7 Retirement Stocks for Steady Long-Term Income Growth

  • As economic troubles loom, these retirement stocks should keep you in the black.
  • AbbVie (ABBV): strong portfolio for sustained dividend growth.
  • ASE Technology Holding (ASX): semiconductor demand from automotive tailwinds.
  • BCE (BCE): effective cost management will lift revenue and dividends.
  • Manulife Financial (MFC): digitization of business will lower expenses.
  • Altria Group (MO): strong brand and growth from healthier alternatives.
  • Merck & Co (MRK): Covid antiviral pill will add billions in revenue.
  • Prudential Financial (PRU): capital investments in real estate will increase returns in invested capital.
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Investors who are just a few years away from retirement may look at markets in horror as the sell-off unfolds. Every time stocks fall, the value of retirement portfolios falls with it.

That could hurt a reader’s funds available upon retirement.

A worse scenario is that future retirees need to delay plans. Readers who are unwilling to work a few years more need to stay the course with a selection of stocks.

They must offer steady long-term income and potential capital growth. Otherwise, poor quality speculations may keep falling as stock market conditions weaken.

ABBV AbbVie $153.50
ASX ASE Technology $6.62
BCE BCE $52.91
MFC Manulife Financial $17.44
MO Altria Group $53.04
MRK Merck $90.41
PRU Prudential Financial $101.19

AbbVie (ABBV)

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AbbVie (NYSE:ABBV) fell from its 52-week high of $175.91 after posting unimpressive first-quarter results and lowering its outlook.

It earned $3.16 a share (non-GAAP). Revenue grew by 4.1% year on year to $13.54 billion. For 2022, AbbVie expects adjusted diluted EPS of $14.00 – $14.20. the outlook includes milestone expenses and acquired in business combinations and asset acquisitions.

AbbVie’s write-down should not worry investors seeking retirement income. The firm has a history of raising its dividends regularly, which now topped $5.64 a share.

On its conference call, AbbVie’s Executive Vice President & Chief Commercial Officer Jeff Stewart said that Imbruvica faced some market share erosion. Stewart thinks the decline is temporary. After some stabilization, revenue will rebound back to more normal levels. When that happens, AbbVie will raise its guidance.

Markets worry over the patent expiry for AbbVie’s blockbuster drug, Humira. Fortunately, the firm is co-positioned against biosimilars in the U.S. Furthermore, competitors may price biosimilars at unfavorable levels. Patients will prefer Humira instead of a generic version as a result.

ASE Technology Holding Co (ASX)

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ASE Technology (NYSE:ASX) supplies semiconductor assembly and test services and electronic manufacturing services.

In the first quarter, the firm posted net revenue of NT$144,39 million, up by 21% year over year. The gross margin improved by 0.7% to 19.7%. The operating margin was 11.2%.

ASE stock is cheap on every metric, which is something to treasure in retirement stocks. Its price-to-earnings ratio and forward P/E are in the mid-single-digit. The stock also pays an attractive dividend of 30 cents a share. Investors get both income and growth.

In its EMS business, the company expects some foreseeable disruptions. The near-term headwind will last only a quarter. Overall momentum is strong. ASE has expanding projects with new customers.

In the automotive sector, ASE may realize $1 billion in revenue by 2024. This is a year earlier than the company previously projected.

Markets probably sold ASX stock on worries of a slowdown in the automotive sector. Pent-up demand will only boost revenue when supply constraints ease.

Retirees will realize significant capital gains by considering ASE stock before the automotive sales rebound.


A digital illustration of the telecom industry.

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BCE (NYSE:BCE) is a Canadian telecom firm that faces minimal competition.

In the first quarter, it posted revenue growing by 2.6% year over year to CAD 5.85 billion. For fiscal 2022, BCE expects revenue to grow by between 1% to 5%. Adjusted EPS growth is 2% to 7%.

BCE is poised to rise steadily as markets underperform. It managed costs well and continues to par expenses. For example, financing and operating costs fell in Q1.

The telecom giant posted service revenue growth of 8.7%. This is its best quarterly figure in 11 years. Furthermore, it added 34,230 net postpaid phone subscribers.

Its customers cannot cut their service no matter how poor the economy becomes. The Federal Reserve is raising interest rates, which may lead to a temporary recession. BCE’s business is immune to the economic slowdown.

