Retirement stocks are at the center of attention for millions of investors. Rising global tensions, declining markets and the expected recession have investors looking more closely at their longer-term saving plans, be it 401(k)s or IRAs.

According to Alicia Munnell, director of the Center for Retirement Research at Boston College, the current selloff has erased around $3 trillion from retirement accounts stateside. This year’s declines on Wall Street remind us the importance of choosing robust stocks for retirement accounts.

Many widely-followed retirement stocks pay stable dividends. According to Barron’s, “well-chosen dividend stocks can help mitigate the effects of market downturns or add juice to rallies, delivering quarterly income that cuts losses and amplifies gains. They can also be a hedge against inflation.”

Current bear market conditions present the perfect opportunity to invest in retirement stocks while they’re trading at bargain valuations. If history is any guide, the market will inevitably rebound in future months.

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With that information, here are seven retirement stocks to buy in July:

Caterpillar (CAT)

52-week range: $176.02 – $237.90

Caterpillar (NYSE:CAT) is the world’s leading producer of construction and mining equipment, as well as engines, turbines and locomotives. The company maintains 18 brands under its belt, with more than 500 sales, services and research and development facilities around the world.

In late April, Caterpillar reported Q1 financials. Revenue increased 14% year-over-year (YOY) to $13.6 billion. Adjusted profit per share was $2.88, compared to $2.87 the year before. Operating cash flow was $300 million.

When the iconic brand puts out Q2 results in July, Wall Street will be keeping a close eye on the effects of rising prices and supply-chain constraints. Many expect Caterpillar to keep a tab on costs and maintain strong margins.

Recently, the company announced that it will be moving its global headquarters from Deerfield, Illinois, to its existing office in Irving, Texas. According to CEO Jim Umpleby, the move is in the “best strategic interest of the company” and will support “Caterpillar’s strategy for profitable growth.”

CAT stock has lost 11% year-to-date (YTD). Shares are trading at 15 times forward earnings and 2 times sales. The dividend yield is 2.6%. The 12-month median forecast stands at $230.

Constellation Brands (STZ)

52-week range: $207.35 – $261.52

Drinks giant Constellation Brands (NYSE:STZ) produces beers, wines and spirits. Its well-known brands include Corona, Modelo, Pacifico, Ruffino and Svedka. The manufacturer maintains breweries in Mexico and wineries in California, Italy and New Zealand, as well as spirit distilleries stateside.

In early April, Constellation released Q4 FY22 results. Net sales totaled $2.1 billion, an 8% increase YOY. Diluted earnings per share (EPS) was $2.07, compared to $1.95 the year before. Cash and equivalents totaled $199.4 million.

Constellation Brands recently launched the “Next Round Cocktails” line, its first ready-to-drink boxed wine cocktails. Management aims to cater to those who prefer to drink at home rather than go out. Wall Street will be looking at how sales will come in future quarters.

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Since January, STZ stock has fallen 3%. Forward P/E and P/S numbers are 22 and 5, respectively. The dividend yield is 1.4%. Lastly, the 12-month median forecast stands at $271.

Enbridge (ENB)

52-week range: $36.21 – $47.67

Canada-based Enbridge (NYSE:ENB) operates oil and natural gas pipelines and has a natural gas utility operation, as well as renewable energy assets. It transports a quarter of total crude oil production in North America.

The midstream operator released Q1 metrics on May 6. Revenue grew 24% YOY to $11.7 billion. Adjusted earnings came in at 65 cents per share, compared with 63 cents a year ago.

Customers pay Enbridge for the use of its pipelines. Thus, it runs a fee-based business shielded from volatile commodity prices.

Therefore, its cash flows are resilient to energy price swings. Enbridge generates roughly $2 billion in excess cash flows from its carbon operations and uses it to build a renewable power business.

The Dividend Aristocrat currently generates a fat 6.6% dividend yield supported by 27 years of annual dividend hikes.

So far in the year, ENB stock is up 9%. Shares are trading at 18 times forward earnings and 2.2 times sales. Analysts’ 12-month median price forecast for Enbridge stock stands at $47.14.

GSK (GSK)

52-week range: $37.80 – $46.97

Global pharma giant GSK (NYSE:GSK) manufactures more than 100 prescription medications and vaccines. It is highly regarded for its work in vaccine development.

Prior to Covid-19, its market share of the global vaccine market was well over 30%. It currently has a “strong pipeline of 21 vaccines and 43 medicines.”

In late April, GSK reported Q1 earnings. Revenue was $11.9 billion, representing a 32% increase YOY. Adjusted EPS was 40 cents, compared to 28 cents the year before. Free cash flow (FCF) was 2.1 billion pounds.

Recently, the company detailed positive results from a phase-3 trial for a vaccine for respiratory syncytial virus (RSV). The results show significant efficacy with no unexpected safety concerns. If approved, it will be the first vaccine to be used to combat RSV in adults aged 60 years or over.

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GSK stock has declined around 1% YTD. Shares are trading at 14 times forward earnings and 2.5 times sales. The dividend yield is 4.6%. Wall Street’s 12-month median forecast stands at $45.15.

Johnson & Johnson (JNJ)

52-week range: $155.72 – $186.69

Johnson & Johnson (NYSE:JNJ) is one of the most diverse global healthcare conglomerates. Its business covers lucrative areas within the healthcare industry, including pharmaceutical drugs, consumer products and medical devices.

The group issued Q1 results on April 19. Revenue increased 5% YOY to $23.4 billion. Adjusted earnings came in at $2.67 per diluted share, up 3.1% from $2.59 per diluted share a year ago.

Its pharmaceutical segment sales jumped 6.3% YOY to $12.9 billion, generating the majority of sales growth and operating margins. The healthcare stock boasts over a dozen blockbusters in its portfolio, including immunology drug Stelara and antipsychotic drug franchise Invega.

JNJ also has 94 projects in clinical development or the registration phase. Meanwhile, management will spin off its consumer products segment by late 2023. Johnson & Johnson then can focus on the higher-margin pharmaceuticals and medical devices segments.

In April, this Dividend King increased its base annual dividend for the 60th consecutive year. JNJ stock currently generates a 2.5% dividend yield.

Despite market volatility, JNJ shares are up 3% YTD. The stock changing hands at 18 times forward earnings and 5 times sales. Wall Street’s 12-month median price forecast for Johnson & Johnson stock is at $187.

Oracle (ORCL)

52-week range: $63.76 – $106.34

Enterprise software giant Oracle (NYSE:ORCL) offers integrated suites of applications plus autonomous infrastructure in the Oracle Cloud. Another notable product is the Oracle Database, used for online transaction processing and data warehousing.

By net sales, Oracle trails Microsoft (NASDAQ:MSFT) as the second largest software company. Meanwhile, Oracle’s share of the customer relationship management (CRM) market is over 5%.

In mid-June, Oracle presented Q4 FY22 metrics. Total revenue was $11.8 billion, up 10% in constant currency. Diluted EPS was $1.54, unchanged from the year before. Cash and equivalents totaled $21.4 billion.

Recently, the company completed the acquisition of Cerner, which offers digital information systems for healthcare providers. Together, the two companies’ systems should lower administrative costs and improve patient outcomes and privacy.

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ORCL stock has lost 21% YTD. Forward P/E and P/S numbers are 14 and 5, respectively. The dividend yield is 1.9%. Finally, the 12-month median forecast stands at $88.

State Street (STT)

52-week range: $61.29 – $104.87

State Street (NYSE:STT) provides investment management, fund administration, research and financial data analytics for institutional investors. InvestorPlace readers likely know that State Street Global Advisors, the company’s investment management division, is one of the most important asset managers. 

In mid-April, State Street released Q1 financial results. Total fee revenue was $2.6 billion, representing a 4% increase YOY. Diluted EPS was $1.57, compared to $1.37 a year ago.

State Street announced in May that it was appointed by K2 Asset Management as the fund administrator for the Cosmos-Purpose Bitcoin Access ETF. It is Australia’s first cryptocurrency exchange-traded fund (ETF), backed by physically-settled Bitcoin (BTC-USD).

Furthermore, in June, State Street expanded its partnership with K2 Asset Management. Now it is the fund administrator in Australia for the new Cosmos-Purpose Ethereum Access ETF, giving Australian investors access to the world’s first physically-settled Ethereum (ETH-USD) ETF.

So far in 2022, STT stock has lost around a third of its value. Meanwhile, the dividend yield is 3.5%. Shares are trading at 8 times forward earnings and 2 times sales. Wall Street’s 12-month median forecast stands at $88.

On the date of publication, Tezcan Gecgil, Ph.D., 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.

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The S&P 500 recently fell into a bear market, defined as a 20% year-to-date drop, which has ramifications for dividend stocks.

The good news for investors is that the stock market decline has created buying opportunities for long-term investors. Valuations have come down, while dividend yields are relatively higher as share prices continue to fall.

Investors looking for cheap dividend stocks have more options to choose from. The following three dividend stocks have high potential long-term returns due to their future growth, low valuations and solid dividend yields.

Dividend Stocks: Skyworks Solutions (SWKS)

First on our list of undervalued dividend stocks, Skyworks Solutions is a semiconductor company that designs, develops and markets proprietary semiconductor products worldwide. Its products include antenna tuners, amplifiers, converters, modulators, receivers and switches. Skyworks’ products are used in diverse industries, including automotive, connected home, industrial, medical, smartphones and defense.

Revenue grew 14% for the second quarter to $1.336 billion. For the first six months of the fiscal year, total revenue rose 6% while earnings-per-share increased 11% versus the same six-month period last fiscal year.

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Going forward, Skyworks Solutions is expected to generate growth from a number of potential catalysts. Demand for connectivity to start rapidly expanding across multiple essential wireless protocols, including 5G, advanced Wi-Fi and precision GPS.

Skyworks’ management team provided an outlook for the third quarter of the fiscal year 2022. They anticipate revenue between $1.200 billion and $1.260 billion, with non-GAAP diluted earnings per share of $2.36 at the midpoint. We expect 8% annual EPS growth over the next five years.

Skyworks has enjoyed tremendous growth over the past decade thanks to smartphones’ proliferation that use its chips. The company increased EPS by double-digit percentages each year in the past five and 10-year periods. These past two years of 2020 and 2021 saw a significant upturn for many semiconductor companies, including Skyworks.

Skyworks stock trades for a 2022 P/E ratio of 8.4. Our fair value P/E is 15 for Skyworks, which implies significant upside for the stock. Shares also have a dividend yield of 2.4%. Total returns could reach 22% per year over the next five years.

Lennox International (LII)

Next among dividend stocks is Lennox International, a company that manufactures and sells HVAC products (heating, ventilation, and air conditioning). About 94% of sales come from North America (particularly the U.S. and Canada), and about 6% of sales are international.

The company operates through three segments: residential heating and cooling, commercial heating and cooling, and refrigeration, which made up 66%, 21%, and 13% of 2021 sales, respectively. To preface this business, 75% of sales come from replacements, and only 25% of sales come from new construction – which means that this business’s performance isn’t directly tied to new home sales.

On the residential side, the company is focused on geographic expansion of their store footprint, so they can serve more households. At the end of 2021, the business had 232 stores, and the company expects to add 30 stores in 2022 to bring the store total to 262. The business wants to have 350 stores by 2026.

In the 2022 first quarter, Lennox generated $2.36 in adjusted earnings-per-share, up 4% year-over-year, and revenue increased 9% year-over-year to $1.01 billion. Revenue and profits grew in the residential and refrigeration segments. Overall, the strong performance on the residential side masked underperformance on the commercial side.

The company has a strong track record of growth. In the past five years the company grew its earnings-per-share by 12% annually. Dividends rose 18% per year in the same period. Lennox International has grown dividend payments for 14 consecutive years.

Lennox stock trades for a 2022 P/E of 14.2, which is significantly below its 10-year average around 21. Lennox recently hiked its dividend by 15% and the stock now yields 2.1%. We also expect the company to grow earnings-per-share by 10% per year. As a result, total returns could exceed 20% per year over the next five years.

Dividend Stocks: Ally Financial (ALLY)

Ally Financial, our last dividend stocks entry, provides financial services to consumers, businesses, automotive dealers and corporate clients. Its segments include automotive finance, insurance, mortgage finance and corporate finance. Its services include term loans, lines of credit, fleet financing, vehicle financing, commercial insurance products, etc.

Ally also has a held-for-investment consumer mortgage finance loan portfolio with mortgages that were originated by third parties.

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Ally reported first-quarter earnings results on April 14. The company reported revenues totaled $2.1 billion during the quarter, which was 11% more than its revenues during the same quarter a year ago.

Ally originated $12 billion in new consumer auto loans during the quarter and managed to grow deposits by $1.3 billion during the quarter. At the end of the quarter, retail deposits totaled $136 billion. Due to lower provisions and higher revenues, Ally’s bottom-line performance improved markedly on a year-over-year basis, and the company managed to hit net earnings of more than $700 million during the quarter.

ALLY stock earnings-per-share during the first quarter were strong, as the company generated profits of $2.03 per share. Earnings-per-share showed a strong recovery in 2021, as earnings-per-share hit a new record level of $8.60. It is expected that Ally Financial’s earnings-per-share will decline in 2022 due to lower reserve releases, but profits should nevertheless remain well above pre-pandemic levels this year. We expect 3% annual EPS growth over the next five years.

Ally is a shareholder-friendly company that returns cash aggressively through buybacks and dividends. On Jan. 11, the company simultaneously announced a 20% dividend increase and $2 billion share buyback authorization, which represents approximately 18% of the stock’s current market cap. Shares currently have a dividend yield of 3.5%.

The company has increased its dividend for six consecutive years. Ally will pay around 15% of its earnings in the form of dividends this year. This low of a payout ratio leaves plenty of room for future dividend increases.

The stock trades for a 2022 P/E ratio of just 4.3; our fair value P/E is 7.5 which leaves potential returns above 17% per year over the next five years.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• It’s never too late to start adding to your nest egg and these cheap retirement stocks can provide excellent bang for your buck.
• Leggett & Platt (LEG): A diversified manufacturer of engineered components that are delivered to the home and auto industries, Leggett & Platt is structured for long-term relevance.
• Walmart (WMT): Although Walmart has been suffering due to a poor earnings performance, WMT stock offers a sizable discount for long-term holders.
• Prudential Financial (PRU): Offering financial wellness and insurance services, Prudential is also one of the discounted cheap retirement stocks to buy right now.
• LyondellBasell Industries (LYB): Significantly undervalued, LyondellBasell’s plastics and chemicals business is boring, but pertinent.
• General Motors (GM): Though one of the cheap retirement stocks on the riskier end, General Motors demonstrates that Detroit is back and swinging hard.
• Macatawa Bank (MCBC): One of the cheap retirement stocks priced under $10, Macatawa Bank provides focused regional banking services in Michigan.
• Oaktree Specialty Lending (OCSL): Providing financing services for upper-middle-market companies, OCSL is risky, but provides a massive dividend yield.

With all the rumblings in the equities sector, the temptation for contrarian investors may be to focus on popular growth names. However, cheap retirement stocks also deserve some of the spotlight. The problem with taking advantage of the flavors of the week is that fundamental shifts in the economy could derail their businesses permanently. However, retirement-oriented investments tend to be built for the long haul.

Additionally, when you’re specifically focusing on cheap retirement stocks to buy, the framework already implies that you have the patience necessary to see these ideas marinate and rise steadily. On the other end of the spectrum, growth-exclusive names may be compelling discounts until they’re not. Again, it’s not out of the realm of possibility that such enterprises could sink to the abyss.

• 7 Dividend Stocks to Buy and Hold Forever

Finally, cheap retirement stocks are generally not as volatile as cyclical operators. Buoyed by consistent demand and relevant business models, companies whose shares are appropriate for retirees are better able to weather economic storms. And with that, here are the names on discount to consider:

Cheap Retirement Stocks: Leggett & Platt (LEG)

Hardly what you might consider a household name, there’s still a good chance that you’ve used Leggett & Platt (NYSE:LEG) products without even knowing it. A diversified manufacturer specializing in engineered components, Leggett & Platt’s acumen is integrated into various applications for the home furnishings and automotive sector.

On one end of the scale, the company is integral to the supply chain of the bedding industry, from providing raw materials to private label finished goods. On the other end, Leggett & Platt is a leader in seating comfort for the auto industry, providing the motor systems used in adjustable seats. In addition, the company has an aerospace unit, commanding expertise in exotic metals and demanding applications.

Fundamentally, LEG is attractive as one of the cheap retirement stocks as the underlying firm features very strong profitability metrics. A major highlight is its return-on-equity ratio of 25.7%, which is substantially higher than the industry median of 8.22%. Also, against a basket of valuation metrics, LEG is modestly undervalued.

Walmart (WMT)

It’s fair to say that big-box retailer Walmart (NYSE:WMT) is suffering from a mini-crisis. After a bit of a rough start to the year, WMT managed to climb higher in the early spring days. However, its most recent earnings disclosure imposed a painful wake-up call. Long story short, Walmart badly overstated consumer demand, one of the consequences being a nearly 25% increase in inventory.

Further, Walmart and the big-box competition failed to recognize the shift in consumer behaviors, with people preferring experiences over things. Naturally, people rushed for the exits, although this dynamic sets up an intriguing case for cheap retirement stocks. Basically, consumer demand could revert back to Walmart.

For starters, unforeseen circumstances, such as the pilot shortage, are making vacation plans nightmarish and costly. It’s quite possible that such terrible experiences could see other households cancelling their own vacation intentions until the coast clears.

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Second and more importantly, Walmart’s everyday low pricing model is ideal for recessions. Therefore, don’t ignore WMT in your hunt for intriguing cheap retirement stocks to buy.

Cheap Retirement Stocks: Prudential Financial (PRU)

A leader in the retirement planning industry, Prudential Financial (NYSE:PRU) is itself an excellent name to pick up for cheap retirement stocks. Down nearly 16% on a year-to-date (YTD) basis and almost 10% over the trailing year, it might be time to consider picking up shares of a company that doesn’t really crater all that often.

Further, businesses like the life insurance sector may have received a sentiment boost of sorts because of the coronavirus pandemic. Prior to Covid-19 uprooting our normal daily schedules, the concept of debilitating pandemics was really a theme in history books or in Hollywood blockbusters. That even the mighty U.S. is vulnerable to catastrophic events may have convinced many folks to get their affairs in order, just in case.

Like the other cheap retirement stocks on this list, Prudential is a good deal. The company features decent profitability metrics and is priced attractively. For instance, PRU is priced at eight times forward earnings, which compares favorably to the industry median of 9.8 times forward earnings.

LyondellBasell Industries (LYB)

Arguably a classic example among cheap retirement stocks, LyondellBasell Industries (NYSE:LYB) tends to fly under the radar, largely because it’s boring to contemporary investors. However, boring should not be equated with irrelevant. Indeed, LyondellBasell’s plastics, chemicals and refining expertise makes the firm one of the world’s most valuable.

In particular, the company operates major refineries in the U.S., which process heavy, high-sulfur crude oil to the tune of approximately 268,000 barrels per day. Ultimately, these facilities produce gasoline and fuel components, low-sulfur diesel, jet fuel and lubricants. These segments have encountered increased demand as society returns to normal from the Covid-19 malaise.

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Financially, LYB stock is among the most attractive, whether you’re looking for cheap retirement stocks specifically or just want to grab a great deal. The underlying company features solid strengths in the balance sheet and excellent profitability metrics, especially a return on equity at 52.4%. However, LYB also happens to be significantly undervalued.

Cheap Retirement Stocks: General Motors (GM)

The old General Motors (NYSE:GM) was junk, emblematic of the shoddy domestic cars that wore the various GM brands. The new General Motors is an entirely different beast. Featuring a reinvigorated focus on producing relevant and desirable vehicles, GM appears to have a bright future.

True, this is one of the cheap retirement stocks that presently deserves its low price because of worrying industry-wide headwinds. In particular, global supply chain issues and soaring inflation greatly trouble auto manufacturing and sales. While it’s not just GM’s problem, that hasn’t stopped the stock from hemorrhaging 46% YTD.

Still, the bigger picture is exceptionally enticing. With products like the all-electric GMC Hummer coming out soon, the iconic automaker is poised to make serious waves in the electric vehicle market. Also, on the combustion side, the eighth-generation Corvette is a thing of beauty.

Let’s not forget that GM is priced at below five times forward earnings, which is far more attractive than the industry median of 9.8 times forward earnings.

Macatawa Bank (MCBC)

In theory, a rising interest rate environment is positive for banking firms because they can charge more for their loan products. On the other hand, you can’t force people to absorb higher borrowing costs. Logically, if rates go too high, people and enterprises won’t borrow, thus contributing to a recession.

However, if you do want to take advantage of cheap retirement stocks tied to the financial sector, you might want to go regional. One name in particular is Macatawa Bank (NASDAQ:MCBC). Featuring fewer than 30 branch locations — all of them in Michigan — Macatawa has a diminutive footprint. However, for the next few years, that might be a positive attribute.

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Unlike the major multinationals, Macatawa is entirely focused on the regional economy. Therefore, it’s largely insulated from global events that might hurt the big banks disproportionately. Also, Michigan itself benefits from demographic trends, with the state being popular with millennials. That means the region is much more viable than other places featuring unfavorable demographic dynamics.

Cheap Retirement Stocks: Oaktree Specialty Lending (OCSL)

Although Oaktree Specialty Lending (NASDAQ:OCSL) is one of the riskiest names among cheap retirement stocks to buy, it also at least partially makes up for this risk with its passive income potential. Featuring a dividend yield of 10.14%, OCSL is going to make prospective investors look twice. So, what’s the deal with the high yield?

Oaktree is a specialty finance company, specifically a business development company (BDC). Providing an important source of capital solutions for organizations that are too big to be classified as small businesses, but are too small to warrant an initial public offering, BDCs help firms in the critical phase of their enterprises.

Compared to the competition, Oaktree is arguably better positioned since it focuses on upper-middle-market companies. Before you fork over your money, you should be aware that BDCs usually don’t react well when interest rates spike too much. Second, OCSL is not the most fundamentally resilient name; rather, it’s attractive because of its sub-$10 price point.

On the date of publication, Josh Enomoto 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.

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Another market downturn is upon us, threatening to disrupt individual investment and retirement portfolios — and financial lives. However, as is usually the case, bear markets come and go, and economies and markets recover to print new record highs. As the market benchmark, the S&P 500 index, fell more than 20% year-to-date and into a technical bear market, now could be one of the best times to check out beaten-down growth stocks to buy for a rich retirement in the long term.

Honestly, the irritating and depressing losses in your stock portfolios hurt emotionally, but they remain just paper or electronic losses — unless you sell. History tells us to remain faithful and invested in the stock market during such tumultuous times. Actually, for someone building a retirement nest egg, new contributions deployed during market downturns may produce better capital growth and better dividend-adjusted returns than the capital invested at all-time highs in 2021.

In his letter to Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) shareholders back in 1990, investing legend Warren Buffett wrote that “the most common cause of low prices is pessimism — some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.”

Pessimism and fear have grown in abundance in the U.S. stock market this year. Some growth stocks with very high capital gains potential lie beaten down today. Growth names have been substantially punished. The iShares Russell 1000 Growth ETF (NYSEARCA:IWF) is down more than 25% year-to-date. However, some of the beaten-down growth stocks do have very solid fundamentals. They have a higher capacity to survive any prolonged economic downturn and emerge much stronger businesses once the troubles of this low sentiment season are over.

If the U.S. manages to avoid a recession this year (by chance) or the economy bounces back from one relatively quickly, the growth stocks on my top-buy list could report above-average earnings growth rates and make investors enjoy a richer retirement over the next decade. Perhaps it’s time to start getting greedy while everyone else is getting fearful.

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Let’s have a closer look at my current favorite growth stocks to buy for a richer retirement.

Solid Power (SLDP)

Solid Power (NASDAQ:SLDP) is a solid-state battery developer that is achieving milestones and could soon be shipping some test samples to partners including Ford (NYSE:F) and BMW. Solid Power is one of the electric vehicle (EV) battery stocks that retain the element of surprise and could disrupt a fast-growing $560 billion global EV battery market. It kickstarted a pilot production line recently and could be a favorite candidate to fit the next-gen breakthrough battery tech in a road-driven car ahead of popular favorite QuantumScape (NYSE:QS).

Solid Power stands to gain market traction if its pilot production project registers success. The company made a significant step toward producing its first EV battery to deliver to partners after the installation of a pilot production line. In a March update, all required equipment for the larger 100 amp-hour battery production line has been delivered — management claims.

The company believes its battery design won’t require re-tooling and redesigns of existing battery manufacturing plants (as opposed to QuantumScape’s design). Thus, once proven successful, the company’s battery design could be licensed to any of the battery manufacturing giants leading the global lithium-ion battery market today.

SLDP stock stands to rally if the company were to scale-up operations quickly and grow sales at a fast clip within the next two or three years. The company won’t need the significantly dilutive capitalization to build new factories as its most popular competitor currently does.

The lithium-ion battery market may get disrupted soon, and the era of new solid-state battery technology with higher power density, fast charging capacity and cheaper battery packs with low fire hazards is on the horizon. Solid Power could be a growth stock to buy for its potentially high upside over the long term if it leads in the new transformative mobility-enhancing solution.

Advanced Micro Devices (AMD)

Advanced Micro Devices (NASDAQ:AMD) is a semiconductor chip designer that has executed a growth strategy well over the past decade. The company achieved a 56% compound annual growth rate (CAGR) in revenue from $6.7 billion in 2019 to $16.4 billion in 2021. It significantly expanded its operating profit margins during the three-year period from 9% in 2019 to 22% by 2021. AMD is a promising growth stock to buy after its significant drop so far this year. Shares could be a great performing retirement asset as the company plans to return 40% of free cash flow to shareholders.

In a recent corporate presentation, AMD’s acquisition of Xilinx in 2021 increases the revenue contribution of the high-margin data center and embedded segment in the revenue mix from 25% of total sales to 40%, leading to a non-GAAP margin expansion for 2022. Market worries of a potentially weak PC market are thus drowned as AMD’s total addressable market (TAM) grows to a staggering $300 billion.

AMD stock is down 40% year-to-date as tech sector valuations shrunk in 2022. However, investors who buy AMD stock during the current market correction could lock in hefty returns if the company’s projected 20% per annum growth rate in diversified revenues gets realized over the next three to four years.

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Actually, AMD could be a cheap growth stock to buy right now as shares trade cheaply today.  Its low forward price-to-earnings ratio of 19.9 and a very low price-to-earnings growth ratio of 0.5 imply that AMD stock is undervalued relative to its future earnings growth potential.

Roblox (RBLX)

Online gaming platform provider and videogame publisher Roblox (NYSE:RBLX) is a typical youth-focused growth stock to buy on the dip during the 2022 market decline. Although Roblox stock has declined by 66% so far this year to trade below its IPO price, chances of a strong long-term recovery seem very strong.

According to a recent report, Roblox’s average active users increased by 17% year-over-year to 50.4 million in May, and revenue for the month could be up 30% from comparable numbers last year. Revenue and cash flow are growing in leaps and bounds.

The company may not be profitable today. But it’s generating massive amounts of positive free cash flow every quarter — for five consecutive quarters now. Positive free cash flow cushions the business from the vagaries of trying to borrow or raise new capital during a recession or a period marked by depressed capital market enthusiasm.

Roblox is a growth stock to buy right now for its growing closed garden ecosystem that keeps business within its walls. An in-house game engine, publishing platform, online hosting services, marketplace payment processing and a buzzing social network give the company multiple revenue sources and unparalleled business development insights.

Autodesk (ADSK)

Autodesk (NASDAQ:ADSK) has revolutionized how architectural design, engineering and construction teams go about their work since 1982. The design software company’s growth into media and entertainment in the 1990s opened new growth frontiers, and its visual effects software was used in award-winning productions, including the 2009 film Avatar. Autodesk’s stock price has risen as the business has grown, and there could still be massive growth ahead.

Wall Street sees Autodesk growing its revenue by 14.3% this calendar year and by another 14.2% in the next year, but earnings per share could grow at a faster clip (29.1% for 2022 and 20.5% for 2023). Autodesk reported $1.46 billion free cash flow in 2021, and the company could generate a record $2 billion free cash flow this calendar year according to its management’s latest financial outlook.

