7 Retirement Stocks to Buy in Unexpected Sectors

Advertisement

  • Let’s take a look at seven high-quality retirement stocks, all in industries outside the standard dividend aristocrat stomping grounds.
  • Computer Services (OTCMKTS:CSVI):2.84% forward yield; this IT services firm has raised its dividend 49 years in a row.
  • Darden Restaurants (NYSE:DRI): 3.87% forward yield; restaurant operator well-positioned to ride out possible economic downturn.
  • Fastenal Company (NASDAQ:FAST): 2.49% forward yield; this industrial distributor has a long track record of dividend growth.
  • Global Partners LP (NYSE:GLP): Investors focused on income should consider this fuel distributor, currently sporting an 10.29% yield.
  • Genuine Parts Company (NYSE:GPC): Auto parts distributor and dividend aristocrat, has a 2.74% forward dividend yield.
  • HP Inc. (NYSE:HPQ): Far from being a “dinosaur,” dividends (5.83% forward yield) and multiple expansion could mean solid returns.
  • LCI Industries (NYSE:LCII): With a 3.96% yield, and possible headwinds for the RV industry likely priced-in, consider it a buy.
Retirement Stocks - 7 Retirement Stocks to Buy in Unexpected Sectors

Source: kenary820 / Shutterstock

When you think “retirement stocks,” certain types of stocks may come to mind. For instance, shares in consumer staples companies. Or, shares in healthcare companies, utilities companies, or any other industry/sector that’s typically inflation and recession-resistant.

These sorts of stocks are well-regarded for their dependable earnings and history of dividend payments. Not to mention, dividend growth, as seen with the dividend aristocrats. That term refers to stocks that have raised their dividend payouts at least 25 years in a row.

But when it comes to investing in high-quality stocks fit for a retirement portfolio, your options aren’t limited to these names alone. There are scores of other stocks in this category, all of which are in sectors typically not associated with top dividend stocks.

For example, these seven retirement stocks, all of which earn an “A” rating in my Dividend Grader. Despite being in more cyclical sectors, company-specific strengths outweigh the uncertainties inherent with their respective industries.

CSVI Computer Services $36.85
DRI Darden Restaurants $115.27
FAST Fastenal Company $50.19
GLP Global Partners LP $22.93
GPC Genuine Parts Company $131.54
HPQ HP $33.89
LCII LCI Industries $107.4

Retirement Stocks: Computer Services (CSVI)

Tech stocks: Double exposure of man's hands holding and using a phone and financial graph drawing.
Source: Peshkova / Shutterstock

Based in Paducah, Kentucky, Computer Services (OTCMKTS:CSVI) has been in business since 1965. It has also grown its regular dividend a stunning 49 years in a row.  Given that it trades on over-the-counter (OTC), it may not be a familiar name. But this company, which provides IT services to financial institutions, is a high-quality retirement stock hiding in plain sight.

Knocked lower year-to-date by the broad market sell-off, now’s a great time to initiate a position. Why? With a track record of steady revenue and earnings growth, it’ll likely continue to perform well operationally. This will likely enable CSVI stock, once the market volatility clears up, to make a recovery.

Couple that with its dividend (forward yield of 2.84%). On top of this, it’s reasonably priced (trailing earnings multiple of 18x). Looking for portfolio holdings that provide the opportunity for income and capital growth? Consider CSVI a buy.

This stock earns an “A” rating in my Dividend Grader.

Darden Restaurants (DRI)

an empty restaurant dining room
Source: Shutterstock

A restaurant operator best known for its Olive Garden and Longhorn Steakhouse chains, inflation and recession worries have knocked Darden Restaurants (NYSE:DRI) down around 23.2% year to date. Yet while the restaurant business is cyclical, you may want to make it a holding. Even this late in the business cycle.

The market may be overestimating the impact of a recession. While it owns upscale brands like Capital Grille and Eddie V’s, affordable chains like Olive Garden are its core business. Also, due to the pandemic, Darden streamlined its business model.

This too could also signal solid results, if a recession ends up happening. With a $1.10 quarterly dividend, DRI stock has a forward yield of 3.87%. It could grow this dividend further, as it stands to see continued long-term earnings growth. After uncertainties have knocked it down, now’s the time to buy DRI stock.

This stock earns an “A” rating in my Dividend Grader.

Retirement Stocks: Fastenal Company (FAST)

Fastenal (FAST) logo displayed on a mobile phone
Source: IgorGolovniov / Shutterstock.com

Fastenal Company (NASDAQ:FAST) is a wholesale distributor of industrial supplies. For example, fasteners, as its corporate name suggests. A prosaic business for sure, but one that performed strongly for many years.