In the media segment, the company realized digital revenue growth of 84%. Revenue rose by 15.7%, thanks to its stronger TV performance. Bell will sustain growth by expanding its fiber network. Customers will benefit from service improvements. This should increase its average revenue per user figure.

Manulife Financial (MFC)

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Manulife Financial (NYSE:MFC) raised its dividend by 18% when it posted Q4 results on Feb. 9, 2022. In the quarter, it earned 84 cents a share. A healthy dividend is always worth considering when choosing retirement stocks.

In the previous quarter, banks and insurers in Canada could not raise their dividends due to Office of the Superintendent of Financial Institutions (OSFI) regulations. When Manulife posted strong earnings a share, the regulator eased those restrictions the next day.

Manulife is very focused on driving the benefits of scale. It is digitizing its business, resulting in a steep increase in efficiency rates in the last few years. As interest rates rise, Manulife will benefit from the tailwind. It will manage headwind risks from the hikes by reducing its expenses. It has the flexibility to adjust its pricing to offset higher costs.

Investors should expect Manulife to benefit from an inflow in retail investments. In the last quarter, it enjoyed $7.5 billion in inflows. The U.S. was the biggest contributor to Manulife reporting six straight quarters of positive net flows.

Altria Group (MO)

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Income investors can count on Altria Group (NYSE:MO) to pay a $3.60 per share dividend. The tobacco firm benefits from the stability of its Marlboro product.

With the stay-at-home tailwind over, Altria will have no problem managing the discretionary income that will pressure its customers. Fortunately, Altria enjoys over 90% brand loyalty. It has a strong moat that will protect its profit growth in the long term.

Altria’s e-cigarette company Juul is a small risk. Still, the Food and Drug Administration will regulate the e-vapor category. Altria will need to manage the government oversight in the next 12 to 18 months. It has the flexibility to adjust Juul’s product mix to adhere to the FDA’s decisions.

By April 2022, investors should expect an upside for the e-vapor market. By then, the FDA will have finalized its authorization for e-vapor products in the marketplace.

In the interim, Altria will grow its smokeless tobacco products. This includes the oral nicotine pouch category which has strong margins.

Merck & Co (MRK)

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Merck (NYSE:MRK) has a healthy portfolio of products. It posted a first-quarter report that pleased its shareholders.

In the quarter, Merck’s Lagevrio, which inhibits the replication of Covid, topped $3.2 billion in sales.

Without Lagevrio, growth was 19%. Keytruda sales grew by 23% to $4.8 billion. Gardasil and Gardasil 9, which is a human papillomavirus 9-valent vaccine, added $1.5 billion in sales for Merck. Sales of the vaccine grew by 60% year-over-year.

The company benefited from strong demand in China for Gardasil. The country is managing Covid in a lockdown. As a result, Merck is supplying more Gardasil doses in other parts of the country.

For 2022, Merck raised its 2022 sales to between $56.9 billion and $58.1 billion. It expects full-year growth of 17% to 19%. Conversely, emerging biotech firms in need of cash cannot tap the initial public offering market.

Smaller players will suffer. This could open an opportunity for Merck to acquire those companies at a steep discount. Merck is in no rush to buy drug discovery companies. Its product portfolio is already healthy so this is one of those retirement stocks that looks good and is only likely to look better going forward.

Prudential Financial (PRU)

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Prudential Financial (NYSE:PRU) experienced $4.3 billion in net outflows in its last quarter. The fixed income mutual fund industry weakened. Investor panic worsened in the quarter. Still, Prudential saw a $300 million positive flow into public fixed income and real estate.

Prudential has healthy product diversification. Its institutional business, for example, benefits from algorithms that are positioned into fixed income. Since 2017, Prudential saw $55 billion in inflows. Interest rates are rising sharply, too. This will exert pressure on the retail fixed-income industry. Higher rates are ultimately good for the company’s fixed-income business.

To expand profit margins, Prudential may increase its fee rate. But for now, it is benefiting from the strong real estate and private credit market. In the first quarter, it invested $9.6 billion in real estate. It raised another $1.8 billion through PGIM Private Capital. In the long term, investors will benefit from the company’s track record of a high return on invested capital.

On the date of publication, Chris Lau 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.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/7-retirement-stocks-for-steady-long-term-income-growth/.

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