annuities, and employee benefit programs, with 90 million customers in over 60 countries. The firm was given a Buy rating and a $77 price target by Citi analyst Michael Ward after he initiated coverage on May 23.
On April 26, MetLife Inc. (NYSE:MET) declared a $0.50 per share quarterly dividend, a 4.2% increase from the previous dividend amount of $0.48, which will be distributed to shareholders on June 14. The company’s dividend yield on June 7 stood at 2.95%.
As of Q1 2022, 39 hedge funds were long MetLife, Inc. (NYSE:MET) with collective stakes of $945.5 million in the insurance giant. Richard S. Pzena’s Pzena Investment Management is MetLife, Inc. (NYSE:MET)’s largest investor, owning a $330 million stake through 5.2 million shares.
6. Chevron Corporation (NYSE:CVX)
Dividend Yield as of June 7: 3.15%
Number of Hedge Fund Holders: 53
Chevron Corporation (NYSE:CVX) is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries. Considered a dividend aristocrat, the company’s upside potential alongside a 35-year streak of consistent dividend growth make it ideal for long-term investors.
Chevron Corporation (NYSE:CVX) currently pays a quarterly dividend of $1.42 per share, in line with the previous, which will be payable to shareholders on June 10.
Earlier this May, Barclays analyst Jeanine Wai raised the price target on Chevron Corporation (NYSE:CVX) to $196 from $183 and kept an Overweight rating on the shares. The analyst updated her forecasts post earnings, and believes that the company should approach 0% net debt by 2026, even with buyback assumptions significantly ramping up.
According to Insider Monkey’s Q1 2022 database, 53 hedge funds held stakes worth $28 billion in Chevron Corporation (NYSE:CVX). This is compared to 53 funds that owned positions in the company in the previous quarter, with stakes valued at over $6.5 billion. Among these hedge funds, Warren Buffett’s Berkshire Hathaway owned the largest stake in Chevron Corporation (NYSE:CVX), worth roughly $26 billion.
Just like The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP), Chevron Corporation (NYSE:CVX) has a rich dividend history.
ClearBridge Investments mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm has to say:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
5. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of June 7: 3.21%
Number Of Hedge Fund Holders: 26
Consolidated Edison, Inc. (NYSE:ED), commonly known as ConEd, is one of the largest investor-owned energy companies in the United States. One of the most prominent dividend-payers in the electric utility sector, the company has grown its dividend payments for 47 years in a row.
On April 21, Consolidated Edison, Inc. (NYSE:ED) declared a $0.79 per share quarterly dividend, in-line with previous. The company’s dividend yield stands at 3.21% as of June 7.
The company posted its earnings report for the first quarter of 2022 on May 5, declaring a revenue of $4 billion, up over 10.42% compared to the revenue over the same period last year and surpassing analyst expectations by $350 million.
On May 23, Guggenheim analyst Shahriar Pourreza upgraded Consolidated Edison, Inc. (NYSE:ED) to Neutral from Sell with a price target of $94, up from $80, following what he calls the removal of a “major regulatory risk” from the company’s earnings outlook over the multi-year rate case period.
At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $485.7 million in Consolidated Edison, Inc. (NYSE:ED), compared to 22 in the preceding quarter worth $323 million. Ken Griffin’s Citadel Investment Group is one of the leading stakeholders in the company, with over 1.19 million shares worth more than $113.3 million.
4. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of June 7: 3.41%
Number Of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM), stylized as ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas. Having raised its annual dividends consecutively for the past 39 years at an annual average rate of 6%, the oil and gas giant currently pays a quarterly dividend of $0.88 per share, with a dividend yield of 3.41% as of June 7.
Evercore ISI analyst Stephen Richardson upgraded Exxon Mobil Corporation (NYSE:XOM) to Outperform from In Line with a price target of $120, up from $88 on June 7. The analyst sees long-term earnings growth to be driven by upstream upgrading as well as cost reductions, and forecasts Exxon Mobil Corporation (NYSE:XOM) to have an industry-leading ROCE target of 15% and 17% by 2025 and 2027 respectively.
On April 29, Exxon Mobil Corporation (NYSE:XOM) reported that its earnings per share for the fiscal first quarter of 2022 came to $2.07, falling short of EPS estimates by $0.16. On the other hand, the company’s quarterly revenues came in at $90.5 billion, an increase of 53.01% on a year-over-year basis, surpassing revenue estimates by $6.93 billion.
