So what do you do? One of the best ways I can think of is to diversify your holdings with a few retirement stocks. Here is a list of our three picks which are a must to have in your portfolio right now. I have selected them keeping in mind certain key metrics. Let us take a look at each of these and rate the stocks according to these metrics.
| METRICS | ||||
| Stock | Market Cap | Volatility | Dividend Yield | Medium Term Growth |
| Ryman | $2.2 billion | Low | High | Moderate |
| Cablevision | $3.7 billion | Low | High | High |
| Duke Energy | $51 billion | Medium | High | High |
Low volatility
Retirement stocks should be less risky and possess low volatility. They should not be highly sensitive to the market index. In this way retirees can feel safe to have them.
Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) is one such stock. Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) is a part of the retail estate industry, specializing in group oriented, destination hotel assets in urban and resort markets. The company has a market capitalization of $2.2 billion. Shares are up 39% year-on-year, which easily exceeds the performance of the broader market.
Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) typically doesn’t move with the market. To give you an example, last year, once when S&P fell 0.5%, Ryman moved up 1%. That means even in adverse market conditions, this stock is a safe buy.
Cablevision Systems Corporation (NYSE:CVC) operates TV/data/voice and has the largest Wi-Fi internet network across the U.S. Although the Q4 2012 revenue growth was lower due to cable lines affected by hurricane Sandy, Cablevision Systems Corporation (NYSE:CVC) has been successful in adding more subscribers. This shows the riskiness factor in this stock is low and it can perform well in times of adversities.
Duke Energy Corp (NYSE:DUK) operates as part of the electric utilities sector in the United States and Latin America. In spite of utilities sector being highly capital-intensive, Duke Energy Corp (NYSE:DUK) has maintained a low debt to equity ratio of 0.9. By having less leverage on its balance sheet, Duke Energy Corp (NYSE:DUK) certainly possess less risks of repaying back the debt and will be able to pay dividends on time.
High dividend yield
The dividend yield of Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) is currently 4.4%. Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) is a real estate investment trust (REIT) and receives preferential tax status by distributing a significant portion of its taxable income to shareholders. So, I think this high dividend yield is here to stay.
Cablevision Systems Corporation (NYSE:CVC) is a media and telecommunication company and the fifth largest cable company in the U.S. Since 2008, the company has been increasing dividends. Currently it has a yield of 4.20% at $0.60 a share. The company is expecting strong cash flows in the coming years which makes the dividend yield sustainable.
Duke Energy Corp (NYSE:DUK) has a history of increasing dividends regularly, with the current yield standing at 4.2%. It has incurred huge capital expenditure in the recent past. In spite of that, it has been able to increase dividends year on year. This shows that it is expecting positive cash flows and consistent earnings growth from its prior investments.
Medium term growth
Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) has been witnessing a strong upward thrust over the past one year. For an income investor wishing to have a steady cash flow after retirement, consider this fact. The returns of Ryman from both dividend and price appreciation beats the S&P 500 index by a huge margin. If I put it in figures, Ryman is up 72% vis-à-vis S&P’s 14%. People are willing to invest more in real estate and equities, and this will propel Ryman’s growth prospects.
The EPS growth rate of Cablevision Systems Corporation (NYSE:CVC) for the next three years stands good at 22% compared to the entertainment industry’s 13%. Margins are set to improve this year after Cablevision increased the price of its high speed internet service by $5 a month in early 2013.
Data and internet usage are poised to grow massively in the coming years, and this will provide Cablevision Systems Corporation (NYSE:CVC) tremendous growth opportunity. I predict a steady and increasing cash flow in the future. The stock looks cheap and retirees should definitely not miss this opportunity.
With a market capitalization of $51 billion, Duke Energy Corp (NYSE:DUK) has gained momentum in the past one year. Revenue growth in the last quarter far exceeded the industry average of 13%. Net income in Q4 2012 jumped to $435 million, an increase of 51% over the same quarter last year. After the merger with Progress Energy, it became the largest regulated utility in the U.S. Revenue from the merger has already started materializing.
Conclusion
To sum up, these stocks are the best retirement picks due to their solid financial position, strong operating cash flows, and historically high dividend yielding nature. As a retiree, if you have $50,000 to invest, what would you prefer to do? Invest in some safe, high dividend-yielding stocks or would you buy Apple Inc. (NASDAQ:AAPL) or Facebook Inc (NASDAQ:FB) at such enormous prices and wait for their downfall?
Suppose if you had invested in Facebook Inc (NASDAQ:FB) last year, you would have probably lost half your money by now. The top three retirement picks provided here are among the safest bets for you right now.
The article 3 Retirement Picks Which You Shouldn’t Miss originally appeared on Fool.com and is written by Shas Dey.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
