- These long-term stocks are great for your retirement portfolio, with or without dividends.
- Bank of Nova Scotia (BNS): High-yielding bank stock with moderately high dividend growth.
- Dollar General (DG): Plenty of room for this discount retailer to raise its payout rate.
- Meta Platforms (FB): Doesn’t yet pay a dividend, but it’s cheap, and could start paying a dividend down the road.
- Johnson & Johnson (JNJ): A dividend aristocrat, and a bona fide retirement stock.
- Realty Income (O): High-quality REIT to buy and hold for yield and capital growth.
- UnitedHealth Group (UNH): Relatively-high earnings growth points to continued strong performance.
- Walmart (WMT): The market may be underestimating its growth potential via e-commerce.
When it comes to finding long-term stocks to buy for your retirement portfolio, high-yield dividend stocks may first come to mind. After all, they can provide you with plenty of income to help fund a comfortable lifestyle in your golden years.
Still, you may want to consider some other criteria. There are many risks to chasing high dividend stocks. The risk of a dividend cut, for one. Also, the risk that the high-yielders you load up on fail to raise their payouts in line with inflation.
The number of years you spend in retirement may vary, yet it’s not a bad idea to err on the side of caution. That is, you should build a portfolio that can grow and provide income for 15, 20, or perhaps even 30 years.
|BNS||Bank of Nova Scotia||$63.94|
|JNJ||Johnson & Johnson||$182.10|
Long-Term Stocks to Buy: Bank of Nova Scotia (BNS)
Despite the name, Bank of Nova Scotia (NYSE:BNS) isn’t merely a Canadian regional bank.
Rather, it’s a leading financial institution with operations in the U.S., Latin America, and the Caribbean.
Dividend investors are already well-aware of it, given its high forward yield (4.91%). Beyond just an already-high yield, Bank of Nova Scotia has been growing its payout over the past six years. Over the past five years, its dividend has grown by an average of 6.24% per year.
Through modest earnings growth, it likely has the ability to continue with these dividend increases in the years ahead.
This bank has also boosted its stock-buyback program, which will also enable it to both raise its per-share dividend, plus provide a lift for BNS stock. Put it all together, and this is a solid, steady play perfect for an income-focused retirement portfolio.
Dollar General (DG)
Besides its merits as a safe harbor during wild market swings, shares in this discount retail chain are a great vehicle for capital growth and income.
With a forward dividend yield of just 0.90%, this is a fairly low-yield dividend stock. As I discussed above, yield shouldn’t be your only criteria with possible long-term stocks to buy for retirement.
Its payout is small today, but the company has plenty of room to raise this payout in the years ahead.
Already growing its dividend by an average of 12.38% per year over the past five years, its payout ratio today comes in at just 16.5%.
Between continued earnings growth and dividend increases, years down the road you could end up having a relatively high yield on cost with your investment in DG stock.
Meta Platforms (FB)
First off, I am aware that Meta Platforms (NASDAQ:FB), better known by its former name (Facebook Inc.) doesn’t currently pay a dividend. So, why include it as a stock to own for retirement? The keyword here is “currently.”
Shares in the social media giant have tanked this year, due to the weaker-than-expected revenue growth forecast it provided back in February.
The market takes this to mean its days of high growth are behind it. Investors are also skeptical of CEO Mark Zuckerberg’s metaverse plans.
However, this has pushed it to what’s too low of a valuation (14.9x earnings) for what’s arguably a high-quality blue-chip.
In time, it should see its valuation move higher from here. The company could finally decide to start using its healthy cash flows to start paying out a dividend down the road.
Long-Term Stocks to Buy: Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) is a high-quality giant in a recession-resistant sector (healthcare). It’s also a dividend aristocrat, growing its dividend 59 years in a row.
Currently sporting a forward yield of 2.45%, it may not scream “high yield,” especially at a time when inflation is running in the high single-digits.
Yet with its long track record of raising its dividend and the fact it’s raised it an average of 5.8% per year over the past five years, it’s fairly safe to say the income generated from an investment in JNJ stock will keep climbing throughout your golden years.
If buying DG and FB ahead of them possibly becoming retirement stocks seems too speculative for your taste, you can load up on this bona fide retirement stock instead.
Realty Income (O)
Yielding 4.12% at today’s prices, Realty Income just joined the dividend aristocrat club, now that it’s raised its dividend 25 years in a row.
Over the past five years, it’s raised its payout by an average of 3.67% per year. High-quality REITs like this one also consider stocks to buy during this time of elevated inflation.
Even if/when inflation normalizes, O stock stands to provide stellar long-term returns. It owns more than 11,000 properties (primarily retail), triple net-leased to tenants across many industries. It will likely continue to grow its funds from operations (the REIT equivalent to earnings), grow its dividend, and in turn, send its stock price consistently higher in the years ahead.
UnitedHealth Group (UNH)
UnitedHealth Group (NYSE:UNH) is a great dividend stock, and one of the best long-term stocks to buy for your retirement portfolio. This diversified provider of health insurance and related services has performed very well over the past decade (up 839%).
Analyst earnings forecasts suggest it will keep on delivering solid performance in the years ahead. Earnings per share (EPS) is expected to grow by double-digits in 2022, 2023, and 2024. Trading at a reasonable valuation relative to growth (23.7x earnings), it should be able to sustain its current valuation.
In other words, UNH stock should continue to appreciate in tandem with earnings growth. Earnings growth will also enable it to continue growing its dividend (currently yielding 1.13%). With a payout ratio today of just 30.2%, it may be able to keep growing its payout by double-digits.
Long-Term Stocks to Buy: Walmart (WMT)
The flight to low-risk stocks has provided a boost for Walmart (NYSE:WMT) shares in recent weeks.
Even so, do not take this to mean it is too late to add this retail powerhouse to your long-term retirement portfolio. The strength and stability of its business should keep it resilient during today’s uncertain stock market.
Over a longer timeframe, steady earnings growth will enable it to maintain its dividend aristocrat status. It has grown its dividend (currently yielding 1.44%) 48 years in a row. Average annual dividend growth over the past five years comes in at 2.02%.
That’s not all. As Louis Navellier argued late last month, its e-commerce strategy gives WMT stock long-term growth potential. It is possible that earnings estimates (coming in at high single-digits) are underestimating to what extent it can grow earnings (and its dividend) in the years ahead. Consider making it a long-term holding.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.