Autodesk’s billings may grow at 18% to 21% for fiscal year 2023, which ends in January next year, while revenue grows at 13% to 15% during the period. Hence, the company is winning more subscription customers — a huge source of high quality, recurring earnings and growing cash flow.

Cash flow is the lifeblood of any enterprise, and growing free cash flow could allow Autodesk to reinvest in growing its operations, acquiring new customers and even scooping up good and promising businesses through acquisitions during a down market.

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Autodesk is a good growth stock to buy for its growing earnings, robust and sticky customer base and strong future cash flow generating capacity which opens up new possibilities.

Datadog (DDOG)

Datadog (NASDAQ:DDOG) is a cloud-based service provider offering server monitoring, database services and analytics bundled in a fast-growing software-as-a-service business model. Its enterprise software platform could prove mission-critical and attract sticky demand — even in a recession. The company broke into profitability two quarters ago, and Datadog’s revenue and earnings performance could attract more investors back to the high-growth tech stock.

After a 41% decline that saw it print new 52-week lows before recovering somewhat, DDOG stock is back to its 2020 trading levels. However, the company generated more than four times its ($83 million) 2020 free cash flow over the past twelve months ($336 million) and could grow earnings at increasing rates over the next few years.

Datadog’s earnings per share (EPS) are estimated to grow to 74 cents in 2022. Analysts have increased Datadog EPS projections for this year by 45% over the past 90 days. Wall Street sees DDOG profits rising 42% year-over-year in 2023 and projects a strong 48% compound annual earnings growth rate for Datadog over the next five years.

It’s highly likely that DDOG stock could generate significant capital gains in the long term and enable investors to enjoy a rich retirement.

DigitalOcean Holdings (DOCN)

DigitalOcean Holdings (NYSE:DOCN) is another cloud computing growth stock investors could buy and add to a retirement-focused portfolio today. The company offers on-demand platform tools for developers, start-ups and small and medium businesses — a growing market that usually lacks in-house IT support staff.

Critical to the DigitalOcean business model is its simplified cloud computing interface that users without formal training can practically use to create and develop tools, and the company offers full-time customer and technical support.

The company became free cash flow positive in 2021 after producing $133 million in cash from operations and spending less on capital investments. Wall Street expects DigitalOcean to double its free cash flow to $52 million in 2022 and report another 80% cash flow growth in 2023 as it reports its first positive GAAP EPS next year.

Cash flow growth and its graduation into positive profitability in 2023 could put DOCN stock price on a strong recovery path over the next few years.

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Wall Street rates DigitalOcean Holdings stock a strong buy today. The average analyst price target on DOCN stock, at $59.20 per share, could represent a 27% potential upside over the next twelve months. However, a full recovery to its 52-week high of $133.40 could mean a strong 186% capital gain if the company’s management continues to execute as well as it has been doing lately.

Nvidia (NVDA)

Last on our list of growth stocks to buy now for a richer retirement is Nvidia (NASDAQ:NVDA). Nvidia is a leading designer of graphics processing chips globally, and its moves into artificial intelligence (AI) and the automotive segment opened up new market verticals that could power strong growth over the next decade or two.

Nvidia’s market dominance in the global gaming graphics market and AI and its clout in the supercomputing market make it an ideal growth stock to buy and hold for the long term. That’s more true if you believe the global supercomputing market, powered by AI and spurred by emerging Web 3.0 applications, is headed for phenomenal growth.

Management sees a $1 trillion total addressable market for Nvidia’s products right now.

Its shares seem expensive with a trailing P/E multiple of 45 times. However, since our discussion is forward-looking, Nvidia’s forward P/E is a respectable 29.6. Wall Street expects the company’s five-year earnings growth rate to exceed 18% per annum. High valuation multiples for NVDA stock may be justifiable.

Shares are down 42% in a market sell-off so far this year. The company’s sustainable profitability, positive cash flow generating capacity and proven leadership capacity in key growth markets in the supercomputing age make NVDA stock a promising growth machine in a retirement portfolio.

On the date of publication, Brian Paradza held Advanced Micro Devices’ (AMD) common stock. He did not hold (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Consider this column a twist on all those “30 Under 30” lists that business news outlets are so fond of publishing. In short, this is “7 Over 30″ but in this case, we’re looking at stocks to buy for those born before 1992.

When looking for buy-and-hold stocks that can fund a comfortable retirement, you want to focus on a few characteristics. You want companies that dominate their industries.

Companies with strong profit margins. Ones which pay rising dividends and have capital allocation policies that reward their shareholders. And you want these companies to have an enduring competitive moat that will last for decades.

As we’ve seen over the past two years, there are a lot of hot ideas that are popular for a minute or two. Cryptocurrencies, SPACs, electric vehicles, FinTech, and the list goes on. However, these have all crashed and burned because they failed to have several of the key traits mentioned above.

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To be sure, there is nothing wrong with speculating in riskier ideas. However, for building a solid retirement portfolio that can withstand any economic shock, you need to aim higher. These seven retirement stocks to buy after age 30 fit the bill.

Visa (V)

Visa (NYSE:V) is the world’s largest credit card network. In some ways, it’s the perfect financial business. Visa takes no credit risk. All the downside around credit goes to the backing bank or credit union behind a card. Rather, Visa is simply there to collect a small fee on each and every transaction.

Visa earns a much higher transaction fee on cross-border purchases involving foreign currencies. As a result, Visa has seen muted profits since the onset of the pandemic. Throw in uncertainties around the economy now, and V stock is near its lowest point in several years.

That makes it a bargain now. Over the longer-term, the trend from cash to plastic will only gain strength, particularly in emerging markets. Visa has plenty of robust growth years ahead of it, and shares will pick back up as soon as global travel normalizes.

Diageo (DEO)

Diageo (NYSE:DEO) is the world’s second-largest spirits company. It is known around the globe for leading brands including Smirnoff, Captain Morgan, Baileys, Don Julio, Crown Royal and Aviation Gin among many others.

In some ways, alcoholic beverages are the perfect industry. It’s always 5 o’clock somewhere. Even during the pandemic, the alcohol industry saw sales rise slightly. With bars closed, consumption simply picked up at home to offset the loss of on-premise sales.

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And spirits are attractive, in particular. They are far less susceptible to craft competition than beer. Unlike wine, there’s little weather concern; the inputs for spirits tend to be much less finicky than grapes. With huge profit margins, brands that last for generations, and a healthy generous dividend policy, Diageo is a perfect centerpiece of a retirement portfolio.

Ecolab (ECL)

Ecolab (NYSE:ECL) is the world’s largest provider of hygiene and sanitation services. It provides these across a number of channels. Think about hotels, cruise ships, fast food restaurants and other such places that need spotless working conditions to keep food safe. Ecolab is the leading supplier there.

It also does pest control, water and chemical treatment for factories and data centers, and a variety of other such fields.

Ecolab is four times as large as its next biggest peer, Diversey Holdings (NASDAQ:DSEY). And, since this field remains fragmented around the world, Ecolab has a long growth trajectory ahead of it in buying up local and regional sanitation and hygiene companies.

ECL stock has had a rough go of it since the onset of Covid-19. Large customers such as hotels have downsized operations due to the virus. This makes Ecolab an interesting economic reopening play as the global travel industry picks back up.

Ecolab, like others on this list, has a long history of generating increasing free cash flow and using that to pay increasing dividend payments to shareholders. With ECL stock down 36% year-to-date, shares are a strong buy here.

American Tower (AMT)

American Tower Corporation (NYSE:AMT) is the leading private sector owner of telecommunications infrastructure sites around the world. American Tower, in fact, now owns more than 200,000 such facilities.

This is a great business model. American Tower can rent each location to multiple telecom carriers, thus engineering significant economies of scale. And the business has low recurring cost. Once the land is acquired and the tower is built, the amount of ongoing capital to run the business is minimal.

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This is wonderful in inflationary conditions such as now. American Tower is protected from inflation with built-in rent adjustments in its contracts. And the value of its debt obligations diminishes as inflation weakens the value of the dollar.

REITs tends to fare alright during inflation, and American Tower is among the best positioned. Throw in a dividend — now yielding 2.32% — that historically has increased at a rapid rate, and this is a great growth and income pick today.

Nike (NKE)

These are rough times for consumer products companies with significant exposure to China. And Nike (NYSE:NKE) isn’t completely immune.

As China has re-entered Covid-19 lockdowns, demand has dried up. More broadly, there are serious questions around the health of China’s economy and real estate market.

This has contributed, to a major degree, to the stunning slump in Nike shares. The worldwide footwear and apparel giant has seen shares plummet 35% year-to-date. And yes, Nike faces major obstacles in Asia. U.S. sales could also see declining profitability amid high inflation and persistent supply chain issues.

Stock watchers are bracing for less-than-stellar results next week when the shoemaker reports fourth-quarter earnings on June 27.

However, this is Nike we’re talking about. A company that has grown earnings at 13% per year and free cash flow at 16% a year compounded over the past decade. And it’s a company that can use those robust cash flows to support share buybacks and a rapidly increasing dividend. Thinking about investing in Nike now? As the motto goes, “Just do it.”

3M (MMM)

3M (NYSE:MMM) is a diversified industrials company with product lines covering safety and industrial, transportation and electronics, healthcare and consumer products. The company sells everything from Post-It Notes to safety helmets, airplane tray tables, dental adhesives and thousands of other such niche products. And, no doubt the company’s N95 masks saved countless lives over the past two years.

MMM stock has fallen from a peak of $250 a few years back to just $130 today. That has come amid supply chain and inflationary issues, some product liability concerns, and also general fears around an impending recession.

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However, for investors concentrating on building their retirement assets, this is a great opportunity. Incredibly enough, shares are now going for just 13 times earnings for this industrial powerhouse, and that’s with earnings still expected to grow nicely over the next two years.

Meanwhile, shares are paying a mouth-watering 4.6% dividend yield. And, 3M has increased that dividend payment every single year dating back to 1959. Now that’s consistency right there.

Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) has long been a one-stop shop for healthcare. The company has dominant franchises across pharmaceutical drugs, medical devices, OTC treatments and consumer products. J&J takes a holding company approach to its product portfolio, with individual operations having a great deal of autonomy.

This has allowed J&J to ride the healthcare waves for more than a century now. When one business — such as medical devices during the pandemic — struggles, another tends to see results pick up.

In any case, Johnson & Johnson has managed to increase its dividend an admirable 59 years in a row. This makes the company a bedrock of any future retiree’s growth and income portfolio. And with shares selling for less than 17 times forward earnings, JNJ stock is currently on offer at an attractive price.

On the date of publication, Ian Bezek held long positions in V, DEO, ECL, AMT, NKE, MMM, and JNJ stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Mega-cap stocks are defined as stocks with market capitalizations above $200 billion. These represent the largest businesses in the world. Mega-cap stocks have built-in competitive advantages such as strong brands and global scale.

Since they are larger and generally more stable businesses, mega-cap stocks could outperform small-caps or mid-caps in a bear market. As a result, investors looking for quality stocks with reliable dividends in a recession should consider the following 3 mega-cap stocks.

Mega-Cap Stock: Apple (AAPL)

Apple (NASDAQ:AAPL) is a technology giant that manufactures devices such as iPhones, iPads, Mac, Apple Watch and Apple TV. Apple also has a services business that sells music, apps and subscriptions. Apple’s market cap exceeds $2 trillion.

The tech sector is usually notorious for volatility during recessions. But Apple stock is a very stable company, even for a tech stock. In the most recent quarter Apple generated revenue of $97.278 billion, an 8.6% increase compared to Q2 2021. Product sales were up 6.6%, led by a 5.5% increase in iPhones (52% of total sales). Service sales increased 17.3% to $19.8 billion and made up 20% of all sales in the quarter. Earnings-per-share of $1.52 per share rose 8.6% year-over-year.

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Going forward Apple’s earnings growth will be driven by several factors. One of these is the ongoing cycle of iPhone releases. In the long run Apple should be able to grow its iPhone sales. Moreover, in emerging countries where consumers have rising disposable incomes, Apple should be able to increase the number of smartphones it is selling in the coming years.

In addition, Apple’s Services unit which consists of iTunes, Apple Music, the App Store, iCloud, Apple Pay, etc., has recorded a significant revenue growth rate in recent years. Services revenues grow at a fast rate and produce high-margin, recurring revenues.

Apple is arguably the safest tech stock, not just because of its huge size and stable business model, but also because of its tremendous balance sheet.

As of the most recent report Apple held $51.5 billion in cash and securities, $118.2 billion in current assets and $350.7 billion in total assets (of which an additional $141.2 billion are non-current securities) against $127.5 billion in current liabilities and $283.3 billion in total liabilities.

Shares currently yield 0.7%, which is a fairly low yield. However, Apple is a strong dividend growth stock. The company has come through with 10 years of consecutive dividend increases since initiating its dividend a decade ago. In April, the company increased its dividend by 4.5%. And with a 2022 expected dividend payout ratio of just 15%, Apple has plenty of financial cushion to continue increasing its dividend each year, even in a recession.

Walmart (WMT)

Walmart (NYSE:WMT) is a discount retailer and dominates the industry. It is the largest retailer in the world, serving more than 230 million customers each week. Annual sales reach nearly $600 billion for Walmart, and the stock has a market cap above $300 billion.

In the 2022 first quarter, revenue grew 2.4% to $141.6 billion. Adjusted earnings-per-share came to $1.30 for the quarter. Comparable sales were up 3% year-over-year in the U.S., and up 9% on a two-year stacked basis. eCommerce growth was 1% year-over-year, but up 38% on a two-year stacked basis as demand for online shopping continues to grow.

Sam’s Club comparable sales rose 10.2% year-over-year, and the two-year value was +17.4%. Membership income at Sam’s Club was up 10.5% year-over-year.

We have a positive long-term outlook for Walmart’s earnings growth, even with the near-term challenges of inflation. The company continues to buy back stock as well, which is a tailwind for earnings-per-share growth. We see low single-digit sales growth each year, with its e-commerce business being the primary driver of top line growth. That combination should be good enough to create mid-single-digit growth without the benefit of margin expansion.

Walmart is one of the most recession-proof business models in the entire stock market. During recessions, consumers usually shift their spending habits, seeking out lower prices. It could actually be argued that Walmart benefits from recessions.

To that end, consider that Walmart managed to increase earnings steadily during and after the Great Recession of 2007-2010. Hard economic conditions tend to send consumers on the margins to Walmart, which is also an advantage. A similar dynamic played out during the coronavirus pandemic, when Walmart remained highly profitable.

Walmart has increased its dividend for over 40 years, making it a Dividend Aristocrat. Shares currently yield 1.8%. The stock has a 2022 dividend payout ratio of 35%, indicating a safe dividend.

Mega-Cap Stock: Pfizer (PFE)

Pfizer (NYSE:PFE) is a global pharmaceutical company that focuses on prescription drugs and vaccines and has a market cap above $270 billion. Pfizer’s new CEO completed a series of transactions significantly altering the company structure and strategy. Pfizer formed the GSK Consumer Healthcare Joint Venture in 2019 with GlaxoSmithKline plc, which includes Pfizer’s over-the-counter business. Pfizer owns 32% of the JV. Pfizer spun off its Upjohn segment and merged it with Mylan forming Viatris for its off patent, branded and generic medicines in 2020.

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The company is seeing strong growth right now from several factors, such as new products as well as its Covid-19 therapies. In the first quarter, revenue rose 77% to $25.66 billion. Adjusted earnings-per-share soared 72% year-over-year.

Pfizer generated nearly $15 billion in revenue last quarter just from its Covid-19 vaccine and anti-viral drug. While this boost is likely to fade over time as the pandemic subsides, the mRNA vaccine technology will be tried in two protease inhibitor antiviral compounds, a flu vaccine, a shingles vaccine, a breast cancer therapy, hemophilia gene therapy, a Lyme vaccine, RSV Adult vaccine, and others.

Therefore, this could be a longer-lasting tailwind than the market realizes. Pfizer completed its acquisition of Arena Pharmaceuticals for etrasimod and announced the acquisition of ReViral for its RSV programs.

Overall, Pfizer has a strong pipeline in oncology, inflammation & immunology, rare diseases, and vaccines. We are expecting 5% earnings per share growth out to 2027 (beside the COVID-19 vaccine and anti-viral). This should be enough growth to continue raising the dividend over time, which currently yields 3.3%.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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We believe the best way to accrue wealth over the long-term is to find high-quality dividend stocks, hold for long periods, and reinvest dividends in additional shares over time. This strategy is simple, but very effective when it comes to investors gradually building wealth over their lifetime.

However, if the investor selects poor stocks, the buy-and-hold strategy for the long-term doesn’t work; we need companies that have sustainable advantages, and therefore, the ability to continue to raise their dividends to shareholders over time.

One place to start when looking for such stocks is the list of blue-chip stocks, which is a group of high quality dividend stocks that have raised their dividends for at least 10 consecutive years. This would include stocks that only began paying dividends fairly recently – such as technology stocks, for instance – and companies with much longer histories in traditional dividend sectors like utilities and consumer staples.

The list is diverse, and in this article, we’ll highlight three we think can continue to pay their dividends through a recession.

Blue-Chip Stocks: Qualcomm (QCOM)

First on our list of dividend blue-chip stocks is Qualcomm, a technology company focused on the development and distribution of components mainly used in wireless communications. This includes integrated circuits, system software, global positioning systems, and of course, components used in smartphones around the world. Qualcomm is a pioneer in 5G wireless technology, and has been a leader in that space for many years, helping to drive technological advancement over time.

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The company was founded in 1985, generates about $45 billion in annual revenue, and its market cap is $149 billion.

We see growth at 7% annually for Qualcomm, which is roughly congruent with its history in the past decade. The company is somewhat beholden to smartphone upgrade cycles given its 5G-related sales, but it is diversified enough that we don’t see a recession being a significant problem. Earnings declined in the mid-teens during the last recession, but nowhere near enough to put the dividend at risk.

Revenue gains should drive earnings growth in the years to come, along with a small measure of margin expansion, as well as steady share repurchases.

Given the massive decline in Qualcomm shares thus far in 2022, we see total return prospects as excellent going forward. In total, we think buyers today could see 18% annual total returns over the coming years.

We estimate 7% earnings growth, the dividend yield is good for 2.3%, and the valuation makes up the rest with a massive 9% gain annually possible. Shares go for just 10.4 times this year’s earnings, which is well below our somewhat conservative estimate of fair value at 16 times earnings. Should the stock revert to that valuation, holders of Qualcomm would see sizable capital appreciation.

State Street (STT)

Our next blue-chip stocks company is State Street, a financial services company based in the U.S. State Street isn’t a traditional bank that focuses on deposits and lending products. Rather, it is a custodial bank, meaning it generates the bulk of its revenue from fees rather than interest on loans. State Street, therefore, primarily serves institutions such as investment firms, pension funds, insurance companies, endowments, and the like.

State Street traces its roots to 1792, making it one of the oldest banks in the U.S. It generates about $13 billion in yearly revenue, and its market cap is $24 billion.

We estimate State Street can grow earnings at 7% annually in the years to come, driven by strong fee generation, and State Street’s inherent insulation from interest rate moves that can be a boon or bust for traditional banks. The bank owns the lucrative and wildly popular SPDR exchange-traded product family, which benefit from inflows of cash into equities. The company’s other fee-generating businesses are diverse and therefore, aren’t especially susceptible to recessions.

We think State Street can provide nearly 20% annual returns from current levels, as the market has priced shares for a recession already. The dividend yield has soared to a very impressive 3.7%, so along with 7% projected growth, and a significant tailwind of almost 10% from the valuation, State Street looks quite attractive. Shares trade for under eight times this year’s earnings, which is a long way from our estimate of fair value at 12.5 times earnings, driving the tailwind.

Blue-Chip Stocks: Dover Corp. (DOV)

Our final stock is Dover Corp., which provides equipment, consumable supplies, aftermarket parts, software and support services for various industrial applications worldwide. It offers products through five segments, offering significant diversification of revenue: engineered products, clean energy and fueling, imaging and identification, pumps and process solutions, and climate sustainability technologies.

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Dover was founded in 1947, generates $8.6 billion in total revenue, and trades with a market cap of $18.5 billion. Dover also holds one of the longest dividend increase streaks of any company in the world at 66 years.

We estimate 8% annual earnings growth for Dover, driven largely by revenue gains. The company buys back a very small amount of stock, but Dover’s growth is largely driven by revenue and associated margin gains. Growth has been lumpy at times in the past, but over the medium term, we expect earnings to be much higher than they are today.

Dover offers the weakest potential returns of the three stocks, but “weakest” is used in a relative sense as we still expect ~13% annual returns for buyers today. Eight percent growth, the 1.6% dividend yield, and a ~3% tailwind from the valuation should see the stock produce strong total returns in the years to come.

Final Thoughts

Finding high-quality dividend stocks is always the best strategy for building wealth long-term, in our view, but that’s especially true during tough economic times, such as recessions.

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We like the blue-chip stocks as a place to start screening for high-quality names, and we’ve highlighted three we like very much. All three have strong growth potential, and very reasonable payout ratios, the combination of which should see them able to pay – and even raise – their dividends into the next recession.

We have buy ratings on Qualcomm, State Street, and Dover and believe their dividends will continue to be raised regardless of whether we enter a recession or not.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Dividend growth investing can be an excellent way to produce secure cash flows in retirement. Markets go up and down, but dividends often grow, especially when one invests in quality companies.

With most companies distributing dividends on a quarterly basis, investors needing predictable monthly cashflows could face some uncertainty due to the timing of payments.

The good news is that there are a number of securities that pay dividends on a monthly basis, helping to deliver a steady stream of income. Real estate investment trusts (REITs) are some of our favorite monthly paying stocks as REITs are required by law to distribute the vast majority of income in the form of dividends.

Here are three of our favorite monthly dividend stocks.

Monthly Dividend Stocks: Realty Income (O)

Our first entry of monthly dividend  stocks to consider is Realty Income (NYSE:O), which specializes in single-tenant standalone properties. The trust is valued at $41 billion and generates annual revenue approaching $2 billion.

Realty Income has more than 11,100 properties in its portfolio, giving the trust an expansive reach that is largely unmatched by competitors. The trust operates a highly diversified business model, with more than 1,000 clients in 60 industries across 50 U.S. states and Puerto Rico. Realty Income has also expanded its business into Europe, with properties located in Spain and the U.K.

The trust’s top 20 tenants account for 42% of properties and include names such as Walgreens Boots Alliance (NASDAQ:WBA), Dollar General (NYSE:DG), CVS Health (NYSE:CVS), Home Depot (NYSE:HD) and Amazon (NASDAQ:AMZN). Just three tenants represent ~4% of the portfolio and nearly half of properties are leased to investment grade tenants.

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Realty Income is diversified across industries as well, with the top three of grocery stores, convenience stores and dollar stores contributing 10.2%, 9.1%, and 7.5% of annual revenue, respectively. Geographically, only Texas makes up more than 10% of properties.

Realty Income has made several moves to improve the quality of its business. Last November, the trust finalized its merger with VEREIT, which held nearly 4,000 single-tenant properties. Overnight, Realty Income become a leading property manager in the U.K. and Spain. As a result, the U.K. now holds the second largest number of properties for the trust at nearly 8% of the total.

The trust then spun off its office property business, which had been among the weakest areas of the business during the worst of the Covid-19 pandemic, into Orion Office REIT (NYSE:ONL). Following these strategic endeavors, Realty Income simultaneously strengthened its portfolio and expanded its operations.

Realty Income has earned the title Monthly Dividend Company because it has distributed dividends on a monthly basis since its IPO in 1994. In total, the trust has declared more than 620 consecutive monthly dividends. The dividend has a compound annual growth rate of more than 5% over the last decade. The dividend appears to be on very stable ground as the projected payout ratio for this year is 75%, lower than the 10-year average of 84%. Shares currently yield 4.4%, nearly three times the average yield of 1.5% for the S&P 500.

SL Green Realty (SLG)

Next up is SL Green Realty (NYSE:SLG), which owns, develops and leases office properties in the New York City metropolitan area. The trust had revenue of just over $678 million in 2021 and has a current market capitalization of $3.7 billion.

SL Green Realty’s portfolio includes 35 million square feet of office space spread out over 70 buildings, making the trust the largest owner of office space in Manhattan. This area has been synonymous with the financial industry for a long period of time, making the trust’s properties ideally located for companies in this space.

One cautionary item is that SL Green Realty is beholden to the operating environment within New York City given the density of its portfolio. When Covid-19 first emerged, restrictions were implemented to slow the spread of the virus and  the fallout meant that companies tightened their budgets. With many employees working from home, office space wasn’t a large need. At one point, Manhattan office buildings were less than 15% occupied.

That has changed, with the majority of unoccupied office space now having a tenant. SL Green Realty’s portfolio was close to 93% occupied as of the most recent quarter, showing that the trust’s properties remain in high demand following the unprecedented actions that were taken in 2020.

While SL Green Realty does lack geographic and industry diversification, the trust is increasing becoming attractive to the technology sector. New York City is now one of the largest employers in the tech sector, giving SL Green Realty a potential additional avenue for growth. Pivoting away slightly from just financial sector tenants would provide some diversification to the trust’s business model.

SL Green Realty ended the last quarter with nearly 4 million square feet of properties in development, which would further add to the trust’s leading position in its area of operations. The majority of SL Green Realty’s leases range from seven to 15 years. The length of the agreements provides the trust idea of what revenue will look like in the future.

SL Green Realty joined the list of monthly dividend stocks in 2020. The trust has raised its dividend for 11 years and with a CAGR of 14.5% over the last decade. The expected payout ratio for 2022 is 57%, higher than the 10-year average of 41%, but still quite low for a REIT. The stock yields 6.5%, more than four times the market index average.

Monthly Dividend Stocks: STAG Industrial (STAG)

Our final name on this list of monthly dividend stocks is STAG Industrial (STAG), which specializes in industrial real estate properties. The $6 billion trust produced revenue of $562 million last year.

STAG Industrial is very much a niche business as it is the only public pure-play industrial real estate company. This is a significant advantage because potential tenants are limited in their choices when it comes to leasing a facility.

Unlike SL Green Realty, STAG Industrial has a highly diversified business model. The trust owns and leases 553 buildings across 40 U.S. states. STAG Industrial tenants are found in more than 45 industries. The trust counts Amazon as its largest contributor to annual base rents, but this one tenant amounts to just 8% of yearly totals.

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The top 20 tenants account for less than 20% of annual rent, with each company’s annual revenue ranging from $50 million to $100 billion. This level of diversification protects STAG Industrial from weakness in any one area, whether its geographic region, industry, or company size.

STAG Industrial has grown quickly since going public in 2021. The trust now has more than 110 million square feet of leasable space as the property total has climbed from 93 to its current total. This expansion continues has the trust had almost $4 billion of deals completed through the first four months of 2022. And with a total addressable market value of $1 trillion, STAG Industrial, thanks to its size, scale, and experience, is likely to continue to grow its portfolio.

STAG Industrial has raised its dividend for 11 years and with a 3.4% growth rate since 2012. The payout is projected to be 66% for this year, well below the long-term average of 85%. Today’s dividend looks safer than it has in a long time. STAG Industrial yields 4.3% today.

Final Thoughts

Investors needing income on a more regular basis should consider owning securities that pay dividends monthly. With less than 50 names that do so, the pickings can be slim. However, we believe there are high-quality companies that have competitive advantageous that should allow for continued dividend growth.

Realty Income, SL Green Realty and STAG Industrial are three such examples of REITs that we believe will continue to pay monthly dividends given the strength of their respective business model.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Look up the term “retirement stocks,” and you’ll pull up many lists, often listing the same basket of widely held, blue-chip stocks. But while a portfolio of such names could provide you with the income and capital growth needed for your golden years, you may want to consider adding a few undervalued retirement stocks into the mix.

In other words, stocks that either sport higher dividend yields than the lauded “dividend aristocrats,” and/or sell at a lower valuation. Such names could help you in two ways. First, stocks with high-yet-sustainable yields could help you maximize portfolio income.

Second, some of these undervalued names could see price appreciation. Either due to market conditions normalizing, or from fixing company-specific issues that are causing negative sentiment at present.