83 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the end of the first quarter of 2022, with aggregate stakes worth $8.55 billion. Rajiv Jain’s GQG Partners is the most prominent investor in Exxon Mobil Corporation (NYSE:XOM) with stakes worth approximately $4.27 billion in the company.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in the firm’s fourth-quarter 2021 investor letter. Here is what the firm had to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
3. Duke Energy Corporation (NYSE:DUK)
Dividend Yield as of June 7: 3.51%
Number Of Hedge Fund Holders: 32
Duke Energy Corporation (NYSE:DUK) is an American electric power and natural gas holding company headquartered in Charlotte, North Carolina. On April 27, the company announced its investment in two projects to convert landfill gas from two North Carolina landfills into renewable natural gas. Each project is expected to produce roughly 500,000 dekatherms of renewable natural gas each year.
Duke Energy Corporation (NYSE:DUK) has paid a cash dividend on its common stock for an impressive 96 consecutive years. On May 5, Duke Energy Corporation (NYSE:DUK) declared a $0.985 per share quarterly dividend, in line with previous. The dividend is distributable on June 16, to shareholders of the company as of May 13.
On May 10, Wells Fargo analyst Neil Kalton raised his price target on Duke Energy Corporation (NYSE:DUK) to $120 from $109 and kept an Equal Weight rating on the shares following quarterly results. The analyst sees an improving regulatory backdrop in NC and substantial energy transition opportunities post 2025.
At the end of the first quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $1.04 billion in Duke Energy Corporation (NYSE:DUK), compared to 36 in the preceding quarter worth $1.1 billion. Of these, Jim Simons’ Renaissance Technologies holds a notable position in Duke Energy Corporation (NYSE:DUK), with over 1.66 million shares worth approximately $185.6 million.
2. Cardinal Health, Inc. (NYSE:CAH)
Dividend Yield as of June 7: 3.68%
Number Of Hedge Fund Holders: 38
Cardinal Health, Inc. (NYSE:CAH) is an American multinational health care services company that engages in the provision of customized solutions for hospitals, healthcare systems, pharmacies, and ambulatory surgery centers.
Another dividend aristocrat on our list, Cardinal Health, Inc. (NYSE:CAH) declared a $0.4957 per share quarterly dividend on May 10, up from the previous dividend amount of $0.4908. The dividend will be paid on June 15, to shareholders of the company as of June 1. Cardinal Health, Inc. (NYSE:CAH)’s dividend yield on June 7 stood at 3.68%.
Earlier this May, Evercore ISI analyst Elizabeth Anderson upgraded Cardinal Health, Inc. (NYSE:CAH) to Outperform from In Line, with a price target of $68, up from $55. After looking deeper at the trajectory of its Medical segment for the fiscal year 2023, the analyst came to the conclusion that the business can drive about $16.7 billion in revenue, or about 6% year-over-year growth, and believes this segment is being undervalued by the market.
Cardinal Health, Inc. (NYSE:CAH) was found in the public stock portfolios of 38 hedge funds according to Insider Monkey’s first quarter, down from 39 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management is the biggest shareholder of the company, with approximately 3 million shares worth $168.59 million.
1. Realty Income Corporation (NYSE:O)
Dividend Yield as of June 7: 4.35%
Number Of Hedge Fund Holders: 22
Realty Income Corporation (NYSE:O) is a real estate investment trust that invests in free-standing, single-tenant commercial properties in the United States, Spain and the United Kingdom. One of the most prominent monthly dividend-paying stocks, Realty Income Corporation (NYSE:O) has raised its dividend 115 times throughout its 53-year operating history, with the company’s compound average annual dividend growth rate standing at approximately 4.4%.
For the fiscal first quarter of 2022, Realty Income Corporation (NYSE:O) reported an EPS of $1.01, beating estimates by $0.04. Additionally, the revenue came in at $807.34 million, an increase of 93.29% on a year-over-year basis, surpassing market predictions by $58.66 million.
Based on Insider Monkey’s Q1 database, 22 hedge funds were bullish on Realty Income Corporation (NYSE:O), down from 30 funds in the preceding quarter. The total stakes held in Q1 2022 amounted to approximately $284.8 million. Matthew Barrett’s Glendon Capital Management is the largest shareholder of the company, with a position worth roughly $128.68 million.
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Disclosure: None. 10 Best Retirement Stocks To Buy Now is originally published on Insider Monkey.