That’s clear from its long track record of dividend growth. It has grown its dividend (2.49% forward yield) 24 years in a row. It’s raised its dividend by an average of 13.74% annually for the past five years. Trading for 26.25x forward earnings, FAST stock may seem pricey compared to many of the stocks listed above and below.

Why? Slowing earnings growth. It’s expected to grow earnings by around 19% this year, but in the coming years, growth will fall to the high single-digits. Still, its valuation is sustainable, when you consider its operational track record. Not to mention, the high potential for it to continue raising its rate of payout.

This stock earns an “A” rating in my Dividend Grader.

Global Partners LP (GLP)

oil stocks: stacks of oil barrels
Source: Shutterstock

Looking for a retirement stock with a very high yield? You may want to consider Global Partners LP (NYSE:GLP). A master limited partnership (MLP), Global Partners is a wholesaler/retailer of gasoline.

Granted, soaring energy prices haven’t had the impact on GLP stock as they’ve had on other energy plays. The big run-up in fuel prices may result in a big jump in its earnings, but that’s not expected to be the case in 2023. Analysts forecast an earnings drop next year, from $3.45 to $2.70 per share.

Still, Global Partners’ current valuation (6x) more than accounts for this. Furthermore, even if earnings drop next year, it’ll continue to have coverage for its $2.38 per share annual payout. At current prices, this gives the stock an 10.29% forward yield. GLP may make a great choice for investors focused on portfolio income.

This stock earns an “A” rating in my Dividend Grader.

Genuine Parts Company (GPC)

electric vehicles at a recharging station
Source: Sopotnicki / Shutterstock.com

Like one of the other unexpected retirement stocks listed above, Computer Services, Genuine Parts Company (NYSE:GPC) is another with dividend aristocrat status. The auto parts wholesaler has raised its dividend 65 years in a row.

The current annual payout for GPC stock is $3.58 per share. That gives it a forward yield of 2.74%. As has been the case with auto parts retailers, auto market trends have been on its side in the past year. The chip shortage, which has sent new and used vehicle prices skyrocketing, has resulted in American motorists holding onto their vehicles longer than ever.

As this trend continues, the company should continue to see elevated revenue and earnings growth. In turn, enabling it to maintain its long streak of dividend growth. Trading at a more-than-fair valuation (16.2x forward earnings), it’s another great retirement stock to consider.

This stock earns an “A” rating in my Dividend Grader.

HP Inc. (HPQ)

HP (HPQ) sign with blue sky and autumn leaves as backdrop
Source: Shutterstock

Personal computer (PC) maker HP Inc. (NYSE:HPQ)  may not sound like a promising opportunity. After all, it’s in a very mature segment of the tech industry. Yet in recent years, strong demand for PCs by consumers and businesses have shown that it’s premature to declare it a “dinosaur.”

After a pandemic era boost in PC demand, growth is set to slow down. Even so, don’t assume it’s middling returns ahead for HPQ stock. A lot of pessimism is. priced in. That’s clear from its low 7.75x earnings multiple. Just achieving modest earnings growth could be enough to send it higher.

HP is also a great dividend stock, with a 5.83% forward yield. With a payout ratio of just 16.26%, the company has room to carry on with double-digit annual dividend growth. Over the past five years, it’s raised its dividend annually by 12.57%.

This stock earns an “A” rating in my Dividend Grader.

Retirement Stocks: LCI Industries (LCII)

Two RVs drive down a road with trees and blue sky in the background.
Source: Sundry Photography / Shutterstock.com

LCI Industries (NYSE:LCII) makes recreational vehicle (RV) components. The RV boom has of course been a boom for it, but it’s easy to see why investors have bid it lower, in anticipation of more challenging times ahead.

High inflation, soaring interest rates, and high gas prices could bring the RV boom to a halt. With this, why buy LCII stock, much less, make it a long-term holding for a retirement portfolio? The market’s de-rating of it in recent months likely accounts for a possible decline in revenue/earnings over the next two years.

While you wait for the industry to recover, LCII pays a 3.96% dividend. It has raised its dividend six years in a row, with average annual dividend growth over the past five years coming in at 12.3%. Dropping 34% since January, now may be the time to go contrarian.

This stock earns an “A” rating in my Dividend Grader.

On the date of publication, Louis Navellier a had long position in DRI.  Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article. 


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/7-retirement-stocks-to-buy-in-unexpected-sectors/.

©2024 InvestorPlace Media, LLC