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That’s the story here with these seven undervalued retirement stocks. Each one offers an above-average dividend, plus upside potential.

Devon Energy (DVN)

Skyrocketing oil and gas prices have resulted in a similar move for shares in Devon Energy (NYSE:DVN). This independent energy company is up around 70% year-to-date alone, and up 151% over the past twelve months.

But don’t take that to mean you have missed out on DVN stock. If you’re bullish on energy prices staying high, it’s a great opportunity. If oil and gas prices remain elevated, it will keep reporting high earnings. This may enable it experience further multiple expansion. Shares today trade for around 8.9x earnings.

In terms of its appeal to retirement investors, high energy prices will result in very high dividends as well. Devon pays a fixed-plus-variable dividend. That is, its dividend moves higher or lower based on earnings. If high oil prices aren’t going away, it will continue to sport a high yield (6.66% at current prices).

Enbridge (ENB)

Enbridge (NYSE:ENB) is a great “safe and steady” energy stock. Based in Canada, Enbridge is a large owner of oil and gas pipelines. Changes in energy prices do not materially impact its earnings. If you’re less confident oil and gas will remain at prices not seen in over a decade, this may make a better choice.

Trading for around 20x earnings, ENB stock may not sound “cheap” on the surface. Yet it may be a more than fair price to pay, given the consistency of its dividend. At current prices, it has a forward dividend yield of 5.66%.

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With 10 years of consecutive dividend growth, it has increased its payout by an average of 9.58% per year over the past five years. If you’re looking for steady returns via dividends, Enbridge is a solid choice. Moving higher in recent weeks, consider it a buy.

Gladstone Commercial (GOOD)

Gladstone Commercial (NASDAQ:GOOD) is another of the high-yield undervalued retirement stocks to consider. This real estate investment trust (REIT) has never missed a dividend payment, with zero dividend cuts.

This stability, plus the fact it pays out its dividends monthly rather than quarterly, makes GOOD stock appealing for dividend investors. You can argue that it’s not “undervalued,” in the traditional sense. It doesn’t trade at a discount to its book value. Its valuation on a price/funds from operations (P/FFO) doesn’t scream “deep value,” either.

So then, why consider it a buy? It may be a great vehicle for high yield with limited downside risk. After its pullback in recent months, investors buying today can get a 7.38% annual return via dividends. Its payout consistency suggests a low chance of it becoming a case of yield chasing gone wrong.

IBM (IBM)

Up slightly year-to-date (around 4%), with IBM (NYSE:IBM), market volatility has been outweighed by investors buying into it as a safe harbor play. That’s not all. “Big Blue” has reported strong results in recent quarters.

While obviously a mature tech company, don’t assume that it’s a “dinosaur.” There’s more to like with IBM stock besides its 4.71% dividend yield. The company’s solid fiscal performance has been in large part to its so far successful turnaround. Shedding legacy businesses, it is now focused on its cloud computing and artificial intelligence (AI) segments.

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This could result in steady earnings growth for previously low-growth IBM. In turn, a higher stock price. Due to both its increased earnings, plus a possible expansion of its forward earnings multiple. Offering both a high yield, and upside due to its current low forward multiple (14.3x), investors building a retirement portfolio should take a look.

Altria Group (MO)

Altria Group (NYSE:MO) is another stock that has benefited by the move to “risk off” in recent months. Attracted by its steady earnings and high dividend (6.65% yield), shares in this company, parent of tobacco giant Philip Morris USA, are up around 11% in 2022.

Granted, this sin stock may not be for everybody. There’s no getting around the controversial nature of its business. Not only that, there’s the concern that changes in U.S. tobacco use trends will drag earnings lower over time.

Yet concerns of secular decline may be overblown. Altria could make up for declining cigarette sales through price increases, plus the move of cigarette users to Altria’s other non-cigarette tobacco products. This will enable continued slow and steady earnings/dividend growth. Consider MO stock a buy because of its high yield (6.65%) at a low price (11.x earnings).

AT&T (T)

A lot has changed with AT&T (NYSE:T) in recent months. It has divested its media business. The telecom company is now purely “Ma Bell” once again. Unfortunately, it has also slashed its dividend.

Even so, since the spinoff of Warner Bros. Discovery (NASDAQ:WBD), the “new” T stock has inched higher. While no longer as high-yield as before, a 5.24% dividend is nothing to sneeze at. The company also continues to trade at a low valuation (8.3x). Yes, this stock has a reputation as a “value trap.”

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Yet it could be in the process of shaking off this reputation. Now streamlined, management can focus on improving the profitability of its telecom business, de-lever AT&T’s balance sheet, and make other moves that may enable it to make a further recovery. With steady returns via its payout, plus the potential for upside, add it to your watchlist.

Western Union (WU)

Western Union (NYSE:WU) is another name you can consider to be an undervalued retirement stock. It trades at a low multiple (around 10x), and has a 5.27% forward dividend yield. It’s also a bit of a contrarian play.

The rise of fintech is seen as a possible threat to its old-school payment remittance business. However, like I argued late last year, it may be too soon to say that it will be “disrupted” out of business. Around since the 1850s, it’s no stranger to keeping up with the times.

It may prove the market wrong with steady earnings. Also, it could continue increasing its dividend payout. All of this may result in a move to higher prices for Western Union stock. If you’re looking for a play where going against the grain may pay off, this may be it.

On the date of publication, Thomas Niel held a LONG position in MO stock. He 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.

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Amidst the volatility and declines on Wall Street, dividend stocks with high yields have become a prized commodity among investors. Growing fears that the economy is tipping into recession continue to draw investors into reliable stocks that offer passive income.

Most dividend payers are primarily concentrated in industries that consumers rely on throughout the year, regardless of the economic environment. Such sectors typically include utilities, infrastructure, consumer staples and telecommunications. We should also add real estate investment trusts (REITs) and master limited partnerships (MLPs) to the list of high-yield plays.

So far in 2022, dividend stocks have outperformed broader indices. For example, an exchange-traded fund (ETF) that tracks 75 high-dividend stocks, the iShares Core High Dividend ETF​ ​(NYSEARCA:HDV), has appreciated over 7% year-to-date (YTD). Conversely, the S&P 500 index has lost over 13% since January.

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With that information, here are seven high-quality dividend stocks with high yields that will provide a safe way to position investor portfolios amidst the uncertainty in the stock market.

Brookfield Infrastructure Partners (BIP)

52-Week Range: $52.92 – $69.01
Dividend Yield: 3.5%

Brookfield Infrastructure Partners (NYSE:BIP) is one of the leading operators of infrastructure assets across the globe. Its portfolio includes communications towers, data centers, fiber optic cable, natural gas pipelines, storage, and processing facilities.

The infrastructure giant announced first-quarter metrics on May 4. Revenue increased 27% year-over-year (YOY) to $3.4 billion. Funds from operations (FFO) per unit increased 3% YOY to 96 cents. Cash and equivalents ended the period at $1.97 billion.

The company is capitalizing on soaring demand for infrastructure worldwide. As a result, its FFO was the highest in the partnership’s history.

In May, the company also announced a 3-for-2 stock split. It is expected to take place on June 10. Many investors focus on stock-splits as historically the move has provided positive momentum for such shares.

So far in 2022, BIP stock is trading almost flat. The stock generates a 3.5% dividend yield.

Shares are trading at 89 times forward earnings and 1.5 times sales.  The 12-month median price forecast for Brookfield Infrastructure stock stands at $70.

EPR Properties (EPR)

52-Week Range: $41.14 – $56.38
Dividend Yield: 6.6%

EPR Properties (NYSE:EPR) is a specialty triple-net lease REIT focused on “experiential” real estate properties. They includes vacation resorts, theme parks, movie theaters and other entertainment-oriented sites.

The thematic REIT released Q1 results on May 4. Revenue increased 41% YOY to $157.5 million. Adjusted FFO per diluted share more than doubled to $1.10, up from 48 cents in the prior-year quarter. Cash and equivalents ended the period at $323.8 million.

Analysts concur that such venues could capitalize on the post-pandemic “travel revenge” momentum. Management projects adjusted FFO for 2022 to increase more than 42% to between $4.39 and $4.55.

The REIT generates a 6.6% dividend yield paid in monthly installments. It has a reasonable dividend payout ratio, standing at 75% of its adjusted FFO.

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EPR stock has returned over 5% YTD. Shares are trading at 23 times forward earnings and 6.55 times sales. The 12-month median price forecast for EPR Properties stock stands at $58.50.

Foot Locker (FL)

52-Week Range: $26.36 – $63.98
Dividend Yield: 4.9%

Foot Locker (NYSE:FL) operates footwear and apparel retail stores across the U.S. as well as globally.  Wall Street has not been happy to hear that Nike (NYSE:NKE), a vital supplier to the retailer, has recently taken a direct-to-consumer business approach.

In other words, Nike is now selling a majority of products through its own channels. However, Foot Locker’s management seems confident in its ability to navigate this headwind.

The retail store chain issued Q1 numbers on May 20. Revenue increased 1% YOY to $2.18 billion. Adjusted earnings came in at $1.60 per share, down from $1.96 in the prior-year quarter.

Cash and equivalents totaled $551 million at the end of the period. The group also reaffirmed its guidance for 2022.

So far in 2022, FL stock has tumbled 25%. Nonetheless, it currently generates a juicy 4.9% dividend yield. Shares are changing hands at 7.2 times forward earnings and 0.36 times sales. The 12-month median price forecast for Foot Locker stock is at $32.

Kinder Morgan (KMI)

52-Week Range: $15.01 – $20.19
Dividend Yield: 5.6%

Kinder Morgan (NYSE:KMI) is one of the largest midstream energy firms in North America. It specializes in transporting, storing, and processing natural gas and crude oil as well as refined products.

The midstream giant announced Q1 results on April 20. Revenue declined nearly 18% YOY to $4.29 billion. Adjusted earnings per share came in at 32 cents, down 47% from 60 cents in the prior-year quarter. Cash and equivalents ended the period at $84 million.

The spike in energy prices has allowed Kinder Morgan to secure attractive renewal rates and expansion projects. Moreover, management highlighted that the Russian invasion of Ukraine created more growth opportunities in its gas infrastructure business.

KMI stock currently generates a lucrative 5.6% dividend yield.

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Shares have gained almost 25% YTD. KMI stock is changing hands at 16.3 times forward earnings and 2.75 times sales. The 12-month median price forecast for Kinder Morgan stock stands at $20.

Kraft Heinz (KHC)

52-Week Range: $32.78 – $44.87
Dividend Yield: 4.4%

Food and beverage giant Kraft Heinz (NASDAQ:KHC) is the next of our dividend stocks with high yields. Along with its namesake brands, its product portfolio includes Oscar Mayer, Velveeta and Philadelphia brands.

The food manufacturer released Q1 numbers on April 27. Revenue declined 5.5% YOY to $6.05 billion. Adjusted earnings were 60 cents, down 16.7% from 72 cents a year ago. Cash and equivalents ended the period at $2.98 billion.

Kraft has been increasing prices to compensate for the rising costs of raw materials and transportation. With a large global portfolio, KHC stands out as an inflation-resistant stock. Moreover, the company raised its sales guidance for the fiscal year.

So far in 2022, KHC stock has gained over 2%. It supports an attractive 4.4% dividend yield. Shares have a modest valuation at 14.6 times forward earnings and 1.9 times sales. The 12-month median price forecast for Kraft Heinz stock is at $45.

Viatris (VTRS)

52-Week Range: $9.66 – $15.92
Dividend Yield: 4.1%

Viatris (NASDAQ:VTRS) is an important global generic drug manufacturer. It offers a substantial off-patent branded drug portfolio. It is known for a number of brands, including Lipitor, Xanax and Zoloft.

The pharma play issued Q1 results on May 9. Revenue declined 5% YOY to $4.18 billion. Adjusted earnings came in at $1.13 billion, or 93 cents per share, compared to $1.12 billion in the previous year. The company generated $1.07 billion of free cash flow.

Viatris expects to generate full-year revenues of around $17 billion. It is selling its biosimilars portfolio to Biocon Biologics for $3.3 billion as well.

Recently, Viatris announced the launch of Abevmy, a cancer drug, in Canada. The treatment was approved for use in treating certain types of colorectal, lung, ovarian and brain cancer. Abevmy represents the third cancer treatment that Viatris has had approved by Health Canada.

Earlier in the year, management approved a 9% increase in quarterly dividend, currently offering a yield of 4.1%. Moreover, the board authorized a “Dividend Reinvestment and Share Purchase Plan” in May.

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VTRS stock has declined 13% YTD. Shares look like a bargain at just 3.3 times forward earnings and 0.8 times sales. The 12-month median price forecast for Viatris stock stands at $13.50.

Walgreens Boots Alliance (WBA)

52-Week Range:  $39.72 – $55.82
Dividend Yield: 4.4%

The last of our dividend stocks with high yields, retail pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA), needs little introduction. Over the past year, many Americans have visited one of its stores for Covid-19 vaccine shots. Management has been investing in full-service health clinics and specialty pharmacy management systems.

In late March, Walgreens released Q2 metrics. Revenue increased 3% YOY to $33.8 billion. Adjusted earnings came in at $1.59 per diluted share, up from $1.26 in the prior-year period. Cash and equivalents ended the quarter at $2.03 billion.

Walgreens reported a 14.7% growth in U.S. retail comparable sales, the highest in two decades. Moreover, its focus on digitization led to a 38% increase in online purchases.

This Dividend Aristocrat has raised its payout for over four decades and now has a 4.4% dividend yield.

So far in 2022, WBA stock has lost 17%. Shares are attractively priced at 8.1 times forward earnings and 0.3 times sales. Lastly, the 12-month median price forecast for Walgreens stock is at $48.

On the date of publication, Tezcan Gecgil 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.

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When picking safe retirement stocks to buy, it’s important to prioritize a few traits. A company should have a strong balance sheet to keep it secure during economic downturns. It should pay a dividend, and have a history of raising it at least as quickly as the inflation rate so that your dividend income keeps up with expenses during retirement. Also, the company should have a strong competitive moat or other inherent advantages to ensure that it remains a dominant player in its industry for years to come.

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While smaller or more speculative companies may offer greater upside, an investor focused on retirement is generally seeking to make solid returns while avoiding significant drawdown risk. Once you have made enough to leave the workforce, a top priority is on making sure that the nest egg remains healthy while generating enough returns and income to support a fruitful retirement. These seven safe retirement stocks fit the bill today.

Diageo (DEO)

Diageo (NYSE:DEO) is the world’s second-largest alcoholic spirits company. It is known for a wide variety of brands including Smirnoff, Johnnie Walker, Crown Royal, Captain Morgan, Baileys and Guinness beer.

Diageo has existed in its present form since the 1990s, when the Guinness beer business merged with the Grand Metropolitan spirits company. However, the underlying brands have existed far longer than that. Guinness, for example, was founded in 1759. That’s the sort of longevity that ensures that the company can keep your retirement dividends flowing.

Diageo is a great business because of its industry. Alcohol is a high profit margin product with steady consumption patterns regardless of political and economic developments. Diageo has raised its dividend each and every year dating back to when the company was formed. Shares have also dropped to below 25 times earnings with the recent selloff, making this a fine entry point.

McCormick & Company (MKC)

McCormick & Company (NYSE:MKC) is by far the world’s largest spice company, outselling its nearest rival at least fivefold on an annual basis. The company has a strong competitive advantage for its sheer size. Most grocery stores don’t want to carry many brands of products such as black pepper or oregano, giving McCormick a natural monopoly. McCormick is also the largest player in generic store brands of spices as well.

In addition to the core spice business, McCormick has moved heavily into salsas and hot sauces. Recent purchases such as Frank’s Red Hot and Cholula have supercharged McCormick’s growth trajectory. Consumers are increasingly looking for novel and diverse flavors, and McCormick is a major winner in that trend.

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MKC stock is generally not cheap, and that remains true now. People pay up for quality, after all. However, after a recent 10% decline in the stock price, shares are back under 30 times earnings. That’s a reasonable entry point historically for McCormick, given its solid growth rate and impeccable dividend history; the company has raised its dividend payout 36 years in a row.

Exxon Mobil (XOM)

The oil and gas industry is back. After many obituaries were written for the sector in 2020, it turns out that these reports were premature. The invasion of Ukraine has highlighted the precarious nature of the world’s energy supply. While renewables will eventually shoulder the load, they’re not yet there in terms of being able to supplant oil and gas.

With gasoline prices hitting record highs, oil majors are in a uniquely powerful position. Government regulations and environmental pressure have made it hard to drill for oil or build new pipelines and refineries in recent years. This has created a massive structural deficit of energy infrastructure.

The owners of existing assets, thus, have a winning hand. Exxon Mobil (NYSE:XOM) is now producing record profits and cash flows. That has allowed it to resume boosting its already generous dividend; XOM stock currently yields 3.6%. While energy can be a boom and bust industry, Exxon Mobil’s diversified operations across oil production, transportation, refining and chemicals make it much more stable and reliable for retirees than the average energy outfit.

Lockheed Martin (LMT)

After the pullout from Afghanistan last year, some investors gave up on the defense stocks. It seemed like America might pull back a bit from international engagement. However, the invasion of Ukraine has highlighted the ongoing need for national defense capabilities. In addition to the U.S. buying more armaments, foreign powers such as Germany and Japan have sharply increased their military budgets.

This has led to an upturn in the stock prices for firms such as Lockheed Martin (NYSE:LMT). Lockheed, in particular, has inked several new contracts for fighter jets this spring. With LMT stock up 25% year-to-date, it might seem too late to buy. It’s not, though.

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In fact, shares are still selling for less than 17 times earnings. And defense contractor earnings are high quality, as they are backed by decades-long contracts paid for by government spending. This is the sort of stable reliable business that a retiree can count on.

Medtronic (MDT)

One of the biggest demographic trends in America is the aging of the population. And as retirees know, the cost of medical care constantly rises. The best way to play defense against these inexorable forces is to own stocks in the healthcare industry.

Medical device makers such as Medtronic (NYSE:MDT) are uniquely well-positioned to protect investors from rising healthcare costs. Medtronic is a large pureplay device maker focused on cardiac care, diabetes, neurological conditions and spinal disorders among other issues. As more of the population becomes elderly, demand for these sorts of life-enhancing products will increase.

MDT stock is near its 52-week lows at the moment. It was slowed down by a reduction in the tempo of elective surgeries with the pandemic. And now inflation and supply chain issues are running their course. Regardless, shares go for less than 18 times forward earnings and offer a near-3% dividend yield.

Nike (NKE)

For global consumer brand names, Nike (NYSE:NKE) is right up there. The company’s footwear and athletic apparel can be found on almost every corner of the planet. That has been something of a headwind in 2022. Nike is pulling out of the Russian market this year, and it also faces a potential sales slowdown in China as that country remains under more strict Covid-19 restrictions.

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Throw in global supply chain issues and inflation, and NKE stock has dropped 30% year-to-date. That’s an overreaction, however. Shares are now selling for less than 30 times forward earnings, and analysts see those earnings growing at 20% a year in 2023 and 2024 once the current headwinds let up. And while Nike only pays a 1% dividend today, it has grown that dividend at a double-digit compounded rate in recent years, making this a strong growth and income play.

Texas Instruments (TXN)

It can be hard to pick technology companies as part of a lower-risk income-generating portfolio. After all, technology changes quickly, and also many tech firms don’t pay dividends.

Texas Instruments (NASDAQ:TXN) is a great solution to these two issues, however. The semiconductor company makes thousands of different niche analog chips. These serve specialized functions such as converting real-world weather information into digital data that machines such as autonomous vehicles can use. These sorts of specialty chips have a much longer lifespan than, say, a semiconductor for the latest iPhone or gaming device.

By serving durable industrial markets, Texas Instruments faces much less competition than in consumer electronics. In addition, Texas Instruments’ management makes all its decisions with a focus on boosting is free cash flow. This cash generation, in turn, is shared with investors via aggressive dividend hikes. Shares currently yield 2.6% and, impressively, the company has grown its dividend at a 19% per year compounded rate over the past five years.

On the date of publication, Ian Bezek held a long position in DEO, MKC, TXN, XOM, LMT, MDT and NKE stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Investing in REITs, or real estate investment trusts, remains one of the best inflation protection tactics in 2022. However, choosing which individual REITs to buy can still be a daunting task susceptible to asset selection risk. So investors may choose to buy exchange-traded funds (ETFs) focused on REITs instead. These REIT ETFs offer wide diversification benefits right from the onset.

Besides REITs’ well known inflation protection capabilities, investing in REIT ETFs helps diversify stock and bond market risks in a portfolio and boost investment income. Some of the selected ETFs on this list boast high income yields, while others will offer international diversification among REITs, and some are sector specific.

Sector-specific REIT ETFs will tilt the odds in your favor if growth is what you are targeting. Datacenter focused REITs, industrial real estate developers and cell tower landlords still promise strong growth, while office and healthcare REITs could make it a value plays.

Although the stock market has sold off so far in 2022, investors still find pockets of value and attractive investment options as seen in a net increase of funds invested in exchange-traded funds (ETFs) over the past three months. According to the VettaFi (formerly ETF Database), about $4 billion in net new funds trickled into REIT ETFs during the past three months.

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Let’s take a closer look at which ETFs you can buy right now for diverse exposure to REITs.

REITs: Vanguard Real Estate Index Fund (VNQ)

Expense Ratio: 0.12%, or $12 per $10,000 invested annually.

The Vanguard Real Estate Index Fund (NYSEARCA:VNQ) is the largest among REIT ETFs in the world, boasting of over $82 billion in assets under management. VNQ passively tracks the MSCI US Investable Market Real Estate 25/50 Index. Its benchmark essentially covers all REITs and real estate sectors tradable on U.S. exchanges.

The VNQ provides wide exposure to the REIT asset class. Pure REITs constitute about 95.5% of the ETF’s holdings. The remainder is allocated to real estate services stocks (3.8%), real estate developers (0.3%), real estate operating companies (0.2%), and diversified real estate activities (0.1%). Thus, investors in the VNQ ETF will own a diversified real estate portfolio and enjoy exposure to plenty of REITS and everything real estate-related.

The fund is passively managed with a low expense ratio of 0.12% or $12 for every $10,000 invested. Total returns from owning the VNQ ETF stock are augmented by a roughly 3% dividend yield, which compares very well to the S&P 500’s 1.5% annual dividend yield today.

Schwab U.S. REIT ETF (SCHH)

Expense Ratio: 0.07%

The next of our ETFs to invest in REITS —  Schwab U.S. REIT ETF (NYSEARCA:SCHH) — is one of the largest and most diversified real estate exchange-traded funds with more than $6.3 billion in assets invested in more than 140 individual REITs. The ETF offers investors simple, straightforward and low-cost access to REITs and excludes several non-REIT stocks that are sometimes included in other competing real estate offerings.

It’s a passively managed fund that tracks the Dow Jones Equity All REIT Capped Index. Mortgage REITs are excluded from the index, and investors will find SCHH’s expense ratio of 0.07% (or $7 for every $10,000 invested) far cheaper than Vanguard’s VNQ. Investors may expect to receive quarterly distributions that currently yield about 3.3% annually.

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The fund’s manager has more than five years of manager tenure. Investors should feel they’re in good, experienced hands. The fund’s largest holding is American Tower REIT Corp (NYSE:AMT) at 8.3% followed by a 6.7% allocation to Prologis REIT (NYSE:PLD) stock.

Real Estate Select Sector SPDR Fund (XLRE)

Expense Ratio: 0.1%

The Real Estate Select Sector SPDR Fund (NYSEARCA:XLRE) is one of the largest REIT ETFs by assets under management. It boasts of more than $5.4 billion in net assets. The XLRE ETF offers investors exposure to “the real estate sector of the S&P 500 Index.” It has 30 holdings, including real estate management and development companies (comprising under 3% of the fund) and equity REITs which comprise over 97% of the portfolio. The fund excludes mortgage REITs from its portfolio.

Investors will find the REIT ETF’s low expense ratio of 0.1% too low to significantly matter. XLRE stock has declined by about 15% so far this year. However, the ETF pays out quarterly dividends that yield 2.8% annually.

Top holdings include American Tower Corp, Prologis, and cell-tower giant Crown Castle International Corp. (NYSE:CCI).

Global X Super Dividend REIT ETF (SRET)

Expense Ratio: 0.58%

Income-oriented investors seeking high distribution yields and some global diversification may find the Global X Super Dividend REIT ETF (NASDAQ:SRET) more appealing than many pure U.S. REIT ETFs. It offers high yields and geographical and interest rate risk diversification off the bat.

The SRET portfolio holds 29 of the highest yielding REITs in the world. It invests about 53% of its assets in U.S. REITs, allocates 33% of the portfolio in developed Asia (Singapore REITs), and spreads the balance equally into Canadian and Australian REITs.

Most noteworthy, the SRET ETF pays distributions that yield 7.1% annually at the time of writing. The portfolio has more than $360 million of net assets and a reasonable expense ratio of 0.58% annually.

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Top holdings include the WP Carey (NYSE:WPC) at 4.05% followed by the Physicians Realty Trust (NYSE:DOC) at 3.85% of the portfolio.

Hoya Capital High Dividend Yield ETF (RIET)

Expense Ratio: 0.25%

The Hoya Capital High Dividend Yield ETF (NYSE:RIET) is a recently launched REIT ETF that invests in high dividend yield paying real estate equity securities to produce high yields for its investors. The fund invests around 90% of its assets in REIT common equity, and about 10% is invested in preferred stock. Preferred stock positions significantly augment the fund’s recurring income. However, preferred equity limits growth potential.

The fund manager waived management fees for now to reduce the trust’s total expense ratio to 0.25% or $25 for each $10,000 invested in the fund. RIET ETF’s total expense ratio will revert to 0.5% after September 2022 — the first ETF launch anniversary. The fund tries to replicate the Hoya Capital High Dividend Yield Index, a proprietary, internally managed index of high-quality high yielding publicly traded real estate assets.

You can invest in the RIET ETF for its juicy dividend income offering. The trust pays a dividend that yields 7.3% annually. Its top 10 holdings include the Simon Property Group (NYSE:SPG), Starwood Property Trust (NYSE:STWD) at 1.5% and Iron Mountain (NYSE:IRM), all at around 1.5% of the portfolio.

Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR)

Expense Ratio: 0.6%

The Pacer Benchmark Data and Infrastructure Real Estate SCTR ETF (NYSEARCA:SRVR) is a strategy-driven exchange-traded fund (ETF) that offers investors exposure to global developed market REITs and real estate companies in the fast-growing data and infrastructure sector.

The SRVR ETF tracks the Kelly Data Center & Tech Infrastructure Index and it boasts more than $1.2 billion in net assets. It has a total expense ratio of 0.6% per annum and pays distributions that yield 1.1% annually.

Investors in SRVR ETF stock gain access to an internationally diversified portfolio. The fund has about 80% of its assets invested in U.S. REITs. The manager spreads the balance across Europe, Australasia and Asia.

That said, there’s a bit of concentration risk as its 10 largest holdings comprise nearly 79% of the total assets. However, there aren’t too many data center REITs to invest in worldwide, anyway.

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Top holdings include a 17% allocation to the Crown Castle, another 17% allocation to American Tower stock, and 14% in Equinix (NASDAQ:EQIX) stock.

iShares Residential and Multisector Real Estate ETF (REZ)

Expense Ratio: 0.48%

The iShares Residential and Multifactor Real Estate ETF (NYSEARCA:REZ) gives investors more refined and direct access to the U.S. residential sector. Managed by BlackRock (NYSE:BLK), one of the world’s largest asset managers, the REZ ETF invests in U.S. residential, healthcare, and self-storage real estate equities, and has over $1 billion in net assets.

Bullish on the sustained resilience of the U.S. housing sector? Or a strong rebound in healthcare REIT economics post-COVID-19? And a sustained growth in self-storage space demand? Investing in the REZ ETF offers exposure to all three growth opportunities while giving investors some long-term inflation protection.

REZ ETF’s expense ratio of 0.48% annually is reasonably low. It pays quarterly distributions that currently yield about 1.8% annually.

Top holdings include the Public Storage REIT (NYSE:PSA) at 10.4% of the portfolio, followed by Welltower Inc. (NYSE:WELL) at 8.1% while AvalonBay Communities REIT (NYSE:AVB) stock comprises  6% of the ETF’s deployed assets.

Pacer Benchmark Industrial Real Estate SCTR ETF (INDS)

Expense Ratio: 0.6%

Since its inception in 2018, the Pacer Benchmark Industrial Real Estate SCTR ETF (NYSEARCA:INDS) has grown its total assets under management from around $40 million in 2018 to over $320 million today. Industrial REITs attract investor attention for their growth opportunities. The INDS ETF offers investors direct and diversified access to industrial real estate economics. It has an annual expense ratio of 0.6% or $60 per every $10,000 invested in the fund.

Investors may receive quarterly distributions that yield 1.3% annually. The yield is low, but it’s a small bonus for growth-oriented investors seeking capital gains.

The Pacer Benchmark Industrial Real Estate SCTR ETF stock’s year-to-date decline of 22% has been worse than the broader equity market’s fall so far in 2022.

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A general capital flight into consumer defensive names offers contrarian, long-term focused investors an opportunity to buy the dip for above-average future capital gains potential.

On the date of publication, Brian Paradza did not hold (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.

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We believe that investors should strive to own the best names in a particular sector as these companies often have competitive advantageous that will allow it to outperform the competition.

One industry we find appealing is the beer industry, which tends to hold up well even during recessionary environments. Not all beer companies are created equal, so investors should identify the top names in the industry before making an investment decision.

This article will examine three of our favorite beer stocks.

Beer Stocks for Dividends: Constellation Brands (STZ)

Our first pick among beer stocks is Constellation Brands, a leading international alcoholic beverage company. The company is valued at nearly $46 billion and has produced revenue of almost $9 billion over the last year.

Over time, Constellation Brands has become a dominant force in the beer industry. The company’s product portfolio includes Corona, Modelo Especial, Modelo Negra and Pacifico. These products, along with a craft beer lineup, have enabled Constellation Brands to become the third largest beer company in the U.S. and the largest seller of import beers in the country.

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In addition, Constellation Brands often attempts to expand its reach through product innovation, which includes products like Corona Refresca. Modelo Especial is the top grossing imported beer, so the company will launch several new additions to the Modelo lineup as it tries to capitalize on the strength of this brand. New beers to the lineup include Modelo Oro, a premium light beer, and Modelo Ranch Water, a spiked sparkling water.

Constellation Brands has a heavy presence in more than just beer. The company holds many leading wine and spirits brands as well. After selling off non-premium brands, Constellation Brands holds just premium brands names in its portfolio. This includes Robert Mondavi and Kim Crawford in wine and SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey in spirits. The reconfiguration of the portfolio has the company well positioned to lead the premium industry in both wine and spirts.

The company is also looking beyond traditional alcoholic beverages to fuel growth. For example, Constellation Brands has a controlling stake in Canopy Growth Corporation (NASDAQ:CGC). While the future of cannabis infused beverages in the domestic market is murky, Constellation Brands’ stake in one of the top companies in the industry does provide yet another potential avenue for growth.

Business strength has led to excellent results in the business as revenue has nearly tripled over the last decade. Earnings-per-share have increased with a compound annual growth rate of nearly 19% for the last decade.

Despite this long-term success, we project that Constellation Brands can produce earnings growth of 5.5% per year for the next half-decade. This growth rate takes into account the quality of the firm’s product portfolio with the fact that earnings are starting from a high base.

Exceptional business performance has enabled Constellation Brands to increase its capital returns to its shareholders. A dividend was initiated in fiscal year 2016 and it has a CAGR of 9.7% over the last five years. Shares currently yield about 1.3%.

Diageo (DEO)

Our next pick for beer stocks is Diageo, a company that can trace its roots back to 17th century and the oldest family of Scotch whisky distillers. The $107 billion company has generated $16 billion of revenue over the last year.

Diageo’s beer lineup includes Guinness, the top selling stout beer in the world and one of the most iconic brands in the alcohol space. The company has used the popularity of Guinness to bring additional products to market, including Guinness blonde.

Like Constellation Brands, Diageo has an envious portfolio of products aside from just beer. The company has some of the best-selling spirits brands in the world, including Baileys, Captain Morgan, Crown Royal, Johnnie Walker, Ketel One and Tanqueray.

The global alcoholic beverage market is highly fragmented, which could provide the company with ample opportunity to grow its business. Presently, Diageo has a 4% market share, but aims to increase its positioning to 6% by the end of the decade. The company is on track to meet this goal due to its brands.

Helping to achieve this market share target is Diageo’s business in emerging markets. Key markets for the company include China, India and Latin America. The company’s presence in emerging markets should provide tailwinds over time. For example, Diageo experienced organic sales growth of 45%, 23% and 13% in Latin America, Africa and Asia Pacific/China in the first half of 2022. This was ahead of its more developed markets.

Results for the U.K. based company will always be subject to currency exchange rates, but U.S. investors have still seen solid results. Though top-line results are minimal for Diageo over the last decade, revenue has compounded at a rate of 3% annually since 2017. Bottom-line growth has been slightly more robust over this period of time as earnings-per-share have a five- and 10-year CAGR of 7.2% and 4.2%, respectively.

We estimate that the company can grow earnings-per-share at a rate of 8% per year for the next five years given the popularity of its product lineup.

Diageo distributes dividends twice per year to shareholders. The company has raised its dividend for the past eight years in local currency. U.S. shareholders have seen an average increase of 4.2% annually since 2012. Diageo yields 2.2%.

Beer Stocks for Dividends: Molson Coors (TAP)

Our final pick for beer stocks is Molson Coors, which has a market capitalization of $11.7 billion and generated revenue of $10.6 billion over the last 12 months.

Formerly known as Molson Coors Brewing Company, Molson Coors has a rich history that dates back almost 150 years. The company is one of the largest brewers in the country and includes leading brands such as Coors Light, Molson Canadian, Miller Lite, and Coors Banquet. These are some of the most popular beer names in the country, giving Molson Coors a significant competitive edge over peers.

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Recently, however, the traditional beer industry has faced headwinds as younger consumers have trended toward craft beer. The industry giants were slow to react to these changing habits, but Molson Coors is taking steps to improve its standing in the craft beer business. For example, the company’s Blue Moon lineup has become very popular in North America, with the brand owning a high single-digit market share for the region.

Molson Coors also made several acquisitions over the past few years that have brought additional craft beers and ciders into the fold.  The company added Aspall Brewing, a leading maker of premium ciders, in 2018. The company followed this acquisition up by buying Atwater Brewery, the largest craft brewery in Detroit, in 2020.

Molson Coors sales more than doubled over the last decade, though this is skewed by the addition of MillerCoors in 2016. The last five years saw revenue fall nearly 2% per year. Bottom-line performance was nearly as poor as earnings-per-share are up marginally since 2017.

However, the company has stopped making certain low-premium names, including High Life Light and Keystone Ice, that weren’t resonating with customers in an effort to focus on its core brands. This, combined with a heavier emphasis away from legacy beer names, should provide some lift to results going forward. We project that Molson Coors can grow earnings-per-share by 4% annually through 2027.

Molson Coors suspended its dividend in mid-2020 as the company faced the fallout from the Covid-19 pandemic. The company did reinstate in late-2021, albeit at a lower amount than its previous payment. Given its recent actions with regards to the dividend, investors might be wary of owning Molson Coors. The good news is that shareholders did receive a 10.5% increase in the payment earlier this year. Shares yield 1.9% at the moment.

Final Thoughts

The beer industry has undergone changes over the past few years, with new companies becoming leaders in the category. The business is fairly recession-resistant and has proven successful over the long-term.

Constellation Brands, Diageo and Molson Coors are three of our favorite names in the industry. The first two have captured significant market share and also offer products beyond just beer that are leaders in their own categories. Molson Coors continues to focus primarily on beer and has faced some challenges due to changing consumer tastes. That said, the company has made strides to catch up and its legacy beer business continues to hold a top spot.

All three names offer a dividend yield near or above the average yield of the S&P 500.

For investors looking for growth and income from the beer industry, any of these names could be a solid addition to their portfolio.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Investing in retirement requires careful thought and preparation. Investors looking for retirement stocks not only need to continue to grow their nest egg, but also protect their portfolio from inflation, market downturns and unexpected events.

As such, investors need to seek out stocks of established companies that have a track record of delivering consistent, reliable returns to shareholders. Retirees also need to consider whether a stock pays a dividend and if the company buys back its own shares on a regular basis, as these can each add value.

Investors in retirement should also seek out stocks that will continue to perform strongly during an economic downturn or recession. There’s a lot to think about and many factors to weigh. In this article, we help retirees figure it out.

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Here are three of the best retirement stocks to buy for long-term wealth.

Apple (AAPL)

Consumer electronics giant Apple (NASDAQ:AAPL) is a great business and equally great long-term investment. There are many ways that Apple provides value to its shareholders.

Driven by consistently strong quarterly earnings and profits, Apple’s share price has gained 283% over the past five years; the company has split its stock on two separate occasions in the past 10 years; the stock pays a quarterly dividend that currently yields 0.6%, or 92 cents per share annually; and Apple buys back more of its own stock than any other publicly traded U.S. company.

At the end of April this year, Apple announced that it will buyback $90 billion of its own stock in 2022 and raised its quarterly dividend by 5%. Last year, Apple spent $85.5 billion repurchasing its own shares, and spent another $14.5 billion on dividends for shareholders.

All of these benefits make AAPL stock a must own for any portfolio. Until this year’s market downturn, Apple also was the only company in the world to have a $3 trillion market capitalization, making it the most valuable publicly traded company on Earth.

Given its incredibly strong financial position and the myriad of ways in which it rewards shareholders, Apple stock should be a top choice of retirees.

JPMorgan Chase (JPM)

For another reliable, long-term investment look no further than JPMorgan Chase (NYSE:JPM), which is the largest bank in the world by market capitalization. With nearly $4 trillion of total client assets, JPMorgan Chase is involved in all aspects of banking, from consumer retail branches, to corporate lending, investment banking and trading.

The company is a global leader in the world of finance and an earnings machine, having posted a record $48.3 billion in profit last year. JPM stock has also been a consistent winner, having gained over 400% since the 2008 financial crisis, including a 69% gain since its March 2020 low.

JPMorgan Chase also pays a strong quarterly dividend yield of 3%, which is good for a payout of $1 a share every three months. And, like the other names on this list, the bank has been aggressive about buying back its own stock, authorizing share repurchases of $30 billion for this year.

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While the bank performs strongly in good economic times and bad, as the largest lender in America, JPMorgan Chase does particularly well when interest rates are rising as they are now, as it enables the bank to charge more interest on products ranging from credit cards to home mortgages. If you’re looking for dependable retirement stocks, look no further than JPMorgan Chase.

Berkshire Hathaway (BRK-B)

Former hedge fund manager turned analyst Whitney Tilson calls Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) “the No. 1 retirement stock in America.” And he might be right. Helmed by legendary investor Warren Buffett, Omaha-based Berkshire Hathaway has a lot to recommend it.

The holding company is incredibly diversified, owning railroads, insurance companies, the Dairy Queen restaurant chain and the Fruit of the Loom underwear maker. Additionally, Berkshire Hathaway has a monster stock portfolio that currently totals more than $350 billion.

Top stock holdings in the portfolio include stalwart companies such as American Express (NYSE:AXP) and Coca-Cola (NYSE:KO).

Impressively, BRK-B stock has consistently outperformed the benchmark S&P 500 index for the past 40 years. Since the beginning of 2020, the stock has gained 38% compared to a 27% return for the S&P 500. The company’s stock tends to perform its best when markets are at their worst. Case in point, Berkshire Hathaway’s share price is up 4% this year, compared to a 13% decline in the S&P 500.

While Berkshire Hathaway doesn’t pay a dividend, Warren Buffett does buy back the company’s stock when he feels it is undervalued. In 2021, Berkshire Hathaway repurchased a record $27 billion of its own stock, which helped to bolster the share price. This is a rock solid investment that will help retirees sleep soundly at night knowing that it’s in their portfolio.

On the date of publication, Joel Baglole held long positions in AAPL, BRK-B and AXP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Investors focusing on a strategy of dividend growth stocks have performed better than some broader market indices. For instance, the Dividend Aristocrats have declined about 5.3% year-to-date, much better than the S&P 500 or the Nasdaq. The S&P 500 is down about 13.1%, and the Nasdaq has decreased about 22.9% and is in a bear market.

High-quality stocks paying an increasing dividend have arguably done well. However, investors are selling quality along with riskier stocks. Hence, they may want to take this opportunity to buy the dip.

Here, we discuss three quality dividend growth stocks that are undervalued today.

Undervalued Dividend Growth Stocks: Lowe’s (LOW)

Lowe’s (NYSE:LOW) was founded in 1921 and today is one of the largest home improvement retailers in North America. The company has approximately 2,200 stores in the U.S. and Canada. Lowe’s sells lumber, hardware, appliances, flooring, lawn and garden items, lighting and plumbing, etc. The company also provides services to consumers. The company sells leading national brands and well-known private label brands.

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The company generated $95,487 million of revenue in the last 12 months, of which around 75% is from retail consumers and about 25% is from professional contractors. Lowe’s has gained roughly 10% of the nearly $1 trillion home improvement market, placing it second after Home Depot (NYSE:HD).

Lowe’s continues to grow organically and by adding stores. The company benefits from new home construction because professional contractors buy more materials. However, rising mortgage rates usually slow new home construction, but extant homeowners tend to remodel and improve homes, benefitting Lowe’s sales. Furthermore, Lowe’s is profiting from sub-4% unemployment rates.

Lowe’s is well-known for its 60-years of dividend increases, placing it on the Dividend Kings list. The company is also a Dividend Aristocrat. The retailer is known for its high dividend growth rate of about 17.3% in the trailing five years and 18.8% in the past 10 years. The conservative payout ratio of 24% leaves room for more dividend increases. Currently, the forward dividend yield is approximately 1.64%, just below the average in the past five years of 1.73%.

Lowe’s stock price has been caught in the downward trend of the broader stock market with a ~22.4% year-to-date (YTD) decline. The forward price-to-earnings (P/E) ratio has decreased to about 14.4X, below the range in the past five years and 10 years.

T. Rowe Price (TROW)

T. Rowe Price (NASDAQ:TROW) was founded in 1937. Today, it is one of the largest active asset managers in the U.S. It is also one of the few large publicly traded asset managers.

The firm is known for its 401(k) and individual retirement account plans. Besides retirement plans, T. Rowe Price offers mutual funds to retail investors, institutional accounts and sub-advisor services.

Total revenue was about $7,708 million in the past 12 months. As an asset manager, the firm charges a fee for assets under management (AUM). If the AUM is higher due to market action and fund inflow, then T. Rowe Price’s revenue is greater and vice-versa.

At the end of Q1 2022, the company had about $1.55 trillion in AUM. However, T. Rowe Price’s revenue and earnings are sensitive to the stock market.

The firm grows by adding more assets and expanding its distribution. Notably, the company’s funds tend to perform well over the long term, attracting investors and money. In the past 10 years, 85% of the equity funds outperformed the Morningstar median, 67% exceeded the passive peer median, and 72% beat their benchmark. In addition, T. Rowe Price does well for fixed-income and multi-asset funds.

T. Rowe Price is a Dividend Aristocrat with a 36-year streak of dividend increases. The relatively low payout ratio of 33.9% means more future dividend growth. The company often increases the dividend by double-digits, and the trailing 10-year growth rate is ~13.3%, and the 5-year growth rate is ~14.9%.

The stock price recently was down about 34% YTD to $128.59, near the 52-week low and well-off the 52-week and all-time high of $224.56. Simultaneously, the valuation has fallen to about 12.3X, below the range in the past five years and 10 years. T. Rowe Price is an undervalued market leader with a nearly 4% dividend yield.

Undervalued Dividend Growth Stocks: Pfizer (PFE)

Pfizer (NYSE:PFE) traces its history back to 1849. The company has evolved into one of the largest global pharmaceutical companies.

Pfizer reorganized over the past few years into an R&D-based company. The company formed the GSK Consumer Healthcare Joint Venture in 2019 with GlaxoSmithKline (NYSE:GSK), including Pfizer’s over-the-counter business. Pfizer owns 32% of the JV. Additionally, Pfizer spun off its Upjohn segment and merged it with Mylan forming Viatris for its off-patent, branded, and generic medicines in 2020.

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Total revenue has more than doubled from 2020 to $92,433 billion in the past 12 months because of Pfizer’s Covid-19 vaccine, Cominranty, and the anti-viral, Plaxlovid. Furthermore, Pfizer has multiple blockbuster drugs with $1 billion-plus in revenue, including the Prevnar vaccine, Ibrance, Elquis, Xtandi, Vyndaqel/Vyndamax, Xeljanz, and Enbrel.

Pfizer grows organically through additional indications for existing drugs, and M&A. Pfizer has bought smaller companies with promising molecules and compounds.

Most recently, Pfizer bought Arena Pharmaceuticals for $11 billion in cash for potential therapies in immune-inflammatory diseases. Pfizer has also acquired Array BioPharma and Trillium. In addition, the company announced the acquisition of Biohaven Pharmaceutical for $11.4 billion for oral migraine therapies.

Pfizer is a Dividend Contender with 12 consecutive annual dividend increases. The forward dividend yield of about 3% is supported by a 35% payout ratio and robust free cash flow. As a result, Pfizer tends to raise the dividend at a low-to-mid single-digit rate.

Despite the market correction, Pfizer’s stock price is up about 6.38% for the year. But the rapid rise in revenue and earnings means the forward earnings multiple is 8x for this market leader. In addition, Pfizer will likely benefit from its mRNA vaccine technology and M&A strategy for long-term growth.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. Prakash Kolli holds a long position in TROW.

The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.

Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, InvestorPlace, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.0% and 100 (81 out of over 9,459) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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• These seven high-yield retirement stocks to buy are among the top picks to build a retirement portfolio that will provide a stable income.
• Amcor (AMCR): Is a global leader in developing and producing responsible packaging.
• 3M Company (MMM): This conglomerate has a company history of 120 years.
• AbbVie (ABBV): A global biopharmaceutical company with a wide range of therapeutic areas.
• Cardinal Health (CAH): An integrated healthcare services and products company operating intentionally.
• Chevron (CVX): This energy giant has several big projects underway.
• Exxon Mobil (XOM): Here’s another global oil giant with a rich company history of 152 years.
• International Business Machines (IBM): The iconic technology company transforms the past, present, and future of technology.

Building a retirement portfolio is a challenge. One has to compensate for the loss of income and it is a process that takes time and dedication. However, it does not need to be a complex decision as the need for a low-risk and income-oriented portfolio is clear. Today, I will discuss seven high-yield retirement stocks to buy to build your nest egg now.

These seven stocks are dividend aristocrats, a list of high-yield stocks suitable for a retirement portfolio as they are among the “65 members of the S&P 500 that haven’t just paid dividends for at least 25 consecutive years – they’ve raised their dividends for a minimum of 25 straight years.”

All these companies have strong balance sheets, well-established businesses, very attractive dividend yields, and can sustain economic and business cycles with capital appreciation. For simplicity, the following data is referred to at closing stock prices on May 20, 2022.

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Here are my top seven high-yield retirement stocks to buy for your nest egg:

High-Yield Retirement Stocks: Amcor (AMCR)

• Sector: Consumer Cyclical
• Industry: Packaging & Containers
• Forward Dividend & Yield: $0.48 (3.68%)

Amcor (NYSE:AMCR) is a producer and seller of packaging products in Europe, North America, Latin America, Africa, and the Asia Pacific regions. The company operates through two segments: Flexibles and Rigid Packaging. Amcor provides packaging solutions for many products, such as beverages, food, healthcare, home care, personal care, and pet care.

This global leader in responsible packaging has about 46,000 employees, with business operations in more than 40 countries and revenue of $13 billion. Additionally, the company is focused on sustainability by making packaging that is recyclable and reusable.

Amcor has 39 years of a dividend increase and a forward payout ratio of 57.81%. The dividend frequency is quarterly. The expected 3 to 5 year earnings per share (EPS) growth is 9.82%.

3M Company (MMM)

• Sector: Industrials
• Industry: Conglomerates
• Forward Dividend & Yield: $5.96 (4.09%)

3M Company (NYSE:MMM) is a diversified technology company worldwide, operating through four segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. The company was founded in 1902, giving it 120 years of business history. The list of 3M Company products is endless, with 19,079 items on its official website providing solutions for various industries, such as electronics, energy, manufacturing, automotive, communication, and transportation.

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3M Company has 65 years of dividend increases with a forward payout ratio of 52.74% and a quarterly dividend frequency. The expected 3-5 year EPS growth for such a mature company is not negligible, as it stands at 9.5%.

High-Yield Retirement Stocks: AbbVie (ABBV)

• Sector: Healthcare
• Industry: Drug Manufacturers — General
• Forward Dividend & Yield: $5.64 (3.78%)

AbbVie (NYSE:ABBV), is a manufacturer and seller of pharmaceuticals worldwide. It has an extensive range of products for immunology like Humira and Skyrizi. In the neuroscience field, it offers Botox, Celexa and Fetzima. Additionally, the company has treatments for oncology, virology, eye care, aesthetics, and other specialty areas.

The firm is investing in big data technology, precision medicine, and in genetics and genomics.

AbbVie has 50 years of dividend increases with a forward payout ratio of 46.8% with a quarterly dividend frequency. The expected 3 to 5 year EPS growth is 2.54%.

Cardinal Health (CAH)

• Sector: Healthcare
• Industry: Medical Distribution
• Forward Dividend & Yield: $1.98 (3.55%)

Cardinal Health (NYSE:CAH) is an integrated healthcare company providing services and products in the United States, Canada, Europe, and Asia. It operates in two segments: Pharmaceutical and Medical.

The company provides services for a wide audience, consisting of the home care sector, hospital pharmacy, community laboratory, health centers, retail independent pharmacy, ambulatory surgery center supplies, and solutions, among others. Some of its pharmaceutical products cover sectors like biosimilars, influenza, nuclear medicine, and specialty drugs.

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Cardinal Health has 36 years of dividend increases with a very healthy forward payout ratio of 35.77%. The dividend frequency is quarterly. The business outlook is stable and this is reflected in the expected 3 to 5 year EPS growth of 1.62%.

High-Yield Retirement Stocks: Chevron (CVX)

• Sector: Energy
• Industry: Oil & Gas Integrated
• Forward Dividend & Yield: 5.68 (3.29%)

Chevron (NYSE:CVX) is an integrated energy and chemicals company with operations worldwide. The company operates in two segments: Upstream and Downstream. It was founded in 1879, 143 years ago.

The company has important projects, like the Gorgon Project, one of the world’s largest natural gas projects and a very important one for the Australian economy. It also operates the Wheatstone project, one of Australia’s largest resource developments; the Jack St. Malo project in the U.S. Gulf of Mexico; the Big Foot project in the U.S. Gulf of Mexico; the Mafumeira Sul project in Angola; and the Permian Basin project, just to name a few.

Chevron has 35 years of a dividend increase and a forward payout ratio of 38.95% It pays a quarterly dividend. Additionally, the company is expected to have a 3 to 5 year EPS growth of 11.55%.

Exxon Mobil (XOM)

• Sector: Energy
• Industry: Oil & Gas Integrated
• Forward Dividend & Yield: $3.52 (3.83%)

Exxon Mobil, (NYSE:XOM) along with Chevron, has been in the best performing sector in 2022: the energy sector. When you invest in the long-term, like building a diversified retirement portfolio, having stocks that have appreciated significantly offers additional investment opportunities. It is not a bad idea to sell some shares and book profits while having the remaining ones continue to build wealth and recurring income.

Exxon Mobil explores and produces crude oil and natural gas in the United States and internationally, operating through Upstream, Downstream, and Chemical segments. It was founded in 1870, 152 years ago.

The firm is committed to achieving net-zero emissions from its operating assets by 2050. It has 38 years of dividend increases and a forward payout ratio of 42.19%. The dividend frequency is quarterly.

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The expected 3 to 5 year EPS growth of 20.41% is very high, signaling strong business prospects.

High-Yield Retirement Stocks: International Business Machines (IBM)

• Sector: Technology
• Industry: Information Technology Services
• Forward Dividend & Yield: $6.60 (5.14%)

International Business Machines (NYSE:IBM) is a provider of integrated solutions and services worldwide and operates through four business segments: Software, Consulting, Infrastructure, and Financing. The firm was founded in 1911, which gives them 111 years of business activity.

The technology firm provides many tools for businesses, such as Hybrid Cloud, Public Cloud, Blockchain, IBM Watson, Security, Data & analytics, and Quantum computing, among others. Some of the services IBM provides offer solutions for different sectors, including Financial Services, Consumer goods, Energy, Retail, and Telecommunications.

The dividend has increased for 28 years, and the firm has a high forward payout ratio of 62.49%.

The quarterly dividend frequency is ideal, like all other high-yield retirement stocks to buy on this list. Additionally, the 3 to 5 year expected EPS growth of 9.02% is strong for such a large and mature technology company.

On the date of publication, Stavros Georgiadis, CFA  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.

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• Undervalued retail dividend stocks are available after the recent selloff.
• Gap (GPS) is a clothing and accessories retailer that operates worldwide.
• Dick’s Sporting Goods (DKS) is a sporting goods retailer that started out as a fishing-focused shop more than 70 years ago.
• Best Buy (BBY) is a leading consumer electronics retailer that operates in the United States and Canada.

Inflation worries and fears about a potential recession have caused many retail stocks to pull back in recent months.

Both low and high quality retail stocks have sold off, which does not seem justified, and which has resulted in buying opportunities in some of these retail stocks.

In this article, we’ll showcase three retail industry stocks that promise attractive total returns over the coming years.

Undervalued Retail Dividend Stocks: Gap (GPS)

Gap (NYSE:GPS) is a clothing and accessories retailer that operates worldwide, although its biggest market is its home market, the U.S. Its brands include Gap, Banana Republic, Old Navy and several more.

The company cut its dividend during the pandemic, but it did not have an overly reliable dividend growth track record in previous years, either. In 2022, however, the company raises its dividend from 12 cents per share to 15 cents per share per quarter.

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The company reported its most recent quarterly results in early March. During the quarter, the company saw its revenue rise by 3% year over year, which was better than what the analyst community had expected. The company reported a net loss of 2 cents per share, which also beat estimates.

For the current year, earnings-per-share are expected to come in between $1.85 to $2.05, or $1.95 at the midpoint. Unlike many other retailers, Gap’s strongest quarter is not Q4, but usually Q2, as its product lineup is more weighted toward “summer” wear.

Today, Gap trades at just 5x net profits, which is an incredibly low valuation both in absolute terms and relative to how the company was valued in the past. We believe that a meaningfully higher valuation, at a high single-digit earnings multiple, is justified.

Gap is not a high-growth company, but we still believe that there will be some earnings-per-share growth in the long run. Buybacks will likely play a role in that, as Gap has bought back more than 20% of the company’s float over the last decade.

Going forward, we believe that Gap will generate annual total returns of at least 10%. The dividend yield alone is a little over 6%, and earnings-per-share growth and multiple expansion should at more than 4% a year in the long run, although Gap’s shares could remain volatile in the near term as the market is jittery due to inflation and recession concerns.

Dick’s Sporting Goods (DKS)

Dick’s Sporting Goods (NYSE:DKS) is a sporting goods retailer that started out as a fishing-focused shop more than 70 years ago. Its store concept includes a variety of shops-in-shop, dedicated to team sports, golf, fitness, outdoor equipment and so on.

During the pandemic, when many consumers sought ways to entertain themselves without travel, going to the movies or malls, and so on, Dick’s Sporting Goods performed exceptionally well. Its sales soared, and thanks to operating leverage, earnings-per-share hit new record levels in both 2020 and 2021. It is not surprising that the environment will not remain as great as it was in 2021 for outdoor and sporting goods retailers, which is why a decline in profits is forecasted for the current year.

That being said, Dick’s Sporting Goods should still be very profitable this year. During the most recent quarter, the company reported revenue growth of 7% year-over-year, and its earnings-per-share of $3.64 beat estimates easily. Throughout the current year, comparables will get more difficult, and at the same time, rising inflation will likely put some pressure on Dick’s margins.

Another factor to consider is that consumers will now be more eager to spend on travel, dining out, etc. as the pandemic is coming to an end, which will likely reduce the amount of money they spend on sporting and outdoor products. This will also be a factor in this year’s expected earnings-per-share decline. That being said, earnings-per-share are still forecasted at $12.50, which is significantly more earnings-per-share than the company generated prior to the pandemic.

In recent years, DKS has bought back shares at a rapid pace, repurchasing more than 10% of its float during 2021 alone. We do believe that buybacks will be meaningful in the coming years as well, which should be a tailwind for earnings-per-share going forward.

DKS currently offers a dividend yield of 2.7%, and when we account for the forecasted earnings-per-share growth of 5% a year and the multiple expansion tailwind potential (5%+ a year), 12%+ annual returns could be achievable here.

Undervalued Retail Dividend Stocks: Best Buy

Best Buy (NYSE:BBY) is a leading consumer electronics retailer that operates in the United States and Canada. The company has more than 1,000 retail locations, with around 90% of those being located in the U.S. There used to be operations in Mexico as well, but Best Buy exited that market in 2021. The company has raised its dividend for 19 years in a row, which doesn’t make it a Dividend Aristocrat yet, but which is still a very solid dividend growth track record.

Best Buy’s most recent quarterly results were reported in early March. During the quarter, the company saw its revenue decline by a couple of percentage points, partially due to a tough comparison with a strong quarter in the previous year. The company still generated attractive earnings-per-share of $2.73 for the quarter, well above pre-pandemic levels.

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This year, it is expected that profits will decline versus 2021, due to the aforementioned tough comparables. Still, 2022 should be the second-best year in Best Buy’s history, as earnings-per-share guidance is for ~50% growth as compared to 2019, before the pandemic.

Best Buy is not opening a significant number of new stores. Instead, earnings-per-share growth is being boosted by buybacks. Over the last decade, Best Buy has bought back around one-third of its share float. With buybacks continuing and some tailwinds from growing same-store sales, we believe that an earnings-per-share growth rate of 5% to 6% is realistic in the long run.

When we add the dividend, which currently yields 4.8%, we get to total returns in the 10% range even before accounting for potential multiple expansion tailwinds. Since we believe that the current valuation of around 8.5x net profits is lower than justified, total returns could easily reach 12% a year going forward, factoring in some upside potential to Best Buy’s valuation.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Buying quality retirement stocks can provide both safety and growth to keep savings goals on track
• AbbVie (ABBV): With revenue concerns abating, it’s time to take a fresh look at this dividend king.
• Amgen (AMGN): This biotech giant has an ideal combination of in-market products and products in its pipeline.
• Apple (AAPL): Make this tech giant prove that the bears are right before abandoning its stock.
• Dollar General (DG): Inflation and a weakening economy will help keep the revenue coming.
• Western Union (WU): In tough times, the company’s reliability helps keep investors afloat.
• Schwab U.S. Dividend Equity ETF (SCHD): An ETF that tracks the Dow Jones U.S. Dividend 100 index.
• ProShares S&P 500 Dividend Aristocrats ETF (NOBL): This ETF invests exclusively in the elite group of companies known as dividend aristocrats.

For many years, the model for finding retirement stocks to buy got clouded with some FOMO (fear of missing out) and YOLO (you only live once). Investors got conditioned to years where a 20% or higher return was the normal.

However, to borrow an axiom from golf, 2022 is turning out to be a stark reminder to investors that “sometimes par is a really good score.” Whatever happens over the next few years (and I’ll always remain a cautious optimist), the new reality is that investors who get high single-digit growth will be doing well.

One way to boost the total return of your portfolio is with quality dividend stocks. Reinvesting these regular dividends is a simple way to boost the total return of your portfolio. That makes them the ideal choice for long-term retirement portfolios where safety and security should be the top priority.

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So let’s get right to it. Here are seven retirement stocks to buy that combine modest growth with safe dividends.

AbbVie (ABBV)

The first of the retirement stocks to buy is AbbVie (NYSE:ABBV). Concerns about expiring patents for its flagship drug, Humira, gave analysts reasonable concerns about the company’s revenue outlook. However, the company’s most recent earnings report should quell those concerns.

First the company is showing that sales of Humira in Europe (where Humira has lost its patent protection) are not declining as rapidly as expected. Second, AbbVie has in-market replacements for Humira that are delivering strong year-over-year revenue growth.

My InvestorPlace colleague Josh Enomoto also reminded investors that AbbVie is likely to benefit from its acquisition of Allergan, which put Botox into the company’s product portfolio.

Investors also get a stock that remains up 11% for the year and recently joined the ranks of dividend kings. This means it has increased its dividend each year for 50 consecutive years. And ABBV stock has a dividend yield that currently is 3.73%.

Amgen (AMGN)

Sticking in the biotech space, Amgen (NASDAQ:AMGN) is another company that is up 10% for the year. One reason for this is that investors are no longer chasing after speculative biotechs that were competing in the Covid-19 vaccine race.

That is putting attention back on companies that are delivering revenue and earnings today and will continue to do so tomorrow. That’s Amgen. The company’s portfolio focuses heavily on treatments for heart disease and cancer which means demand will stay high.

And, as Tezcan Gecgil points out, the company is building a new manufacturing plant in North Carolina. With supply chains likely to become shorter in future years, this should aid the company’s efficiency as well as lower costs.

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Amgen has increased its dividend in each of the last 11 years and currently has a dividend yield of 3.14%.

Apple (AAPL)

When considering retirement stocks to buy, you may challenge my decision to put Apple (NASDAQ:AAPL) on this list. There are bearish views of the “FAANG” stock. And AAPL stock is down 22% so far in 2022.

However, much of the concern about Apple’s growth is based on its iPhone. But the company has shown over the last few years that its Services division is responsible for a good bit of the company’s growth in recent years.

And while Apple doesn’t offer a particularly impressive dividend yield, it has been increasing its dividend in each of the last 11 years. Plus, the company has a history of share buybacks.

That’s why you should make Apple prove that it’s not a great long-term growth stock before you abandon it.

Dollar General (DG)

Inflation is taking a bite out of consumer’s take-home pay and that is showing up in the results of many retailers. And that includes discount stores such as Dollar General (NYSE:DG). I’m writing this a few days before the company reports earnings. If the trend continues, Dollar General is likely to deliver guidance that reflects the effect that inflation is having, and will continue to have on its business.

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However, the company has a business model that puts its store locations in areas that are not easily serviced by the larger chains. This is likely to give the company a distinct advantage as consumers will be looking to find ways to save money on gas as well as on their groceries. And Dollar General is putting more emphasis on allowing customers to use their stores as a one-stop location, which should be an additional catalyst.

Western Union (WU)

Many economists are predicting a recession in the United States if not in 2022, then sometime in 2023. If you share that view, then Western Union (NYSE:WU) may be worth a look. The company remains a reliable option for the underbanked or unbanked. This group may rely on the company’s ability to facilitate peer-to-peer money transfers as well as providing bill payment services. The company is also embarking on an internal strategic review, which may lead to greater efficiency in the company’s operations.

WU stock is down 6% this year and currently has a consensus Hold rating. However, the stock is still a favorite among institutional investors. And it currently has a dividend yield of over 5% with a seven year streak of raising its dividend.

Schwab U.S. Dividend Equity ETF (SCHD)

An alternative approach to finding retirement stocks to buy is to look at dividend-focused exchange-traded funds (ETFs). I have two on this list. The first is the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD).

This ETF tracks the performance of the Dow Jones U.S. Dividend 100 index. This means the fund invests in high-yielding U.S. stocks that are financially sound and have a history of paying consistent dividends. In fact, one of the fund’s largest holdings is Amgen which is also on this list of retirement stocks.

This is reflected in the fund’s dividend yield which is over 3% (3.04%) at the time of this writing. The fund also has what an amazingly low expense ratio of just 0.06%. That means that for a $10,000 investment investors pay just $6.

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The fund is down about 7.5% for the year. However, much of that loss has occurred with the broad selloff in mid-May.

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

The last security on this list of retirement stocks to buy is the ProShares S&P 500 Dividend Aristocrats ETF (NYSEARCA:NOBL). As its name implies, the benefit of this fund is that it invests exclusively in companies that are part of the dividend aristocrats club. This means that the companies have increased their dividends for at least 25 consecutive years. Companies that prioritize a dividend in this fashion are much more likely to prioritize the dividend.

Another feature of the fund is that it does not allow any sector carry more than 30% of the weighting in the fund. The top three weighted sectors in the fund are consumer staples, industrials and materials.

The fund has an expense ratio of 0.35%, which is considered a bit expensive. And it has not been spared from the market selloff. The fund is down 10% in 2022.

On the date of publication, Chris Markoch had a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• It’s a good time to look for retirement stocks, and these seven are good, reliable choices.
• Alico (ALCO) has a compelling but unusual business as a holding company for agribusiness and land management assets.
• BCB Bancorp (BCBP) is a regional bank headquartered in New Jersey that will benefit from wider margins and continued growth.
• Global Partners LP (GLP) is a limited partnership that buys, sells, stores and transport gasoline to various retailers across its service territory.
• Hess Midstream LP (HESM) is another limited partnership but is in the pipeline business, which will continue to thrive.
• OGE Energy (OGE) has two businesses as an electric utility and a natural gas pipeline company.
• Pangea Logistics (PANL) is a new breed of logistics company that currently focuses on dry bulk shipping.
• Sisecam Resources LP (SIRE) is major soda ash producer, a material used in smelting alumina metals and lithium.

When the markets turn down, it’s a good time to start thinking long term. Bull markets and their heady last days can certainly be exciting as everything just keeps going up. But long-term thinking is in order now, and that means finding quality retirement stocks that offer growth as well as solid dividends.

Dividends are the quiet power behind compounding. Three or four percent may not seem like a game-changer given the last decade of growth, but it’s a powerful tool year after year.

It’s also helped along by quality companies that have built their businesses and control solid niches. That means durable growth on top of steady income.

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Also bear mind that a few energy-focused companies on the list are limited partnerships. That means they operate as a tax-advantaged entity, like real estate investment trusts (REITs). They have to share their net profits with their shareholders as a form of dividends, so their dividends are usually higher than average.

Alico (ALCO)

Land, they’re not making any more of it. That has been the line about real estate for decades.

Alico (NASDAQ:ALCO) understands this well. It has land that it leases out for ranchers. Lands that it leases for orange groves. And other land that has oil and natural gas wells on it. ALCO has 84,000 acres of land in Florida, 49,000 of which are dedicated to orange groves.

The company basically operates like a REIT for raw land. It doesn’t have to improve anything and can also hold plots in reserve for conservation tax credits. It’s a simple business that has been in operation for six decades, so it knows what it’s doing.

ALCO stock has gained almost 13% year to date, and it also comes along with an attractive 4.9% dividend.

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

BCB Bancorp (BCBP)

Banks stocks have been hammered since the beginning of the year. But a lot of the headlines go to the big national banks with their massive trading desks, investment banking arms and huge reach.

BCB Bancorp (NASDAQ:BCBP) isn’t one of those. And that’s why it made this list of retirement stocks. It’s a regional bank with office across New Jersey and eastern New York. That’s a very good market for mortgages, refinancing and the kind of meat and potatoes business traditional banks no how to make money with.

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Rising rates isn’t bad for banks, because it gives them more margin to play with when lending money or setting credit card interest. And it shows in BCBP stock performance; it has gained 21% year to date yet still trades at a price-to-earnings ratio (P/E) of 9. And it has a solid 3.4% dividend.

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

Global Partners LP (GLP)

One inflationary factor that everyone feels is the rising price of gasoline. Many people are upset that gas costs are now over $4 a gallon in every state. But compared to many places in the world, we still have it pretty good. And the nations where gas is cheaper than it is here aren’t likely immigration destinations.

Also bear in mind that most service stations aren’t making a killing because they have very slim margins on their gasoline revenue. But one business that will continue to see consistent demand is the wholesale and transport companies like Global Partners LP (NYSE:GLP).

GLP operates from 21 terminals in the Northeast and then transports fuel to businesses, retailers and resellers. Demand remains high for fuel, especially as summer driving trends come into play. Construction, farming, holiday travel all pick up in the summer.

GLP has been in this business for more than 75 years, so it’s a seasoned veteran of the pricing and supply/demand vagaries that are permanent factors in the fuel business.

The stock has gained 21% year to date, and along with that is a big 8.4% dividend.

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

Hess Midstream LP (HESM)

Another LP in the energy space, Hess Midstream LP (NYSE:HESM) is also driven more by demand than price. Midstream companies are generally pipeline companies that are moving natural gas and oil from fields to ports, tank farms or refineries.

Unlike most of the oil market, midstream players make money on volume, not price. The more product that flows through their pipes, the more money they make.

While prices may have some effect on fuel demand, the economy isn’t showing a lot of signs of weakness here. That means energy demand will continue, especially from U.S. fields.

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HESM stock is a relative outperformer, gaining nearly 12% year to date. It also has a 7.4% dividend, which is pretty tidy return year in and out. Plus, midstream companies are more stable than upstream exploration and production companies.

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

OGE Energy (OGE)

Another twist on the energy industry is the conservative path. Utilities. OGE Energy (NYSE:OGE) is an Oklahoma electrical utility that services some of Arkansas as well. It has natural gas midstream business as well.

That gives investors a taste of the risk in the unregulated energy business. And it’s bolstered by a conservative, predictable utility operation to keep cash flow steady.

It’s an attractive combination, especially in natural gas-rich Oklahoma. It has an $8 billion market cap, so it’s not a massive player, but it has carved out a couple very successful niches.

OGE stock has returned almost 5% year to date, with a 4.1% dividend as well. And its P/E is slightly above 8.

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

Pangea Logistics (PANL)

This supply chain crisis is one for the ages, to be sure. The amount of things that have to go wrong simultaneously — and did — is amazing. But here we are.

Some of the trouble with logistics management is that systems are pretty antiquated, so when things started to go wrong, you couldn’t just flip a button or switch to keep chaos at bay.

Pangea Logistics (NASDAQ:PANL) is a somewhat new name in the dry bulk shipping business, going public in 2013. But it’s run by experienced shippers that have been in the game for decades. PANL focuses on dry bulk shipping — think ore, grain, coal, steel, any cargo that’s “dry” — and also does some work upgrading and build ports. It’s also a leader in high Arctic logistics, which is becoming more attractive because it would cut shipping times significantly. Think of this as one of those retirement stocks that you can buy now and leave it alone for decades.

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PANL stock only has a $294 million market cap but it’s in the right place at the right time. The stock has gained 69% year to date, it has a 5% dividend, and it trades at a P/E of 3.5.

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

Sisecam Resources (SIRE)

Whenever you start looking deeply into an industry, you realize there are companies that provide an essential service to the industry that few people outside of it even realize is a real business.

Sisecam Resources (NASDAQ:SIRE) is one of those companies. Granted, it only has a $368 million market cap, but this soda ash producer is in the center of the aluminum manufacturing business as well as the lithium battery business. You see, soda ash is used to smelt metals in the aluminum family as well lithium. That’s a pretty good business. Think about the next time you buy a 12-pack of sodas or adult beverages.

And its lithium business is certainly going to stay under heavy demand for many years to come. Its profile may well grow for green investors as well. Also, given its size, it may well end up a premium takeover target at some point.

SIRE stock has gained almost 12% year to date, and it also has a whopping 10.8% dividend. Its P/E sits below 10.

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

 On the date of publication, Louis Navellier has no position in any of the stocks in this article. 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.

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• Although the market turmoil may have investors scrambling for cover, these retirement stocks can likely withstand the heat.
• Brookfield Infrastructure (BIPC): One of the largest owners and operators of critical global infrastructure networks, Brookfield presents unbeatable relevance.
• Duke Energy (DUK): A classic name among retirement stocks, Duke Energy’s pertinent business and compelling coverage map make it a worthwhile idea.
• American Electric Power Company (AEP): A massive electric utility firm covering 11 states, AEP commands permanent relevance among retirement stocks to buy.
• Merck (MRK): A powerhouse in the big pharmaceutical industry, Merck should benefit from its enviable product portfolio.
• AbbVie (ABBV): As society gradually returns to normal, AbbVie’s Botox acquisition should make ABBV an enticing name among retirement stocks.
• Exxon Mobil (XOM): While experts are screaming that electric vehicles are the future, crude oil likely has a long, lucrative road ahead.
• Philip Morris (PM): If you don’t mind digging into vice plays, PM could provide a relevant lift regarding retirement stocks to buy.

Just as society thought it was about to turn a corner with the vexing coronavirus pandemic, Russia’s unprovoked attack on Ukraine unsettled global markets, sending many investors seeking shelter from the storm. Despite the volatility, the equities sector still represents one of the best places to grow your money and as such, retirement stocks to buy command relevance.

Of course, you can’t just pick out any idea and expect it to perform well. Unfortunately, this year has witnessed multiple headwinds. Setting aside escalating geopolitical tensions in Europe, the choices that the Federal Reserve made to keep the U.S. economy afloat following the Covid-19 breach have now come to roost in the form of rising inflation. Given this tricky backdrop, investors must be selective regarding retirement stocks.

To better navigate the treacherous waters, your long-term portfolio should consist of companies that don’t just address immediate needs, but will be around well into the future. Granted, qualified ideas are difficult to find, but it’s not impossible.

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Here are some intriguing names to consider for retirement stocks to buy:

Retirement Stocks to Buy: Brookfield Infrastructure (BIPC)

An everyman of supremely relevant and irreplaceable industries, Brookfield Infrastructure (NYSE:BIPC) owns and operates a global network of infrastructure companies in utilities, transportation, energy and communications infrastructure. Specifically, the company invests in transmission and telecommunication lines, toll roads, ports and pipelines.

In other words, if it goes through the global supply chain, there’s a chance that Brookfield is involved. Thus, if you’re looking for a relatively stable and proven investment for retirement stocks to buy, BIPC should be high on your list. Though troubles weigh on global business networks currently, they will eventually fade. But before then, you’ll want exposure to BIPC.

Brookfield is also attractive for investors seeking retirement stocks in that its dividend yield is a solid 3.03%. It’s also recovering in terms of revenue performance since the Covid-19 pandemic, although management will need to address the net losses. Ultimately, though, patient investors should find lots to like about BIPC stock.

Duke Energy (DUK)

One of the classic ideas among retirement stocks to buy, Duke Energy (NYSE:DUK) is a go-to name for those with a long-term perspective. An electric power and natural gas holding company, Duke is essentially permanently relevant. As I like to say, people expect the lights to turn on when they flip the switch. Bad stuff happens when it doesn’t.

Aside from the obvious and cynical, DUK enjoys a fortuitous advantage in its coverage map. Levering a strong presence in the Southeast (Florida, South Carolina) and Midwest (Indiana, Kentucky, Ohio) regions, Duke Energy might see increased demand from migration patterns. As coastal metropolitan areas become overly crowded and expensive, many astute millennials are moving to states with lower costs of living, coinciding with Duke’s coverage map.

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Finally, DUK makes for a solid case for retirement stocks to buy because of its dividend yield, which currently stands at 3.62%. With a solid track record of profitability, the company should be able to take care of its shareholders for years to come.

Retirement Stocks to Buy: American Electric Power Company (AEP)

One of the biggest electric utility firms in the country, American Electric Power Company (NASDAQ:AEP) provides a solid mix of capital return potential and passive income. On a year-to-date basis through the May 16 session, AEP has gained over 12%. At the same time, its dividend yield stands at a solid 3.15%, making it one of the more intriguing retirement stocks to buy.

As with Duke Energy above, American Electric Power enjoys a compelling coverage map. This one in particular spans 11 states — including millennial destination spots like Ohio and Texas — and serves 5.5 million customers. Therefore, because of migration patterns largely fueled by economic necessity, it’s quite possible that AEP could enjoy increased demand.

Financially, the company is rock-solid. After suffering a noticeable sales drought in 2020, annual revenue is now exceeding pre-pandemic norms. In addition, it consistently drives robust net income, making AEP among the most dependable retirement stocks to buy.

Merck & Co. (MRK)

One of the ironies of the Covid-19 pandemic was that it didn’t holistically benefit the broader healthcare industry. Indeed, because of initial fears associated with the mysterious SARS-CoV-2 virus, many chose to avoid hospital and clinical settings unless absolutely necessary. Thus, the pandemic wasn’t exactly a boon for pharmaceutical giant Merck & Co. (NYSE:MRK).

But now that both the virus itself and the fear of Covid-19 are fading, Merck might make for an intriguing idea among retirement stocks to buy. Specifically, investors should key in on the company’s enviable product pipeline. Thanks to societal normalization, people are much likelier to visit health facilities for non-Covid-related issues.

Of course, Merck has a powerhouse oncology drug in Keytruda, which should bolster MRK stock in the long run. According to Mordor Intelligence, experts project the cancer immunotherapy market to command nearly a double-digit compound annual growth rate from now until 2027.

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And while you’re waiting for this narrative to fully materialize, you can take advantage of MRK’s 3% dividend yield.

Retirement Stocks to Buy: AbbVie (ABBV)

Another popular pharmaceutical firm, AbbVie (NYSE:ABBV) is especially enticing as one of the retirement stocks to buy because of its acquisition of Allergan, which it completed in May 2020. Under the Allergan brand were several intriguing products, the most attractive (in my opinion) being Botox.

Say what you want about the neurotoxic protein, it’s a popular treatment because humans want to keep their youthful appearance as long as possible. More significantly, the gradual normalization of society could positively affect Botox. Basically, as more people go out and about, they’ll want to look their best. That’s doubly so if workers are recalled to the office.

However, another demographic aspect might help Botox sales — and thus AbbVie — for decades to come and that’s aging millennials (and eventually Generation Z). Given that western societies have generally become more concerned with physical appearance, people from these demographics would be even more incentivized to consider Botox.

Exxon Mobil (XOM)

Listing Exxon Mobil (NYSE:XOM) as one of the retirement stocks to buy might draw scorn, ridicule, or both. For one thing, society at large has shifted toward an economic ecosystem that favors environmental, social and governance (ESG) sentiments. Big oil doesn’t really factor into such thought processes. Moreover, arguably most analysts proclaim that electric vehicles (EVs) are the future. That’s going to put XOM in a bind.

Well, maybe not. Sure, the war in Ukraine has spurred colossal interest in alternative energy solutions, which EVs play a significant role in. However, the harsh reality is that integration of EVs will take time. For example, the infrastructure to support the electrification of transportation isn’t fully developed. Additionally, EVs are currently extremely pricey, only accessible to affluent households.

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Sorry to burst any bubbles, but the road to true mainstreaming of EVs could take many, many years. In the meantime, hydrocarbon-based infrastructure is ready to go, making XOM a surprisingly intriguing idea among retirement stocks to buy.

Retirement Stocks to Buy: Philip Morris (PM)

Some folks have certain principles or values they want to uphold with their investment portfolios. If that’s you, I can totally respect that. Therefore, you might not want to hear about tobacco giant Philip Morris (NYSE:PM). At the same time, I can’t assume that everyone has the same thought process. For those that don’t mind a little vice in their retirement stocks, PM might fit the bill.

For starters, the vaping community has recently gravitated toward smaller devices due to their convenient profile and ease of use. Such a subculture shift benefits Philip Morris perfectly, which specializes in both heated tobacco products and e-cigarettes that focus on the experience of smoking rather than the wizardry of digital devices.

Second, it’s not unreasonable to believe that as stress levels rise globally due to recession fears — and perhaps an actual recession materializing — many people may turn to coping mechanisms such as cigarettes, both the analog and electronic varieties. Of course, it’s a cynical thesis. But if that doesn’t bother you, PM might be an interesting name among retirement stocks to buy.

On the date of publication, Josh Enomoto 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.

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• ABM Industries (ABM): Though relatively small in size, ABM Industries is one of top names in its industry.
• Becton, Dickinson & Co. (BDX) has grown from humble beginnings to be one of the largest names in the medical device industry.
• Dover  (DOV) is a global manufacturer with a highly diversified business model.

The recent sharp declines in markets have sent prices lower almost across the board for stocks. Investors appear willing to accept any price in an effort to protect the gains they have seen over the past few years.

While this may sooth investors’ nerves in the short-term, long-term it could be a mistake.

Given the volatility, we believe that investors should focus on owning shares of high-quality companies that have business models that work under most market conditions.

The Dividend Kings, which are those stocks with at least 50 years of dividend growth, is an excellent place to find high quality names. There are less than 40 stocks within this index as a company must have a very strong business model to raise dividends for five decades. These are the companies we suggest investors turn to when markets sell off.

Dividend Kings: ABM Industries (ABM)

Our first Dividend King for consideration is ABM Industries (NYSE:ABM), a leading provider of facility solutions. The $3 billion company has annual revenue of more than $6 billion.

Though relatively small in size, ABM Industries is one of top names in its industry. The company provides a wide range of services, including janitorial, electrical and lighting, energy solutions, facilities engineering HVAC, mechanical, and parking. This wide range of services appeals to a variety of clients, including airports, schools, universities, hospitals, and manufacturing plants.

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The company has been in business for more than a century and has established a very positive reputation in facility solutions. This attracts new customers as well as helps to maintain existing partnerships. It is a major reason why ABM Industries often targets, and is successful at, winning large national accounts in order to acquire substantial business.

In addition, ABM Industries uses acquisitions to gain entrance into new markets. For example, the company made two sperate purchases in 2014 and 2015 that helped ABM Industries enter the United Kingdom. While still primarily focused on the U.S. market, these acquisitions have helped propel ABM Industries’ international business. In 2021, ABM Industries acquired Able Services, which was the largest family-owned facility services company in the U.S., helping to further expand the company’s reach and offerings.

Because of these tailwinds, we project that ABM Industries can grow earnings-per-share by 5% annually through 2027, which is in-line with the long-term growth rate.

ABM Industries long track record of success has led to 54 consecutive years of dividend growth. The stock yields 1.7%. We forecast that ABM Industries’ payout ratio will be just 22% for the year.

Shares of the company are currently trading at 12.7 times our expected earnings-per-share of $3.60. We believe fair value lies at 17.5 times earnings, which is the stock’s average valuation since 2012. Multiple expansion could add 6.5% to annual returns over the next half-decade.

Therefore, we estimate that ABM Industries can return 13.2% per year through 2027, stemming from a 5% earnings growth rate, a starting yield of 1.7%, and a mid-single-digit tailwind from multiple expansion.

Becton, Dickinson & Company (BDX)

Our next pick is Becton, Dickinson & Co. (NYSE:BDX), or BD, which is a leading medical device company. BD is valued at just under $71 billion and generated $20 billion in fiscal year 2021.

BD traces its history back more than 120 years. The company has grown from humble beginnings to be one of the largest names in the medical device industry. BD has achieved its leadership position because it has a wide variety of products that are needed in the healthcare sector.

The company consists of three segments, including medical, life sciences, and intervention. BD’s core product categories include diagnostic, infection prevention and surgical equipment. The company is highly innovative dating back to its beginning. That tradition of bringing new products to market continues today, as BD expects to launch more than 100 new products through fiscal year 2025. These products will provide additional tailwinds to results as the company expects nearly $2 billion in incremental revenue during this time.

BD also uses acquisitions to augment its core portfolio, the most important of which was the company’s 2017 purchase of C.R. Bard for $24 billion. The largest acquisition in BD’s history added the one of the top medical supply companies to the portfolio and helped establish the Intervention segment. With Bard in the fold, BD’s total addressable market increased by $20 billion. At the same time, BD spun off its diabetes care business, which had been lagging for some time, into a standalone company on April 1st of this year.

BD’s has been successful for a very long time, with earnings-per-share growing at a rate of more than 10% annually over the last decade. We believe the company can see this level of growth going forward as well.

The healthcare sector is often recession-resistant due to the importance of products and services offered. Combined with a strong business model, BD has been able to grow its dividend for five decades. The company’s dividend should grow for years to come as the payout ratio is projected to be just 27% this fiscal year. The stock yields 1.4% at the moment.

Shares of the company are trading with a price-to-earnings ratio of 19.2 using our earnings estimate of $12.93 per share for fiscal year 2022. With a five-year target valuation of 18.6 times earnings, this implies a small annual headwind to total returns from multiple compression.

In total, BD is projected to return 10.4% per year for the next five years, due to a 10% earnings growth rate and starting yield of 1.4% that are only partially offset by a modest multiple compression.

Dividend Kings: Dover (DOV)

Our final top Dividend Kings pick is Dover (NYSE:DOV), a global industrial manufacturer. The company has annual revenues of more than $6 billion and is valued at $18.6 billion.

Dover operates a highly diversified business model. The company’s reporting segments include engineered systems, clean energy and fueling, pumps and process solutions, image and identification, and climate and sustainability technologies.

Dover is also diversified along sources of revenue, with the U.S. accounting for just over half of annual sales. International markets contribute the remainder.

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The company operates in a niche market, but specializes in highly engineered products. Having the ability to create what customers need helps to raise switching costs as a competitor might not be able to match Dover’s technical prowess. This makes it less likely that customers will change who they do business with, one of the main reasons why Dover’s backlog grew 54% year-over-year to $3.4 billion in the most recent quarter.

Dover has also taken action to improve its portfolio, spending more than $800 million on acquisitions to improve the company’s standing or to enter new markets. This has brought new businesses to every segment within the company.

Earnings-per-share increased by 6% over the last decade, but we expect 8% growth going forward as the company’s history of organic growth supported by acquisitions should continue.

Despite operating in a highly cyclical industry, Dover has increased its dividend for 66 consecutive years, one of the longest track records in the market place. This growth streak is likely to continue as we have a projected payout ratio of just 23% for the year. Dover yields 1.5%.

Using earnings-per-share estimates of $8.55 for 2022, shares trade with a price-to-earnings ratio of 15.2. This is below our 2027 target valuation of 17 times earnings, implying a 2.3% annual contribution from multiple expansion over this period.

In total, Dover is expected to provide annual returns of 11.8% over the next five years, due to a combination of 8% earnings growth, a dividend yield of 1.5%, and a low single-digit contribution from multiple expansion.

Final Thoughts

Turbulent markets can frustrate the average investor, but we stress that those with a long-term perspective target companies that are leaders in their sectors. These companies often have the ability to pay safe and secure dividends because of the strength of their business models.

The recent market wide pullback has resulted in even high-quality names, such as ABM Industries, Becton, Dickinson & Co. and Dover, to see their share prices fall. As a result, all three names now offer the potential annual returns in excess of 10% over the next five years.

All three companies are also members of the exclusive Dividend Kings index. Just as important, the dividend growth streaks are likely to continue as each company has a very low payout ratio.

This suggests that ABM Industries, Becton, Dickinson & Company, and Dover could be good options for investors looking for high levels of total returns and secure income.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Dividend stocks are a great way to buffer your portfolio against the uncertainty in the market, especially when thinking long-term.
• Bank of New York Mellon (BK) was originally owned by Alexander Hamilton and has been around since 1784.
• Fifth Third Bancorp (FITB) is one of the top regional banks in the country and continues to drive innovation.
• Intel (INTC) remains a premier chipmaker and bringing chipmaking back to the U.S. will help its long-term stability.
• Merck (MRK) may have missed out on the Covid vaccine gold rush but it remains one of the top drug companies in the world.
• Amgen (AMGN) is the kind of biotech all biotech hopefuls want to grow up to be, with plenty of drugs in the market and in the pipeline.
• Morgan Stanley (MS) has proven to be both one of the most durable financial services companies and one of the most profitable, decade after decade.
• T Rowe Price (TROW) might not be one of the big Wall Street names but it has been delivering for its clients and shareholders more than eight decades.

As stocks devolve towards bear market territory and the global economic picture remains in the “uncertainty” camp, many investors want safety and security. That’s why dividend stocks are the perfect choice for long-term investors.

Buying dividend stocks isn’t a bet on the short term. They’re long-term choices where dividends and steady growth top the list of priorities. These stocks have been around for decades, some for centuries.

Their staying power means they understand that fads are exciting, but they don’t necessarily build the bottom line for a sustainable long-term future. This is somewhat refreshing given the start-ups that have flooded the market in recent years and sport massive market caps after just a few years on the exchanges.

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These are foundational companies that have been at the roots of their sectors. They have the necessary attributes to continue to grow through good and bad markets. They also provide reliable, income along the way.

Bank of New York Mellon (BK)

Not only does Bank of New York Mellon (NYSE:BK) carry the powerful banking name of the Mellon family — and of course the prestigious Carnegie Mellon University — but its lineage goes back to the founding fathers. Alexander Hamilton founded the bank in 1784, and this bank has been operating since before the Constitution was finalized.

Right now, a lot of banks, big and small, are trying to gain their footing as the economy and interest rate environments are very dynamic. Uncertainty is poison for the markets. And banks haven’t been immune to this uncertainty. That has hit big banks, including BK.

But that doesn’t spell doom for BK stock. On the contrary, it has been through more severe contractions and headier expansions than we’ve been through recently. And through it all, it has emerged stronger.

BK stock has lost 25% year to date and it’s carrying a price-to-earnings ratio (P/E) of 11. This is a great opportunity to add this stock to your nest egg for the long term. It currently has a rock-solid 3.1% dividend.

This stock has a “B” rating in my Dividend Grader.

Fifth Third Bancorp (FITB)

After the big national banks, the next tier is regional banks. These are banks that operate in a number of states around a geographical region. At this point for Fifth Third Bancorp (NASDAQ:FITB), it nearly covers two regions.

It has locations in Ohio, Kentucky, Indiana, Michigan, Illinois, Tennessee, West Virginia, North and South Carolina, Georgia, and Florida. That’s most of the Midwest and South, east of the Mississippi River.

But that growth has taken time. It wasn’t a massive private equity fueled buying spree. The bank has been around since 1858 and has spent decades methodically growing it operation.

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FITB stock has lost 18% year to date and now trades with a P/E of 10. It has a 3.4% dividend and is well situated in states where companies — and their workers — are moving into.

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

Intel (INTC)

We’ve been hearing a lot about the semiconductor chip shortage this year. Well, Intel (NASDAQ:INTC) is the world’s largest chipmaker. That means it’s the largest victim of this issue, as well as the biggest beneficiary once it’s resolved.

What’s more, when most other chipmakers when “fabless” INTC continued to build its own chips.

Fabless chipmakers engineer the chips — usually in the U.S. or Europe — and then ship the specs to Asia for manufacturing, since a chip plant these days has a cost in the billions of dollars. That’s a massive expense, and fabless players don’t have to deal with that issue.

However, they’re now worse off due to the supply chain collapse. Now, everything is more expensive, and the chip foundries are starting and stopping production time and again. In the midst of all this, INTC announced it was going to build at least one if not more foundries in the U.S. That likely comes with massive tax breaks and federal subsidies as well.

INTC stock is down 18% year to date, but that’s not bad compared to many of its competitors. It also has a 3.4% dividend that will continue to help compound the cash in your portfolio.

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

Merck (MRK)

Merck (NYSE:MRK) has been a drug maker since 1891. It has both a human health and an animal health division. The latter has become ever more important due to the economic devastation brought by recent animal-borne diseases from Covid-19 to the avian flu to African swine fever.

While the pandemic is a fresh memory of Covid-19’s power, rising egg and poultry prices in the U.S. are partially due to a fast-moving avian flu. And ASF was crushing the Chinese economy in the summer and fall of 2019.

But vaccines aren’t where the money is for big pharmaceutical companies. It’s drugs. And MRK has always been at the center of innovation. Its Keytruda was one of the first cancer immunotherapy drugs to get approval from the U.S. Food and Drug Administration. That means it was researching these drugs long before the public ever imagined these drugs were possible.

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MRK stock has gained 20% year to date, as healthcare beyond the pandemic returns to normalcy. It still trades at a bargain 17 P/E and has a stalwart 3% dividend.

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

Amgen (AMGN)

Amgen (NASDAQ:AMGN) has been in the biotech space since 1980. And its $130 billion-plus market cap makes it a biotech that’s as big as some significant big pharma drug makers.

In the current market, investors are focused on companies that can deliver. The speculative bubble has burst, so money isn’t flowing into niche biotechs that have a cool technology. In the past market, they were buyout candidates or could get massive funding from private equity firms.

Now, everyone is keeping their cash closer to their vests. And the attractive drug companies are those with proven track records, a healthy portfolio drugs, and a strong pipeline. AMGN fits that bill to a T.

The stock has gained 9% year to date, has a P/E of 24 and a very reliable 3.2% dividend.

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

Morgan Stanley (MS)

One of the realities of the markets is that the big institutional players like Morgan Stanley (NYSE:MS) don’t just do well when the markets are going up. They make money when investors are active, either moving money around, pulling it out or funneling it in.

They can use that cash flow to position their accounts as well as work complex cross-hedging across stock, bond and derivatives markets. As long as that momentum is moving, the direction isn’t as crucial as volume.

And right now, MS and others are staying busy. Financial services companies have sold off a little this year as broad selling is the first wave of market readjustments. But lumping banking stocks and financial services companies together isn’t always apples and oranges. For example, MS isn’t particularly interest in the traditional banking sector and continues to focus on its investment banking strengths. That focus will pay dividends (pardon the pun) in the long-term.

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Given that MS has been around since 1924, it understands the long term. Currently MS stock is down 18% year to date. But it has a generous and trustworthy 3.4% dividend and is trading at a P/E of 10.

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

T Rowe Price (TROW)

Like MS, T Rowe Price (NASDAQ:TROW) is a financial services company that has been around since 1937. But unlike most of its peers, TROW isn’t a Wall Street firm. Its headquarters has always been in Baltimore, Maryland.

The logic is that there’s too much group think among all the firms on the Street. By operating out of Baltimore, TROW can think for itself and stick to its view of the markets without undue influence from competitors.

With a $28 billion market cap, it’s not a major player, but it’s a well established one. Much of its business is focused on its family of funds — for consumers and companies – and managing institutional money.

The current selloff has hit its assets under management, which has hit the stock pretty hard. TROW stock is down 38% year to date. But this is the kind of company that knows how to weather the storms, which is why it’s very attractive now. And its 3.8% dividend is an investment in your patience.

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

On the date of publication, Louis Navellier has a position in AMGN in this article. 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.

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• Water stocks are attractive to income investors.
• American Water Works (AWK): American Water Works has a significant scale advantage.
• California Water Service Group (CWT): California Water Service Group is one of the three largest water utilities in the U.S.
• SJW Group (SJW): SJW Group engages in a full suite of water services.

Water stocks possess all the qualities one would wish for when it comes to long-term dividend growth.

Investors seeking long-term, secure dividend growth would do well to carefully select sectors of the market before picking individual stocks to ultimately purchase. There are many factors that determine how safe a company’s dividend payment is, with sector playing a big role in terms of competition, long-term demand, recession resistance and other critical factors.

In this article, we’ll take a look at why dividend growth investors would want to own water stocks, as well as three examples of companies we like today in the sector.

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Water is essential not only to all human life, but in manufacturing, irrigation, and countless other applications. Not only is water essential, but clean water is absolutely essential. That opens up the universe of water-related stocks to those that provide things like pumping and transportation equipment, filtering, storage, heating and cooling, and of course, the physical delivery of water itself.

Below, we’ll focus on three examples of companies that focus on the physical delivery of water. That is, three water utility companies.

Water utilities tend to exhibit many of the same characteristics as electric utilities, for instance; stable long-term demand, monopolies in their service areas, built-in pricing increases, and recouping of capital expenditures from customers. These characteristics make water utility stocks strong dividend growth candidates, and the three companies below have these and more.

Water Stocks: American Water Works  (AWK)

Our first stock is American Water Works (NYSE:AWK), a water and wastewater services company based in New Jersey. The company offers water and wastewater services to 1,700 communities in 14 states, serving about 3.4 million customers. Among utilities, that gives American Water Works a big scale advantage. Its customers include residential, industrial, food and beverage, property developers, energy suppliers, fire services and much more.

The company was founded in 1886, generates about $3.8 billion in annual revenue, and trades with a market capitalization of $26 billion.

American Water Works has only paid dividends to shareholders for 14 consecutive years, which is somewhat on the lower end of the scale when it comes to utilities. However, the company has raised its dividend by an average of nearly 9% annually over that 14-year period, so as a pure dividend growth stock, it definitely hits the mark.

The current yield is 1.8%, so it’s about better than the S&P 500, and the payout ratio is right at 60% of earnings. With the company’s reliable earnings stream, that’s a perfectly acceptable payout ratio. Further, we expect robust 8% earnings-per-share growth in the years to come, meaning the company could raise its payout by 8% annually without increasing the payout ratio. For that reason, we believe this stock has many years of strong dividend growth in front of it.

California Water Service Group (CWT)

Our next stock is California Water Service Group (NYSE:CWT), a water utility based in California. The company provides water and related services to customers in California, Washington, New Mexico, Hawaii and Texas. Its customer base includes about 550,000 total connections, with the vast majority of those in California. That makes California water one of the three largest water utilities in the U.S.

California Water was founded in 1926, generates about $835 million in annual revenue, and trades with a market capitalization of $2.7 billion.

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California Water’s dividend increase streak stands at an immensely impressive 54 years, making it a Dividend King. That puts the stock in very rare company in terms of dividend longevity, and is certainly one of the reasons we like it.

In addition, the average increase in the payout for the past decade is about 5%, so management is handily beating inflation with dividend increases. The current yield is 1.9%, so again, meaningfully better than the broader market. And California Water’s payout ratio is just 50% of earnings for this year.

Given the stable nature of its earnings, as well as 5% projected average annual growth, we see the dividend growth runway as very long for this stock. We are forecasting, 6% average annual growth in the dividend over the next five years, making California Water a strong dividend growth stock.

SJW Group (SJW)

Our final stock is SJW Group (NYSE:SJW), a water utility provider based in California. The company engages in a full suite of water services, including production, purchase, storage, purification, distribution, and selling of water and wastewater services. Its service area includes California, Connecticut, Maine, and Texas following its merger with the former Connecticut Water.

SJW has about 400,000 total connections, so its scale is quite large as well. It produces $645 million in annual revenue, and trades with a current market capitalization of $1.8 billion.

SJW’s dividend increase streak is 54 years, making it a Dividend King. In addition, its average annual increase over the past decade is more than 7%, so on a pure dividend growth basis, SJW receives high marks.

Its current yield is 2.4%, almost a full percentage point better than the S&P 500. Like the others on this list, its payout ratio is also quite reasonable at 61% of earnings for this year. That makes the dividend not only safe, but with lots of room to grow in the future.

Taking into account forecasted earnings growth of almost 8% annually, we see the potential for future dividend increases as vast for SJW, without undue stress on its ability to pay.

Final Thoughts

Water stocks have many characteristics that make them great dividend stocks. They have stable demand from a captive customer group, have built-in pricing increases from regulators that virtually ensure growing profitability over time, and they have shareholder-friendly management groups that prioritize returning capital to shareholders.

In addition, water stocks are inherently recession resistant, so they can have a diversifying impact on an investor’s portfolio.

The three stocks we’ve highlighted here – American Water Works, California Water and SJW – all have strong dividend growth histories, market-beating yields, relatively low payout ratios and strong growth prospects. Combined, these factors make these stocks great dividend growth stocks for long-term investors.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• 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.

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.

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

AbbVie (ABBV)

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)

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.

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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.

BCE (BCE)

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.

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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)

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)

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)

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.

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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)

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.

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• These cheap stocks to buy come from growth and dividend names. All are worth holding in the retirement portfolio for value creation.
• Pfizer (PFE): Undervalued with a robust dividend yield, Pfizer has a deep pipeline of drugs to ensure long-term revenue growth visibility.
• Chevron (CVX): Among the top oil and gas plays with assets that have an attractive break-even. Considering financial flexibility, aggressive investments expected in renewable and non-renewable energy assets.
• Apple (AAPL): This is the best-performing FAANG stock in 2022. Sustained revenue and earnings growth visibility through diversified revenue sources.
• Lockheed Martin (LMT): The top defense stock is likely to benefit from rising geo-political tensions. A strong order backlog provides clear cash flow visibility.
• Rivian (RIVN): In the early stages of growth, but the long-term outlook is promising. A deep correction provides an attractive entry point.
• Pinterest (PINS): Ample scope for upside in international ARPU. With the platform becoming more shopping friendly, Pinterest is a proxy e-commerce play.
• Target (TGT): Strong growth in comparable store sales. Target has an omnichannel presence with significant investments planned in the next few years.

It’s never too early to start retirement planning. The power of compounding can do wonders even if a small amount is allocated every month towards retirement funds. Similar to a dynamic portfolio, a retirement portfolio also needs to be diversified.

Some popular asset classes would include fixed-income securities, gold, equities and blue-chip cryptocurrencies. With equity markets having witnessed a meaningful correction from highs, investors can consider some cheap stocks to buy for the long-term.

Within the equity portfolio for retirement, I would consider holding some growth stocks as well as dividend stocks. In my view, the dividend income can be re-invested to further boost the retirement portfolio returns. Additionally, growth stocks have the potential to deliver multi-fold returns over the long-term.

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Let’s take a close look into seven cheap stocks to buy for a rich retirement.

Cheap Stocks to Buy: Pfizer (PFE)

Among income stocks, Pfizer (NYSE:PFE) would be among the top picks. PFE stock offers a dividend yield of 3.2% and it’s likely that dividends will increase in the coming years. In addition to this, the stock trades at a forward price-earnings ratio of 7.2. Considering the current valuation, there is scope for capital gains.

Pfizer is not just a Covid-19 vaccine play. The company’s growth and cash flow upside are likely to sustain in the long term. However, it’s true that the vaccine sales have provided a cash bump, which provides ample flexibility to invest in research and development.

For 2022, Pfizer expects revenue of $100 billion, which would imply a year-on-year growth potential of 27%. For the same period, the company expects robust research and development expense of $11.5 billion. With a product pipeline of 96 drug candidates, the company’s revenue visibility is strong.

In  the first quarter, the company completed the acquisition of Arena Pharmaceuticals. Further, Pfizer also entered into an agreement to acquire ReViral, which is expected to add $25 billion in risk-adjusted revenue by 2030. Acquisitions are likely to accelerate the growth trajectory over the next few years.

Chevron (CVX)

Legendary investor Warren Buffett is known to invest in long-term value creators. In Q1 2022, Buffett was on a buying spree and boosted his holdings in Chevron (NYSE:CVX). The stock is among the top five holdings for Buffett.

Of course, that’s not the only reason to consider CVX stock for the retirement portfolio. Even after a big rally, the 3.4% dividend yield stock looks attractive. Investors can consider buying the oil and gas exploration stock on dips.

With the Russia-Ukraine conflict, the West is looking to reduce energy dependence. There are two ways to achieve this. First, have policies and incentives that help in boosting production in U.S. and Europe. Further, increase investments in renewable energy.

For the first quarter, Chevron reported operating cash flow of $8.1 billion. This implies an annualized operating cash flow of $32 billion. Robust cash flows will allow Chevron to increase dividends and pursue aggressive share repurchase.

More importantly, the company is likely to maintain a high investment expenditure towards renewable and non-renewable assets. The long-term outlook is therefore positive with the company having 88 billion of barrels of oil equivalent (BBOE) in resources. Chevron is also investing in renewable fuel, hydrogen energy and carbon capture. These factors make CVX stock attractive for the long term.

Apple (AAPL)

Among FAANG stocks, Apple (NASDAQ:AAPL) stock has been an outperformer so far this year. I believe that at a forward P/E of 24.7, it’s among the cheap stocks to buy for the long term.

Considering the company’s top-line and earnings growth, I would still consider it as a growth stock. At the same time, the company has clear dividend growth visibility.

For the first six months of 2022, Apple reported top-line growth of 10% and earnings growth of 18%. A key point to note in the earnings report is healthy growth in segments like wearable and services. Apple is more diversified with the company having multiple segments that support growth.

Of course, the iPhone segment remains the cash cow. With 5G phones, the segment growth is likely to remain healthy. I also like the fact that Apple is cash rich and it allows the company to make big investments. It’s being speculated that the company will be launching autonomous driving cars by 2025. This is another potential source of revenue diversification and AAPL stock upside.

In the company’s fiscal second quarter 2022, Apple returned $27 billion to shareholders. This level of value creation is likely to sustain with innovation driving growth and cash flow upside.

Cheap Stocks to Buy: Lockheed Martin (LMT)

The escalation in geo-political tensions between Russia and Ukraine is likely to have a long-term impact on global defense spending. Global military spending has crossed $2 trillion for the first time with Europe boosting spending.

In current times, it’s important to have a defense stock in the long-term portfolio. Lockheed Martin (NYSE:LMT) has surged by 31% in the last six months. However, at a forward P/E of 16.3, it’s still among the cheap stocks to buy a rich retirement.

Besides the stock upside potential, LMT stock also offers an annualized dividend of $11.20 per share. As the company’s order backlog swells, there is clear cash flow visibility for higher dividend income. As of Q1, the company’s order backlog was $134 billion.

During the quarter, the company also returned $2.8 billion to shareholders. With a guidance of $6 billion in free cash flow for 2022, Lockheed is positioned to create value.

The company’s F-35 remains the key cash flow generator. International orders have increased for the aeronautics segment. With a bigger addressable market, the company is positioned for stable cash flows. Also, emerging segments like “Space” should increasingly contribute to growth in the next few years.

Rivian Automotive (RIVN)

There has been a sharp fall in electric vehicle stocks in the last few months. The reasons include chip shortage, supply chain issue and raw material inflation. Also, growth stocks have been battered in the recent plunge.

The deep correction provides a good opportunity to consider some EV stocks. Tesla (NASDAQ:TSLA) is clearly one name that’s worth considering on dips. However, among high-growth names, Rivian Automotive (NASDAQ:RIVN) looks attractive.

For Q1 2022, Rivian produced 2,553 vehicles and delivered 1,227 vehicles. The company has reaffirmed the guidance for production of 25,000 vehicles in 2022.

Rivian already has an order backlog of 90,000 vehicles for its electric trucks. The company also has an initial order of 100,000 electric delivery vehicle from Amazon (NASDAQ:AMZN). These orders provide revenue upside visibility.

In terms of production, Rivian already has plans to ramp up total capacity to 600,000 vehicles between its Normal and Georgia plants. With $18.4 billion in cash and equivalents, the company seems fully financed for the medium term.

Overall, Rivian has already launched R1T and R1S for the U.S. markets. Additionally, the company’s electric delivery vehicle is likely to boost growth. After a plunge of 78% for year-to-date 2022, RIVN stock is among the names to consider for the long term.

Pinterest (PINS)

Among growth stocks that have witnessed a significant correction, Pinterest (NYSE:PINS) looks attractive. The stock trades at a forward P/E of 23.1 and seems oversold considering the long-term growth outlook.

For Q1, Pinterest reported revenue growth of 18% on a year-on-year basis. However, excluding U.S. and Europe, the company’s revenue growth was 152%. This is one big reason to like Pinterest. The company has a global addressable market and there is ample headroom for growth in international markets.

Another major reason to like Pinterest for the long-term is the company’s effort to make the platform more shopping friendly. The company recently launched the Pinterest API for Shopping. With sustained growth in global e-commerce, Pinterest is well positioned to benefit.

Pinterest reported operating cash flow of $213 million in the first quarter. The company already has an annualized OCF potential of $800 million. With growth in international average revenue per user, the long-term free cash flow outlook is robust.

Of course, PINS is a high-beta stock. I would still include it in the retirement portfolio considering current valuations.

Cheap Stocks to Buy: Target (TGT)

With retail spending being a key driver of the U.S. economy, I would also consider a retailer for the retirement portfolio. Target (NYSE:TGT) is among the cheap stocks to buy from the sector. The stock currently trades at a forward P/E of 15.4. In comparison, Costco (NASDAQ:COST) trades at a forward P/E of 37.9.

For 2021, Target reported 12.7% growth in comparable store sales. This was on top of a 19.3% growth in 2020. Further, the company’s digital comparable sales growth was 21% in 2020 on a year-on-year basis. Clearly, Target has achieved robust growth and is building a strong omni-channel presence.

The company’s sale-day services have been the fastest growing part of the business. The company has also committed to invest significantly over the next few years towards store remodeling, new stores and ramping-up e-commerce sales.

For the long term, Target has guided for high single-digit growth in adjusted EPS. For the last financial year, the company reported operating cash flow of $8.6 billion. Given the growth visibility, OCF is likely to be in excess of $10.0 billion in the next few years. TGT stock therefore looks like a value creator through dividends and stock upside.

On the date of publication, Faisal Humayun did not hold (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.

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• The market weakness is a great opportunity to pick up retirement stocks that may have been overheated.
• Dollar General (DG): The retailer is expected to open 1,000 new stores in 2022.
• Home Depot (HD): The home improvement retailer plans to continue increasing dividend payments.
• JPMorgan Chase (JPM): Shares offer a compelling buying opportunity at 52-week lows.
• McDonald’s (MCD): The fast-food chain can prosper in just about every market environment.
• Walmart (WMT):The Dividend Aristocrat continues to gain market share against its peers.

As an investor, you are already looking for ways to add value to your hard-earned money as you plan for long-term goals, and these retirement stocks may fit the bill.

Amid declines on Wall Street, some investors are allocating an increasing portion of their portfolio to retirement stocks they would want to hold for decades.

Many of us save and invest for financial security in the future. Wells Fargo (NYSE:WFC) reminds us that investing may help us with long-term goals.

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Bear markets are a natural part of the market cycle on Wall Street. Seasoned investors typically position themselves to benefit from them. The S&P 500 index is currently down 18% year-to-date, while the tech-heavy Nasdaq 100 has declined more than 28% during the same period.

Therefore, this month could be the perfect time to buy solid retirement stocks and forget about them for an extended period. Against this backdrop, here are five retirement stocks to buy and hold for decades.

Dollar General (DG)

Dollar General (NYSE:DG) is one of the largest consumer retailers in the country.

The company boasts more than 80 years of history, operating over 18,000 stores in 46 states. It plans to add more than a thousand new stores to its total count during the 2022 fiscal year.

Dollar General reported Q4 2021 results on March 17. Net sales increased 2.8% year-over-year to $8.7 billion. However, same-store sales decreased 1.4% year-over-year, driven by a decline in customer traffic. Diluted earnings per share (EPS) fell 1.9% year-over-year to $2.57.

The retailer used most of its net cash flow of $2.9 billion to repurchase stocks and make dividend payments. Management declared a quarterly cash dividend of 55 cents per share, representing a 31% increase compared to the prior quarter.

DG stock is down just a little more than 1.5% for the year. Shares are trading at 20.3 times forward earnings and 1.6 times sales. Meanwhile, the 12-month median price forecast for DG stands at $255.50.

Home Depot (HD)

Home Depot (NYSE:HD) is the largest home improvement retailer worldwide. It has more than 2,300 stores across North America. HD is among the popular retirement stocks for buy-and-hold investors as a result of its generous dividend payments.

Management announced Q4 2021 results on Feb. 22. Revenue came in at $35.7 billion, achieving 10.7% growth year-over-year. Diluted EPS per share increased 21.1% to $3.21, up from $2.65 in the same quarter in 2020.

The company benefits from a strong housing market and soaring home prices, driving homeowners to remodel their homes. Fiscal 2022 guidance includes diluted EPS growth in the low single digits.

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Management announced a 15% increase in dividends, up to $1.90 per share. HD stock currently supports a 2.6% dividend yield.

HD stock has lost roughly 29% so far this year. Shares are trading at 19.1 times trailing earnings and 2.1 times sales. Meanwhile, the 12-month median price forecast for HD is $380.

JPMorgan Chase (JPM)

JPMorgan Chase (NYSE:JPM) is one of the world’s largest financial institutions, with assets that exceed $3 trillion. It offers consumer banking, commercial banking, corporate and investment banking, as well as asset and wealth management.

JPMorgan Chase announced Q1 results on April 13. Revenue of $30.7 billion was down 5% year-over-year. Gross Investment Banking revenue declined 35% to $729 million. Diluted earnings per share came in at $2.63, down 42% year-over-year from $4.50 for the same period last year.

The financial institution boasts an enormous scale in consumer and investment banking. Management anticipates net interest income (NII) to benefit from the anticipated interest rate hikes through 2022.

During the quarter, the company also distributed $3 billion in dividend payments and repurchased $1.7 billion of common stock. In addition, there is a new share repurchase program of $30 billion, effective May 1. The dividend yield currently stands at 3.2%.

JPM stock is down by 27% so far this year. Shares are trading at 11.0 times forward earnings and 3.1 times sales. Meanwhile, the 12-month median price forecast for JPM stands at $150.63.

McDonald’s (MCD)

McDonalds (NYSE:MCD) is possibly the most famous fast-food chain worldwide. The company continues to transform the fast-food industry, growing its enormous global footprint via partnerships with independent restaurant franchisees.

McDonalds reported Q1 2022 results in late April. Revenue came in at $5.67 billion, corresponding to an 11% year-over-year growth. But diluted EPS came in at $1.48, down from $2.05 a year ago.

Analysts concur that the fast-food giant can thrive in just about every market environment. McDonald’s is passing along higher food costs to customers, managing to offset inflationary pressures via price increases, and focusing on drive-thru and delivery sales.

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Recent research suggests that the U.S. fast-food industry is expected to grow at a compound annual growth rate (CAGR) of over 5% between 2020 and 2027.

As a result, we can expect the fast-food giant to be at the forefront of this increase. Moreover, the fast-food giant generates a dividend yield of 2.2% at current prices. It is an outstanding defensive stock due to its slow but steady growth.

Yet, MCD stock is down by 9% so far this year. Shares are trading at 25.4 times forward earnings and 7.9 times sales. Meanwhile, the 12-month median price forecast for MCD is $281.50.

Walmart (WMT)

Walmart (NYSE:WMT) is the largest retailer by revenue across the globe. It operates roughly 11,400 stores and employs about 2.3 million people.

Walmart reported Q2 2022 on Apr. 21. Total revenue was $152.9 billion, up just 0.5%. A year ago, it had been $152.1 billion. Adjusted EPS was $1.53. During the full year, the retailer generated $24.2 billion in operating cash flow .

Despite the current bear market, WMT stock looks like a safe bet with its slow but steady growth. The retail giant uses its massive size and scale to gain further market share.

It can also offer better prices across key segments without sacrificing earnings growth. Meanwhile, the Dividend Aristocrat generates a 1.5% dividend yield and offers continued growth potential.

WMT stock is up 2% so far this year. Shares are trading at 22.6 times forward earnings and 0.7 times sales. Meanwhile, the 12-month median price forecast for WMT is $167.

On the date of publication, Tezcan Gecgil 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.

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• Investing in dividend stocks for retirement is excellent. However, you need to know what to look out for. Past performance and current dividend yields aren’t necessarily indicators of future performance!
•  Union Pacific (UNP): Railroad traffic could be set for a multi-year decline as economic activity slows. Furthermore, UNP stock exhibits a stretched payout ratio.
•  ARK Innovation (ARKK): Cathie Wood’s ARKK deploys a questionable strategy. Additionally, the ETF has a low skill ratio accompanied by high expenses.
•  Brookfield Renewable Partners (BEP): Apart from being overhyped, BEP is trading at a premium and doesn’t cover its dividends well.
•  Home Depot (HD): The stock’s dividend policy is stretched. Additionally, HD is faced with a cyclical downturn.
•  United States Steel (X): X isn’t very shareholder-driven and could face a trying time during a contractionary economic period.
•  International Business Machines (IBM): The Kyndryl spin-off won’t be enough to change its position in a crowded industry. In addition, IBM’s dividend distribution has peaked.
•  Harley-Davidson (HOG): A tremendous slowdown in the company’s growth amid a rebranding phase has affected shareholder distribution.

Dividend stocks are great investment options if your objective is to invest for retirement. However, if you don’t choose them wisely, you could easily end up with a non-performing asset, in which your capital depreciation exceeded your dividend income. Moreover, dividend stocks can be cyclical in nature, meaning that their current yield isn’t always an indication of future yield.

The way I approached my screening process for this article was twofold. First off, I considered industry cyclicality for the medium term, as future cash flows need to be considered whenever forecasting dividend payouts. Secondly, I singled out stocks that I think are stretching their dividend payout ratios and, thus aren’t providing sustainable benefits to investors.

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With all that being said, here are seven dividend stocks to avoid if you’re investing for retirement.

Union Pacific Corporation (UNP)

Union Pacific’s (NYSE:UNP) stock is in trouble. The company’s solid, but we are likely headed for a multi-year slowdown in railway activity amid a slowing economy. As an analyst, your general top-down valuation procedure for stocks starts with GDP potential, and continues downward. Quantitative tightening will likely see GDP come in lower than anticipated for years to come, subsequently slowing down global trade.

We’re already seeing evidence of this as a recent report by the Association of American Railroads communicated that U.S. railroad traffic has slowed by 7.4% year-over-year. This is quite surprising considering we’ve been in a reopening. The systemic challenges are clearly reflected in Union Pacific stock, as it’s overvalued on a normalized basis. For instance, UNP stock is trading at a price-book premium of 67% and a price-sales surplus of 8%.

UNP exhibits a respectable forward dividend yield of 2.1%. However, the stock has poor safety ratios, with its payout ratio exceeding its 5-year average by 8.9%.

Stocks to Sell: ARK Innovation (ARKK)

I’m just going to come out and say it the way it is. Catherine Wood’s ARK Innovation (NYSEARCA:ARKK) was a one-hit-wonder. The fund’s industrial revolution concept may align with economic theory, but it remains a folk tale to the stock market. Furthermore, Cathie Wood ignored all of modern ETF literature to construct an actively managed fund that has a flawed investment thesis.

ARKK’s information ratio of -1.7 conveys a lack of portfolio management skill, and its expense ratio of 0.75% exceeds that of the asset class median (0.29%). This just tells me that investors are paying a premium for below-par portfolio management.

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ARK Innovation’s forward dividend yield of 1.9% isn’t sustainable, no matter how you slice it.

Brookfield Renewable Partners (BEP)

Brookfield Renewable Partners (NYSE:BEP) is overly exposed to an industry that requires high re-investment rates at questionable returns. Although renewable energy companies are hot commodities, they’re cyclical and generally overhyped.

BEP missed its first-quarter earnings target by 17 cents per share amid rising input costs. Sure, the company has solid growth initiatives going on in Germany with its utility-scale solar development project and its modular carbon solutions in North America. However, the asset just isn’t good value for money.

Brookfield Renewable Partners is overvalued relative to the industry, with an enterprise value to earnings before interest and tax ratio of 43.4. Additionally, the asset’s 3.8% forward dividend yield is under threat, with its interest coverage ratio barely coping at 1.1.

Dividend Stocks: Home Depot (HD)

Home Depot (NYSE:HD) has three significant headwinds. First off, demand for discretionary goods is in doubt. With inflation running high at 8.5%, we’re likely to see households cut back on non-necessary items.

Home Depot’s second issue is that it is severely overvalued, suggesting that investors have overbought the stock. HD stock is trading at a sector price-earnings premium of 66%, and its earnings per share growth is lagging its 5-year average by 3.3%.

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Furthermore, Home Depot’s dividend safety ratios are poor. The stock’s forward yield of 2.6% is accompanied by an underwhelming free cash flow yield to dividend yield of 1.9%, implying that its future dividend payouts are in danger.

United States Steel Corporation (X)

Analyzing the current state of the ferrous metals market is relatively straightforward. We’ve got inactivity in China with the nation’s political policies causing unstable demand. Furthermore, a contractionary global economy could suppress the company’s growth rates, resulting in an ultimate contraction of its profit margins.

United States Steel (NYSE:X) missed its first-quarter revenue target by $30 million, yet the firm’s management claims that it’s likely to break records in its second quarter. The firm’s CEO, David Burritt, was quoted saying, “We also generated free cash flow of over $400 million which enables the opportunity to meaningfully increase our direct returns to stockholders in the second quarter.”

I don’t have much confidence in Burritt’s statement. I mean, the firm has a payout ratio of only 0.78%, suggesting that X isn’t very shareholder-driven.

International Business Machines (IBM)

Many thought the Kyndryl spin-off would be IBM’s (NYSE:IBM) saving grace. However, the company continues to struggle as it has for many years. The cloud computing space has reached fever pitch, and crowdedness could cause IBM to spend excessively in the coming years, subsequently cutting its dividend.

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IBM stock’s style factors are poorly aligned with negative operating cash flows (-9.1%) and an underwhelming earnings-per-share (7.1%) projected for the following year. Additionally, IBM exhibits shady dividend safety metrics. The stock’s forward dividend yield of 5.1% is accompanied by a payout ratio of 106%, a dividend coverage of only 1.5, and a $4 billion shortfall on its pension plan.

Harley-Davidson (HOG)

Harley (NYSE:HOG) needs to enter a massive rebranding period over the next decade, meaning that it probably won’t be able to distribute much of its residual to investors. The company’s motorcycles aren’t appealing to the newer generation, as conveyed by the 4.13% drawdown in the company’s 5-year normalized net income growth rate.

The firm has attempted to rebrand itself by spinning off its LiveWire electric motorcycle division. However, rebranding takes time, and we’ll likely see a decade of negative earnings growth for Harley.

Harley’s dividend yield of 1.7% is met with a -15.6% 5-year growth rate, spelling a gloom forecast for its investors.

On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) 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.

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• Retiring is a big decision that requires a lot of planning, so let’s take a closer look at these popular retirement stocks and their use cases.
• Raytheon Technologies (RTX): The largest producer of guided missiles in the U.S. and one of the top 10 defense contractors in the world.
• JPMorgan Chase & Co. (JPM): One of the top ten banks worldwide as measured by total assets.
• Stag Industrial (STAG): A U.S. real estate investment trust (REIT) that invests in single-tenant and industrial properties.
• Costco Wholesale (COST): Its success has been attributed to its business strategy, which includes selling products at very low prices.
• Chevron (CVX): A “Dividend Aristocrat” that has been increasing its dividend payment for at least 25 years.
• Bank of Hawaii (BOH): A bank that has been in the market for more than 100 years.
• Digital Realty Trust (DLR): A publicly-traded REIT focused on owning and managing data centers with a solid yield of 3.34%.

There’s no doubt planning for your future with solid investments is a crucial decision to make. Buying retirement stocks may be a good way to help you save for your later years while also providing a source of income when you’re older.

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Don’t put off buying retirement stocks, as they can help you reach your financial goals. Investors should consider these prominent equities that are great for any long-term portfolio.

Raytheon Technologies Corporation (RTX)

Raytheon Technologies (NYSE:RTX) produces missiles, aircraft and satellites. It also provides cybersecurity solutions to government and commercial clients.

The company has been around for nearly 100 years. Raytheon started as a producer of vacuum tubes and other electronics but eventually became a major defense contractor, producing missiles and aircraft.

Raytheon’s products include the Patriot Missile System, Tomahawk Cruise Missiles, AIM-120 AMRAAM missile and the Joint Air-to-Surface Standoff Missile (JASSM).

The company receives much of its revenue from the U.S. government. Thankfully, this customer has a great payment history, which means defense companies and investors can plan better for future growth.

JPMorgan Chase & Co. (JPM)

JPMorgan Chase & Co. (NYSE:JPM) is a multinational banking and financial services corporation headquartered in New York City. It’s the largest bank in the United States with total assets of $3.7 trillion.

The company has a significant impact on the financial sector and the overall U.S. economy. Its revenue reached a record high of $48.3 billion last year despite headwinds. JPMorgan is also a strong dividend growth stock and sports a very high current yield at 3.2%.

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JPMorgan is the largest bank in the U.S. It tends to experience challenges from a valuation perspective, but its capabilities boost its net assets. In other words, it can provide more for investors with a lower risk of volatility over time.

STAG Industrial (STAG)

Stag Industrial (NYSE:STAG) is a real estate investment trust (REIT) that invests in single-tenant and industrial properties. The company manages more than $5.8 billion in assets with 551 buildings and 110 million square feet all across the U.S.

E-commerce has been around since the early 1990s, when online retailers started offering a wide range of products not available in physical stores. Retail e-commerce sales are projected to increase by 50% over the next four years, taking in more than $7.4 trillion by 2025.

The secular increase in e-commerce has created an opportunity for new businesses to enter this market. They can take advantage of this trend by offering their products and services to online customers as well as expanding their existing product line.

This trend will help Stag Industrial move forward. Its structure as a REIT also helps matters. It needs to distribute at least 90% of its revenue income to shareholders. Therefore, STAG stock is a premium income play.

Costco Wholesale (COST)

Costco Wholesale (NASDAQ:COST) is a warehouse club that offers memberships to buy items at bulk rates.

The company was founded in 1983 by Jim Sinegal and Jeffrey Brotman. It started as a single store in Seattle, Washington and has expanded to become one of the five biggest retailers in the United States, with more than 100 million members worldwide.

Costco is known for its low prices. But with the recent popularity of Amazon and other online retailers, Costco has had to change its strategy to stay competitive.

The company has had to implement new strategies such as sales promotions and increased product selection, and it is working well. Costco generated $192.1 billion in global sales in 2021, a significant 17.5% increase from the year-ago period.

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Costco’s competitive advantage is in its leadership position, built from marketing a new product category and price shopping for consumers. It has been around for many years, even through difficult economic periods. COST stock did particularly well during the worst recession in decades and appears to have exited the period stronger than it was when it entered it.

Chevron (CVX)

Chevron (NYSE:CVX) is one of the largest oil companies in the world, with a presence in more than 180 countries and territories. It operates in exploration and production, refining and retail marketing.

Chevron ranks as one of the top 20 largest companies on the S&P 500 index by market capitalization. It is also one of the six supermajors (five of which are state-owned enterprises) that dominate global oil production and trade.

Chevron is a Dividend Aristocrat, meaning it has increased its dividend for more than 25 years. The company says CVX stock is worth it, and its performance proves it. Investors have shown confidence in the company from a valuation standpoint over time.

Bank of Hawaii (BOH)

Bank of Hawaii (NYSE:BOH) has been in the market for more than 100 years. It is one of the largest financial institutions in the United States and is also one of the largest banks in the world.

Bank of Hawaii has many branches, ATMs and services to offer its customers. It has a wide range of products including mortgages, credit cards, personal loans and business banking.

Hawaii’s local culture is one of the reasons it’s such a popular destination for tourists and business travelers. Another reason is its tropical climate, which allows businesses to grow year-round without having to worry about harsh winter weather conditions.

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One of the key strengths of the Bank of Hawaii is its focus on the island’s requirements. It has a long history of delivering strong dividends and investing heavily in the region. Since the end of Q1, the total assets of the bank have increased by 0.9%. The bank has now reached a new record number with a total deposit amount of $20.7 billion.

Digital Realty Trust (DLR)

Digital Realty Trust (NYSE:DLR) is a commercial real estate company that focuses on the development and operation of data centers, office buildings, and other facilities.

It has developed over 300 data centers across the world. It is also one of the largest providers of wholesale data center space in North America. These facilities are often located in a remote part of the world, such as a desert or a cold region. This is done to reduce power usage and cooling costs. But it also means the cost of moving equipment may be high.

Digital Realty also provides crucial cloud and information technology services other companies need to function successfully. There were significant strides over the last decade for the big data center market, and growth is not yet slowing down. Therefore, the dividend for DLR stock is safe and future-proof.

On the publication date, Faizan Farooque 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.

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• Those looking for the best retirement stocks should consider companies tied to powerful market trajectories.
• American Water Works (AWK): A water utility investment, AWK is one of the retirement stocks that sells itself due to addressing critical needs.
• Dominion Energy (D): With retirement stocks to buy for any age, you really can’t go wrong with utility investments like Dominion.
• Iron Mountain (IRM): Comprehensive storage solutions makes IRM relevant amid a spike in data breaches and infrastructural compromises.
• Whirlpool (WHR): A company off the beaten path, WHR could enjoy downwind benefits due to the surge in home purchases.
• Hormel Foods (HRL): No matter what market cycle we’re in, food will always be critical, making HRL a no-brainer among retirement stocks to buy.
• Starbucks (SBUX): Given that Starbucks caters to the beverage preferences of Generation Z, you can grow with SBUX in your portfolio.
• Kimberly Clark (KMB): A popular manufacturer of important household goods, KMB is one of the most reliable retirement stocks to buy.
• Hasbro (HAS): A bit on the riskier side of retirement stocks, millennial family planning could bolster HAS.
• Exxon Mobil (XOM): Despite the pivot toward electric vehicles, XOM will probably be relevant for a very long time.
• Regency Centers (REG): Arguably the riskiest name on this list of retirement stocks, retail dynamics might benefit REG.

Although the main goal of the equities sector is universal — basically to get more out of it than you put in — the concept of retirement stocks to buy demonstrates that not every approach is the same. Particularly for those that are firmly in the midlife demographic, you want to be careful where you put your money to work.

While age may be just a number, certain realities cannot be ignored. As people head toward retirement, you want to make sure that the financial aircraft that you’re flying is aligned properly before touching down. True, tactical shifts can help achieve a successful landing but arguably most people prefer their financial health to be as predictable and uneventful as possible. That’s why it’s important to acquire appropriate retirement stocks.

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To be clear, everyone’s strategy will be different: There’s no one-size-fits-all solution here. Nevertheless, retirement stocks that are tied to vital and relevant economic undercurrents should enjoy a higher probability of success. With that in mind, here are some reliable ideas to consider.

American Water Works (AWK)

When deciphering the vast expanses of retirement stocks to buy, it’s a solid bet to think about the essentials of life. With water-related investments, you not only tie yourself to a precious resource, the relevance is probably going to expand exponentially. Yes, it’s terribly cynical but you’re likely not going to go wrong with American Water Works (NYSE:AWK).

As CNN recently reported, California has been suffering from multiyear megadroughts, exacerbated by an “alarmingly dry winter.” It’s not just a California problem, though, as multiple states — and countries — are suffering from water shortages. Therefore, it’s logical to assume that AWK’s water utility services will only grow in demand.

Admittedly, the stock’s year-to-date loss of 20% is distracting. However, against a longer-term framework, it’s one of the most critical retirement stocks to buy.

Dominion Energy (D)

More so than other investment categories, retirement stocks force people to make big assumptions about the future. Therefore, it’s not the wisest move to put all your eggs into baskets that are exposed to the whims of consumer preferences. Such trends can change on a dime. Instead, electing relevant stalwarts can take some of the guessing game out of long-term strategies, which is where Dominion Energy (NYSE:D) comes in.

As a utility firm, Dominion is natively pertinent to any economic cycle. Recession or not, booming times or depressing ones, bad things occur when people flip the switch and nothing happens. Particularly in the digitalization age, Dominion is absolutely critical.

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Another factor that bolsters the case for D as one of the retirement stocks to buy is the underlying coverage map. Focusing on Virginia and the Carolinas, millennials are moving to these states for cost-of-living reasons. Given the rise of inflation, this is a trend you can bank on.

Iron Mountain (IRM)

Speaking of digitalization, while myriad technology firms have advanced the cause of broader connectivity, securing vital information has never been more critical. As you’re well aware, cyberattacks and data breaches have been on the rise. Further, geopolitical tensions will not heal this unfortunate trajectory. The best we can do for now is data protection, making Iron Mountain (NYSE:IRM) a relevant idea among retirement stocks.

Among the many business units under Iron Mountain, its ability to secure and accommodate “storage needs for any amount of information, in any format” is especially intriguing. With digital data becoming increasingly vulnerable to sophisticated attack schemes, major institutions will likely rely upon IRM’s iron-tight security protocols.

As well, the company has a firm grip of contemporary needs, offering secure cloud-computing storage needs. Given the complexities of future threat paradigms, Iron Mountain is a name you can depend regarding retirement stocks to buy.

Whirlpool (WHR)

On the subject of deciphering the future of real estate prices, seemingly everyone has an opinion. Personally, I’m a bit skeptical about the idea that prices will keep rising. Nevertheless, what’s not in doubt was that 2021 was a spectacular year for the housing market. The circumstances of the new normal caused people to rush out and buy a home, which may bring downwind benefits for Whirlpool (NYSE:WHR).

Since the housing boom represented a seller’s market, many if not most buyers compromised on contingencies. By logical deduction, then, it’s very possible that these new homeowners will need to do some upgrading and repairs. At least a component of this upcoming cash outlay will be for appliances, which is why WHR could be an interesting name among retirement stocks to buy.

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WHR also enjoys a 3.5% dividend yield.

Hormel Foods (HRL)

I’m not going to get any style points for mentioning Hormel Foods (NYSE:HRL) as one of the retirement stocks to buy — or at least consider if you’re in the plus-50 demographic. It’s predictable, yes even unoriginal. But predictable and unoriginal often works just fine for future planning.

Try as we might, the latest advancements that we’ve seen in recent years — cloud computing, decentralized blockchain applications, the metaverse — cannot separate our minds from our physical needs. Hormel provides the sustenance that we all require. Further, competition from plant-based protein providers has yet to change the paradigm of the food manufacturing and processing industry.

Essentially, HRL deals with realities, as evidenced by its 7% YTD performance. It’s not the greatest tally but over the same frame, the benchmark S&P 500 index is down 16%.

Starbucks (SBUX)

As you can see from the retirement stocks above, this list is heavily geared toward necessities for a reason. Frankly, it’s difficult to imagine what will be popular in the consumer discretionary sector. Nevertheless, one of the ultimate frivolous luxuries — in the sense that you can always opt for cheaper alternatives — in Starbucks (NASDAQ:SBUX) may be a reasonable bet for retirement planning.

For one thing, every age group needs their caffeine fix and Starbucks enjoys an attractive and compelling international brand. But the more important factor is the emerging Generation Z. This demographic generally favors iced coffee, which is an area that Starbucks specializes in. Should the trend change to hot coffee, well, guess what? The company can easily accommodate because it does coffee in every way imaginable.

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Now, it is a risky bet at the moment because it’s down 35% YTD. Still, for patient investors, it can be an attractive discount.

Kimberly Clark (KMB)

Another name that’s not going to win any style points is Kimberly Clark (NYSE:KMB). Indeed, you might call it the quintessential idea among retirement stocks to buy: boring, unassuming but always relevant. I don’t care how cool you think you are, everyone needs essential household goods. And Kimberly Clark has been delivering for generations.

What makes KMB particularly enticing at this juncture is its recession-resilient profile. Although no one has a crystal ball on such matters, several analysts have been steadily sounding the alarm about an incoming downturn. Let’s say we do get the recession that seemingly everyone’s talking about. In that case, KMB may weather the storm quite well.

Household goods will be one of the last categories where people will take aim regarding budget-cutting initiatives.

Hasbro (HAS)

As an ultra-long-term investment idea, I’m not entirely sure if Hasbro (NASDAQ:HAS) is appropriate. That’s because data from the U.S. Census Bureau demonstrates that population growth is expanding at a slower rate. Moreover, given that Hasbro is a global provider of toys and amusement products, such trends are problematic because other countries have far worse demographic challenges.

But within the next decade or two, HAS could be a surprising idea among retirement stocks to buy. For instance, with millennials purchasing homes in great numbers throughout the new normal, it indicates a desire to start families. Therefore, HAS might receive downwind benefits, particularly as millennials overall mature into family planning age brackets.

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Notably, HAS picked up significant momentum in the trailing month, gaining nearly 11%. For the investor that doesn’t mind adding a little risk to their portfolio, Hasbro could provide some excitement.

Exxon Mobil (XOM)

For years, both the public and policymakers have pivoted toward electric vehicles and developing the infrastructures necessary for their integration. In turn, big oil firms like Exxon Mobil (NYSE:XOM) have fallen out of favor, at least from a sentiment perspective. Despite the less-than-ideal optics, though, investors will want to consider adding XOM as one of their retirement stocks.

Sure, EVs can lower our carbon footprint. And the geopolitical flashpoint in eastern Europe has world leaders accelerating initiatives geared toward renewable energy solutions, which indirectly impact EVs. But for all the huffing and puffing, fossil fuels will likely maintain their relevance due to energy density. Simply, hydrocarbons provide more bang for the buck.

Further, the EV-versus-combustion-car debate doesn’t have to be binary. It might very well be a concurrent sentence, where fossil fuels and the electrification of transportation more or less harmonize. In such a case, XOM will be relevant.

Regency Centers (REG)

Mentioning Regency Centers (NASDAQ:REG) goes against my instinct regarding a possible downturn in the economy. So, I’m sticking REG last on this list of ideas for retirement stocks to buy. Only engage Regency if you have conviction in this investment.

To be fair, one aspect about REG is intriguing and that has to do with the dynamics associated with the new normal. After the initial impact of the coronavirus pandemic, consumers pivoted to e-commerce as a necessity. But this transition didn’t stick. In fact, e-commerce as a percentage of total retail sales peaked in the second quarter of 2020, steadily eroding since then.

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Therefore, one conclusion is that people prefer the social element of shopping in person. Plus, if we do encounter a downturn, consumers may look to save money on shipping costs by getting their products at brick-and-mortar locations.

On the date of publication, Josh Enomoto 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.

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• Business development companies (or BDCs) offer generous yields to income investors.
• Great Elm Capital (GECC) is a BDC that makes loans and middle market investments.
• Newtek Business Service (NEWT) provides financial and business services to small and medium-sized businesses in the U.S.
• Capital Southwest (CSWC) offers credit and private equity investments in middle market companies, but also invests in buyouts, recapitalizations and late venture-stage companies.

When it comes to investing for dividends, the strategies that are available in the market are numerous. They include investing for dividend growth, dividend safety, and the subject of this article, high current yield. Depending upon one’s goals, one of these may suit best, or in some cases, a combination of these strategies is best.

As part of executing a strategy that involves seeking high yields, sector selection plays a big role. After all, technology and consumer discretionary stocks, for instance, tend to have low yields, so they’d be inappropriate. So where can investors turn for high current yields?

Business development companies offer generous yields because they’re required to distribute substantially all of their earnings to shareholders. BDCs receive favorable tax treatment, and in return, they aren’t allowed to retain earnings in the same way other companies are. That’s good for income investors because yields in the sector are routinely in the mid-single digits or better.

In this article, we’ll take a look at three BDCs we like today with high dividend yields, even by BDC standards, to help jumpstart the search for high-yield components for an investor’s portfolio.

BDCs: Great Elm Capital (GECC)

Our first BDC is Great Elm Capital, a BDC that makes loans and middle market investments. The company primarily makes debt investments from which it hopes to generate interest income, although it does make targeted income-producing equity investments at times.

Great Elm has a relatively narrow focus for a BDC, in that it prefers investments in media, commercial services and supplies, healthcare, telecom, and communications equipment. Many BDCs choose to diversify their industry exposure as much as possible to reduce risk, but Great Elm has chosen a more targeted strategy.

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The company typically invests between $3 million and $10 million per target company, and targets generally have between $3 million and $75 million in annual revenue. These are companies that are generally to small to be able to access public markets funding, which is where the BDC steps in, the so-called “middle market.”

Great Elm was founded in 2016, so it’s a relatively new firm, is set to produce about $27 million in revenue this year, and trades with a market capitalization of $67 million. Given this, scale is certainly not an advantage Great Elm enjoys.

Great Elm made the list because it’s yield is otherworldly, clocking in at a staggering 16.6%. This is due to an extremely high payout, but also the bout of weakness the stock has suffered so far this year. This combination has produced a world-beating yield, but of course, this kind of yield carries with it inherent risks.

Investors would generally flock to a “guaranteed” 16% annual return through dividends, but in Great Elm’s case, the market is likely discounting a dividend cut. The company’s most recent dividend paid was 60 cents per share, paid on a quarterly basis, or $2.40 per share annually. However, we see earnings at just $1.53 for this year, meaning there’s a funding gap of nearly a dollar per share. Great Elm can fill that gap temporarily through debt or equity issuance, but those methods cannot carry on forever.

Thus, we caution on Great Elm that the yield is extremely high today, and may remain that way for some time, but that the risk of a dividend cut is quite elevated.

Newtek Business Service (NEWT)

Our next BDC is Newtek Business Service Corp. a company that provides financial and business services to small and medium-sized businesses in the U.S. Newtek operates a segment that is a traditional BDC – one that makes investments in middle market companies – but it also has a diverse suite of other services it provides outside the normal realm of a BDC.

Other services include electronic payment processing, loan origination, technology solutions such as web hosting and data storage, insurance, payroll management, tax filing and much more.

Newtek was founded in 2013, should generate about $79 million in revenue this year, and trades with a market capitalization of $612 million.

Newtek pays a variable dividend, so it rises and falls with each declaration, typically. The most recent quarterly dividend was 75 cents per share, or $3 on an annualized basis. That is good enough to give Newtek a 13% yield today, but as was the case with Great Elm, investors must understand the risk involved.

We see $2.66 in earnings for this year on a per-share basis, meaning the most recent dividend – on an annualized basis – would exceed earnings. Whether that results in a cut ultimately remains to be seen, but for now, Newtek offers a yield that is about 10 times that of the S&P 500.

BDCs: Capital Southwest (CSWC)

Our final BDC is Capital Southwest, a BDC that offers credit and private equity investments in middle market companies, but also invests in buyouts, recapitalizations, and late venture stage companies. The company is highly diversified in terms of industry exposure, and investments tend to range between $5 million and $25 million per portfolio company. Capital Southwest selects companies with $10 million in revenue or more, profitable operations, and a growth rate of at least 15% annually.

The BDC was founded in 1961, should produce about $83 million in revenue this year, and trades with a market capitalization of $558 million.

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Capital Southwest’s most recent dividend declaration included a payout of 48 cents per share for the regular dividend, but also a special dividend of 15 cents per share. The normal payout annualizes to $1.92, or a yield of 8.2%. The special dividend boosts that by another 0.6%.

While the yield is lower for Capital Southwest than the others on this list, we see its payout as much safer. We believe Capital Southwest can produce almost $2 per share in earnings this year, meaning it can very likely cover the dividend.

Final Thoughts

While not all BDCs are created equal, if one knows where to look, some truly outstanding dividend yields can be found. We’ve highlighted three examples – Great Elm, Newtek, and Capital Southwest – that offer market-beating yields with varying levels of safety and growth.

While BDC investing isn’t suitable for everyone, for those focused on income generation, the group can provide a pure-play income opportunity.

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• These dividend stocks will very likely keep their payouts at the same or higher levels, given their history and cash flows.
• AT&T (T): The company clearly has the ability to fund its $1.11 dividend payout now that it has spun off Warner Bros Discovery (WBD). The stock yields 5.7%.
• Exxon Mobil (XOM): This company refused to cut its dividend during the Covid crisis.
• Clorox (CLX): People will still use cleaning products during a recession. The company has a robust history of increasing its dividend over the last 20 years.
• The Proctor and Gamble Co. (PG): This company has had 66 years of annual consecutive dividend increases, including a recent increase to 91.33 cents.
• Hormel Foods (HRL): This company has consistently raised its dividend over the last 50 years. In the last 20 years, its average annual dividend increase has been 13%.
• Kroger (KR): Kroger has been paying higher dividends over the last 17 years. People will still go to retail stores, even during a recession.

It’s important to know that investing in dividend stocks is about consistency and the ability to pay even in the direst of economic circumstances. After all, this is the chief advantage that dividend stocks have over bonds. Bond coupons are not raised. If inflation rises, they cannot adapt, as dividends can. This is why it is almost always better to stick with dividend-paying stocks with a long history of increases.

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Here is a simple example of how this works. The average dividend yield of each of these six stocks is about 3% (3.03%). Let’s assume that their average dividend growth is 8% each year for the next 10 years. If we compare that with a bond with a higher coupon, say 3.5%, the results are very interesting.

Over the 10 years, an investor who puts $1,000 in these dividend-paying stocks will receive a total of $438.46 in dividend payments. But the investor with $1,000 in a 4% coupon bond will receive just $400 in payments over that 10-year period. That means that even though the initial yield of 3.03% from dividend stocks is lower than the 4.0% coupon bond, the stock investors collect more income over the next 10 years from dividend growth.

Click to Enlarge

This can be seen in the chart on the right, which shows that by year eight, the cumulative dividend payments have overtaken the cumulative bond payments.

One way to ensure this is to look at the company’s payout ratio. This compares the cost of dividends to the earnings of the company. As long as the dividend per share stays below the earnings per share level, you can be reasonably assured the company’s board won’t balk at raising the dividend. Another important factor is how long the company has been raising its dividend.

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We will look at both of these factors in the following six dividend stocks.

AT&T (T)

Market Cap: $135 billion
Dividend Yield: 5.7%

AT&T (NYSE:T) recently spun off its WarnerMedia division to its shareholders and then immediately merged it with Discovery Inc. The new company is called Warner Bros. Discovery (NASDAQ:WBD).

In the process, AT&T lowered its $2.08 dividend per share to $1.11. At today’s price, that gives it a 5.7% dividend yield, but its payment is now more secure. That is because the company has said that this will be about 40% or so of its free cash flow (FCF). As FCF grows from the now-more-focused telecom operations of AT&T, it can increase the dividend.

In fact, AT&T says that it is in the mid-90th percentile of high-dividend-yield payers, even with this lower dividend payment. Moreover, as a result of the WBD transaction, AT&T received $43 billion, which it’s using to pay down debt.

This also makes the dividend very secure on an ongoing basis for investors.

As a result, the dividend payout ratio looks very comfortable. For example, for 2023, 21 analysts surveyed by Refinitv forecast its earnings per share (EPS) at $2.55. That means that the $1.11 dividend per share (DPS) is only 43.5% of its EPS. With this high yield and low payout ratio, T stock looks like one of the best dividend stocks.

Exxon Mobil (XOM)

Market Cap: $361 billion
Dividend Yield: 4.1%

Exxon Mobil (NYSE:XOM) pays out a dividend of $3.52 annually, giving it a 4.1% dividend yield. Moreover, analysts expect that this year its EPS will reach $9.07 this year and (assuming lower oil prices) $7.65 next year. This implies that its payout ratio is still very comfortable at 46% even on the lower 2023 forecasts.

One of the main reasons that you can expect that Exxon won’t cut its dividend is that it refused to do so during the height of the pandemic. I wrote about this in a separate InvestorPlace article a year ago, arguing that as a result, it was a good bargain. Exxon could afford to do this because it was not buying back shares at the time.

Now that its cash flow is much stronger, Exxon has reinstituted its share buyback program. It can afford to do so now that it is cutting out $9 billion in extra costs, as shown in its recent Investor Day presentation.

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That helps companies to raise their dividends for the same cost to their finances. This makes their payout stronger. XOM looks like one of the better dividend stocks as a result.

Clorox (CLX)

Market Cap: $17.7 billion
Dividend Yield: 3.1%

Clorox (NYSE:CLX) produces around 360 brand names in the cleaning space. Consumers love its products, and the company was especially popular during the Covid-19 crisis. Now that the pandemic has abated, its earnings are falling this year, but are expected to rise again next year.

This year EPS should hit $4.18 per share, which is below its DPS of $4.64. However, by next year, it will be above the DPS at $5.63, according to analysts.

In the last five years, Clorox has grown its dividend by over 7.7%, and in the last 10 years, it has averaged annual growth of 6.8%, according to Seeking Alpha. This should be a comfort to investors, showing that the company intends to grow its dividend over the near and long term.

The Proctor and Gamble Co (PG)

Market Cap: $385 billion
Dividend Yield: 2.2%

The Proctor and Gamble Company (NYSE:PG) is a consumer goods company with an array of popular brands and 66 years of annual dividend increases — including a recent increase to 91.33 cents as of April 12. That puts its annual dividend at around $3.65 per share, well below analyst EPS forecasts of $5.84 this year and $6.25 next year.

Moreover, over the last 10 years, Proctor and Gamble Company has had an average compound dividend growth rate of 5.13% each year according to Seeking Alpha. That is a very consistent growth rate and implies that investors can expect that in 10 years, the dividend will be 64.9% higher than when it started.

The simple fact is that Proctor and Gamble Company has many consumer brands that people love and will continue to buy, even during a recession.

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It operates in five segments: beauty; grooming; health care; fabric & home care; and baby, feminine & family care. This is what powers its strong growth and makes PG stock one of the best dividend stocks going forward.

Hormel Foods (HRL)

Market Cap: $29 billion
Dividend Yield: 1.9%

Hormel Foods Corp (NYSE:HRL) produces grocery and refrigerated products and has iconic brands such as Planters, Skippy, SPAM, Natural Choice, Hormel, Black Label, and over 30 others. The company has consistently raised its dividend for over 20 years.

For example, last year it paid out 98 cents in dividends per share. This year it is on track to pay $1.04 in DPS, or 6.1% more. Seeking Alpha calculates that Hormel has grown its dividend by 9.9% in the past five years on average.

The point is that the dividend is rising each year along with the company’s earnings.

Analysts forecast that Hormel will produce $1.93 in EPS this year and over $2.10 next year. That is well over the $1.04 per share in dividends, putting its payout ratio at 54%. This makes HRL stock one of the best dividend stocks to hold if a recession happens.

Kroger (KR)

Market Cap: $39 billion
Dividend Yield: 1.5%

Kroger (NYSE:KR) is one of the top grocery and drug store retailers in the U.S., with over 2,726 supermarkets in the U.S. Its annual 84 cents per share dividend is well below the company’s forecast EPS of $3.81 this year and $3.97 next year.

Moreover, over the past five years, Kroger has grown its DPS by 11.74% on average each year, according to Seeking Alpha. In fact, in the last four quarters, it has paid out 21 cents per quarter, which was 16.7% higher than the average of 18 cents paid per quarter prior to this.

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In fact, Kroger is due to make an announcement before the end of June about its next quarterly dividend hike. This could make KR stock one of the more interesting dividend stocks — especially if its dividend rises substantially.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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.

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• Russia’s invasion of Ukraine has sparked interest in agriculture stocks.
• Archer-Daniels-Midland (ADM): Archer-Daniels-Midland is the largest publicly traded farmland product company in the U.S.
• Deere (DE): Deere is a top name in the manufacturing of farm equipment.
• Scotts Miracle-Gro (SMG) : A leading provider of consumer lawn and garden products, Scotts Miracle-Gro offers many household names.

Russia’s invasion of Ukraine has sparked interest in agriculture stocks after the conflict triggered substantial increases in commodity prices since it began several months ago.

Ukraine is one of the leading exporters of corn, sunflower oil and wheat. Grain exports used to total nearly 5 million tons per month for the country, but now exports sit at close to just 500,000 tons per month.

As a result, food prices are likely to remain high for at least as long as the war continues.

In addition, the United Nations reports that the world will need to produce 60% more food to feed an estimated 9.3 billion people by 2050.

Near record highs for global food products in the short term coupled with the need for aggressive food production in the long term will likely mean strong results for companies operating in the agricultural space.

Here are three of our favorite agricultural stocks.

Archer-Daniels-Midland (ADM)

Our first pick among agricultural stocks is Archer-Daniels-Midland (NYSE:ADM), the largest publicly traded farmland product company in the U.S. The $53 billion company has generated revenue of more than $85 billion last year.

Thanks to its size, Archer-Daniels-Midland benefits from economies of size and scale. The company had approximately 450 crop procurement locations, 320 food and feed processing facilities, and more than 60 innovation centers. The company also has a significant presence in international markets due to its global distribution system. There are few, if any, companies that can match Archer-Daniels-Midland’s infrastructure both domestically and internationally.

Archer-Daniels-Midland has four segments, including carbohydrate solutions, nutrition, origination, and oilseeds. The company produces a vast variety of products and services used in the agricultural industry, which will be needed to meet the ever-growing demand for food production to feed increases in population.

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And with a large product portfolio, the company can act as a one-stop-shop for customers seeking to fill their needs. These factors should allow the company to be well-positioned to see growth not just in the short-term, but also the long-term as world population’s need for food increases.

Archer-Daniels-Midland’s business model has proven to be very recession proof as food demand often remains consistent during economic downturns. The company saw earnings-per-share grow almost 29% from 2007 to 2009. More recently, Archer-Daniels-Midland weathered the worst of the Covid-19 pandemic extremely well as bottom-line results improved 29% from 2019 to 2020.

This ability to grow in recessions is a major reason why Archer-Daniels-Midland has raised its dividend for 47 years, qualifying the company as a Dividend Aristocrat and placing it just three years away from attaining Dividend King status. It is likely that Archer-Daniels-Midland’s dividend growth streak continues as the expected payout ratio for 2022 is just 31%. Shares of the company yield 1.7%, slightly above the average yield of 1.5% for the S&P 500.

Deere (DE)

Next up is Deere & Company (NYSE:DE), a top name in the manufacturing of farm equipment. The company has a market capitalization of $119 billion and has produced revenue of $44.5 billion over the last twelve-months.

Deere is the largest farm equipment manufacturer in the world, which provides it advantages over its smaller competitors due to the sheer size and reach of its business. The company also produces equipment used by customers in such areas such as construction and forestry and turf care.

Deere’s size prevents would be competitors from taking market share from the company as its global network of dealers is financially difficult to copy. This also helps the company secure top pricing as it doesn’t have to discount its products in order to capture market share.

Deere has taken steps to augment its business with strategic acquisitions. Sometimes acquisitions are more of the smaller, bolt-on type, such as the company’s $305 million purchase of Blue River Technology in 2017 that added robotic herbicide sprayers to the product portfolio.

Other times, Deere makes larger purchases to improve its standing in an area it doesn’t have much of a presence. A good example of this is the company’s $5.2 billion addition of Wirtgen Group, which manufactures road construction equipment. Prior to this deal, Deere did not produce road building equipment, such as pavers, but now is an industry leader in such equipment.

Unlike Archer-Daniels-Midland, Deere is much more of a cyclical company. Customers tend to make new investment in machinery when their businesses are seeing growth. When times are more challenging, they put off making massive outlays of capital. As a result, earnings-per-share were cut in half during the last recession. Then Covid-19, and the resulting shutdown of large parts of the global economy, caused a 14% decrease in earnings-per-share in 2020.

The good news is that while Deere is susceptible to downturns in the economy, demand for its products in periods of growth is substantial. The company experienced sharp rebounds in its business immediately after these difficult periods. Earnings-per-share grew 111% in fiscal year 2010 and surged almost 119% last fiscal year.

Deere has paused its dividend several times over the long term, including from 2015 to 2017 and from 2019 to 2020. These were likely prudent decisions as the company dealt with some uncertainty in its business. Investors will note that the company hasn’t cut its dividend during this time. We expect that Deere will continue to grow its dividend going forward as the projected payout ratio for this year is just 19%. Deere yields 1.1% currently.

Scotts Miracle-Gro (SMG)

Our final agricultural name for consideration is Scotts Miracle-Gro Company (NYSE:SMG), a leading provider of consumer lawn and garden products. The company is valued at nearly $6 billion and generates close to $5 billion of annual sales.

Scotts Miracle-Gro’s portfolio contains several household names, including the namesakes Scotts and Miracle-Gro. The company is the most recognizable name in lawn and garden care in the U.S.

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Having well-known and trusted brands gives Scotts Miracle-Gro a leg up on the competition. Home improvement stores, both national and local, favor the company’s products as they can help drive store traffic. Brand recognition and prime shelf space affords the company the ability to charge premium prices compared to its competitors without negatively impacting its market share. Scotts Miracle-Gro is the rare company that can increases its product pricing while also improving its standing in its industry.

Scotts Miracle-Gro has a growing hydroponics business as well. Currently just a 25% contributor to sales, this area should become more important as the need for indoor and year-round food production increases along with food demand.

The company struggled during the Great Recession as earnings-per-share turned negative in 2008. Scotts Miracle-Gro did rebound to record a new high for earnings-per-share the very next year. During 2020, bottom-line results declined 7%, before establishing another new high in 2021.

Scotts Miracle-Gro has raised its dividend for the past 12 years. We believe that the company will continue to provide future dividend growth as well as the payout ratio is expected to be 31% this year. Shares of the company yield 2.6%, nearly twice the average yield of the S&P 500 Index.

Final Thoughts

The ongoing war in Ukraine has caused commodity prices to hit fresh highs in recent months. Looking out further, food production is going to need to ramp up in order to meet growing demand over the next three decades.

With both short-term and long-term tailwinds, the agricultural industry should be one of the higher growth areas in the market place. This likely means higher dividend yields as well.

Archer-Daniels-Midland, Deere  and Scotts Miracle-Gro have competitive advantages over its peer group, making each the best-of-breed in its respective industry. Investors looking to profit from growing demand for agricultural products, we suggest they consider one of these stocks for their portfolio.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Home Depot (NYSE:HD) has been dominating the market for years. It’s a company to own both when the market is up and when it is down. With more than 2,300 stores across the United States, Mexico and Canada, there is no stopping Home Depot, and investors looking to strengthen their portfolios should consider HD stock.

If you want to build a solid retirement portfolio, HD stock is the one to invest in. The stock isn’t having its best days yet, but there is a chance to grow. Despite losing almost 17% of its value over the past six months, HD stock is a strong buy. It is trading at a bit over $308 today and has had a good week, up 3%.

Over the past two years, we spent a lot of time indoors and focused on the home. This helped Home Depot make solid revenue and generate an impressive cash flow. Consumer staples are always seen as a classic defensive play, and they pay solid dividends. Goldman Sachs has recently added HD stock to its best defensive picks list.

The gloomy forecast and inflation concerns may have an impact on the stock, but it will fizzle out in the long term. For now, the company has a dividend yield of 2.4%, which is a solid passive income generator. With solid cash flow, the company has enough room to keep growing the dividend in the future.

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Analysts believe the price of HD stock will continue to rise and have an average target price of $373.41. HD stock can sustain market volatility and it can recession-proof your portfolio. The current dip in the stock is a good chance to make the move. Hold it for the long term to make the most of the dividends and the growth.

On the date of publication, Vandita Jadeja 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.

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• 3M Company (MMM): This dividend stock has been paying dividends to its shareholders for more than 100 years.
• AbbVie (ABBV): AbbVie has doubled its dividend over a span of seven years, after its spin-off from Abbot  Laboratories.
• Johnson & Johnson (JNJ): The firm has raised its dividend for 60 consecutive years.

Dividend stocks give value investors a regular source of income. And in the current high-inflation environment, investing in dividend aristocrats is considered a safe bet as they provide hedge against rising inflation.

In March 2022, the United States authorities reported an annual inflation rate of 8.5%. This is highest in the last 40 years.

Also given low bond yields, investing in dividend stocks is prudent as returns would be higher. Investors should be cautious in selecting these stocks.

Below are three companies that have been distributing dividends for more than 50 years. These companies have sustained their dividends, even during unfavorable economic conditions. I have selected these stocks after considering their track record of steady performance, as well as their future growth prospects.

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From the valuation perspective, these dividend stocks are currently trading at discounts compared to their peer group average, making them an attractive investment proposition.

3M Company (MMM)

3M Company (NYSE:MMM) has paid dividends to its shareholders without interruption for more than 100 years. The company has steadily increased its annual dividend for 64 consecutive years.

The dividend payout has increased at an annualized rate of around 10% over the past decade. The company has a dividend yield of 4%, higher than the 30-day SEC yield of 1.4% of the Vanguard Industrial Index ETF (NYSEARCA:VIS).

3M is a diversified technology company that manufactures and marketer of variety of products used in daily life. Over the last five years, the company has grown at a stable rate of 3.3%.

In 2021, its revenues increase 9.9% primarily led by an 8.8% growth in organic sales and a 1.6% favorable impact from currency translations.

Going forward, management estimates organic sales to grow in the range of 2% to 5%. Earnings per share (EPS) are expected in the range of $10.15 to $10.65.  Free cash flow (FCF) is likely to be between $5.3 billion and $6.2 billion.

Although the estimates can be impacted by supply chain disruptions, the company has adequate cashflows to sustain its dividends and capex plans.

AbbVie (ABBV)

AbbVie (NYSE:ABBV) was formed in 2013 from the spinoff of Abbott Laboratories (NYSE:ABT). The company is a biopharmaceutical firm that discovers, develops, manufactures, and sells its products globally.

The company is known for its drug Humira, an immunology medication with several uses.

Over the last five years, ABBV has grown at an impressive compounded annual rate of 17%. However, this drug is expected to lose its patent in 2022.

Regulatory approval of its Rinvoq drug (used in treating patients with moderate to severe ulcerative colitis) should keep the growth momentum going. The drug is likely to generate more than $400 million in annual sales.

Further, the company expects to achieve over $2 billion worth of synergy from its acquisition of Allergan to develop new aesthetics business.

In 2022, the board raised its dividend by 8.5% in 2022 to $1.41 a share. Counting its time as part of ABT, the company has raised dividends for over 50 years.

Overall, AbbVie has raised its dividend 250% after its spin-off and maintained a pay-out ratio of 88%. It has a dividend yield of 3.6%.

For 2022, management anticipates adjusted earnings of $14-$14.20 per share, up by 10% year-over-year.

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Free cash flow is expected to be $24 billion, which it will utilized in paying debts, investing in its robust pipeline of products and support its dividend.

Johnson & Johnson (JNJ)

The last of our dividend stocks, Johnson & Johnson (NYSE:JNJ), is a healthcare provider in the United States. The firm researches and develops, manufactures and sells various products in categories like consumer health, pharmaceuticals, and medical devices.

The company’s greatest strengths lie in its size and diversity of revenue streams. Over the last five years, JNJ has recorded a compounded annual revenue growth rate of 5.6%.

In the first quarter of 2022, the company reported revenues of $23.4 billion, up 5% year-over-year, led by strength in all its segments on an operational basis (excluding the impact of currency). Earnings of $2.67 per share overshadowed consensus estimates by 7 cents per share.

The board has raised its dividend for 60 consecutive years, including a 6.6% increase in Q1 2022 to $1.13 per share. At present, this provides a yield of about 2.5%, and maintains a payout ratio of 57%.

However, management lowered its FY 2022 guidance due to a slower demand for Covid-19 vaccine.

Excluding revenues from the Covid-19 vaccine, the company is expected to generate revenues in the range of $94.8 billion to $95.8 billion, down from its previously estimation of $95.9 billion to $96.9 billion. Organic sales are likely to grow in the range of 6.5%-7.5%.

Adjusted earnings per share is now forecasted in the range of $10.15-$10.35, down from $10.40-$10.60 per share guided previously.

On the date of publication, Sakshi Agarwalla 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.

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• Pfizer (PFE) has a huge windfall from its Covid-19 vaccine.
• Pfizer is now under pressure to limit that windfall and spend it on new treatments.
• The company also faces a patent cliff on its other drugs.

Pfizer (NYSE:PFE) stock, a long-time stock market laggard, found new life with the Covid-19 pandemic. Comirnaty, the vaccine it produced with BioNTech (NASDAQ:BNTX), delivered 60% gains for shareholders during 2021. Covid-19 made Pfizer’s Chief Executive Officer Albert Bourla a best-selling author and a star.

But investors look at the future, not the past. Since the start of 2022, Pfizer stock is down over 16%. So is the iShares Biotechnology ETF (NASDAQ:IBB), which tracks the biotech industry. The result is that Pfizer stock is deceptively cheap today. At slightly under $50 per share, it sports a price to earnings multiple under 13. It also has a 40 cent per share dividend now yielding 3.2%.

What Pfizer needs is a story to tell that doesn’t involve Covid-19.

Pfizer’s Gamble

Pfizer stock gained 11% between 2017 and early 2020. This not only paled before the S&P’s gain of 46%, but the IBB’s gain of 30%.

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Like other big drug makers, Pfizer spun-off its generics division. These were combined, along with the former Mylan, into Viatris (NASDAQ:VTRS). Since the spin-off last year, Viatris stock is down 30%. Pfizer is up 35%.

The Pfizer pipeline now has 89 listings, with 10 drugs going through registration, the last step before sale. Many inhibit the actions of proteins called kinases. They include new uses for Xeljanz, a kinase inhibitor. The patents for such begin expiring in 2026. They also include Ibrance, a CDK 4/6 inhibitor used to treat breast cancer. Its patent runs to 2027.

Most of Pfizer’s revenue still came from Comirnaty, however. With the pandemic becoming an endemic, Pfizer is under pressure from activists to share the technology. Sales for its Covid-19 anti-viral treatment, called Paxlovid, are already slumping.

Spending the Windfall

At the end of 2021, Pfizer had piled up $31 billion in cash and short-term investments. This is thanks to almost $37 billion in revenue from Comirnaty. At the end of 2019, before the pandemic hit, the company had less than $10 billion in cash.

Like Gilead (NASDAQ:GILD), whose valuation fell after its hepatitis-C cures proved effective, Pfizer is now under pressure to reinvest its Covid-19 windfall. This means the key man at Pfizer today isn’t Bourla, but David Denton, the incoming chief financial officer. Denton is best-known for acquiring Aetna for CVS Health (NYSE:CVS) and new deals are expected to be made by him.

Pfizer’s first post-Covid deal was to buy Arena Pharmaceuticals for $6.7 billion. Its Etrasimod, an anti-inflammatory drug for ulcerative colitis and atopic dermatitis, has performed well in Phase 3 trials. But Bristol Myers Squibb (NYSE:BMY) also has a drug in this area, Zeposia.

Currently, the market battle is over which patients might get the best relief from each drug. But regulators, especially in Europe, are eventually going to look at price. Cost-effectiveness is a war no drug company seems ready to wage yet.

The Bottom Line on PFE Stock

Pfizer is a conservative investment, a true dividend aristocrat. It has paid a dividend continuously since 1980. Pfizer spent $8.7 billion on dividends in 2021, but still had $38.7 billion in debt at the end of the year. This makes Pfizer a speculative stock until investors see where Denton is going to put its Covid-19 money.

The whole industry is pushing against the health care system’s ability to pay. You can’t have an unlimited draw from a limited pool of funds. The current system means wealthy people can live 10 to 15 years longer than people with less money.

Covid-19 hasn’t changed this. The costs of Pfizer’s vaccine has created pushback, even against drugs that treat common conditions. It will take all Bourla’s political skills and all of Denton’s deal-making skills to maintain Pfizer’s valuation.

Buy it for the dividend, but don’t expect miracles.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• ZIM Integrated Shipping Services (ZIM) stock is an undervalued gem that offers outstanding yield.
• Moreover, the company’s financials are airtight.
• Investors should start a position in ZIM stock while it’s valuation is still low.

ZIM Integrated Shipping Services (NYSE:ZIM) is headquartered in Israel and provides container shipping services. There are many reasons for value-conscious and income-focused investors to own ZIM stock now.

The company has actually been around since 1945. However, ZIM Integrated Shipping Services became a container-shipping pioneer in the early 1970s.

It’s not difficult to see why the company is relevant in 2022, a year in which supply-chain bottlenecks have thrust the shipping industry into the spotlight. ZIM operates a fleet of around 100 vessels across five geographic trade zones, so it’s a truly multi-national business.

Some of the numbers we’re about to dig up might surprise you. These should be positive surprises, though — and in the end, you might even be persuaded to start a position in ZIM Integrated Shipping Services.

What’s Happening with ZIM Stock?

So, here’s the first surprising number. Believe it or not, ZIM stock offers a forward annual dividend yield of 34.87%.

Now, that’s what you would call a hefty yield. Some folks might even say it’s too much. Can the company afford to pay a 34.87% dividend?

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We’ll explore ZIM Integrated Shipping Services’ financial in a moment, and hopefully you’ll be convinced that the company is in a strong enough financial position to pay those dividend distributions.

Income-focused investors have to admit, it’s tempting to buy and hold ZIM stock just for the sizable yield. Yet, there are other reasons to own the stock.

Are you ready for another shocking number? Believe it or not, ZIM’s trailing 12-month price-to-earnings ratio is 1.41. That’s a rock-bottom valuation, and it suggests that the share price is extremely low when we take the company’s earnings into consideration.

Value investors should like that number, and here’s something else they’ll appreciate. ZIM stock just recently pulled back from $91.23 to the $50s. Thus, value hunters can grab some shares at an attractive price point.

Financially Firm

Already, you’ve been given enough information to get you interested in ZIM. Still, it’s understandable if you’re worried about the dividend being too large.

Only a business that’s financially firm can continue to pay out such large dividend distributions. So, let’s dig into the company’s financials.

Here’s yet another astonishing number for you. In the fourth quarter of 2021, ZIM Integrated Shipping Services’ net income totaled $1.71 billion, marking a year-over-year increase of 366%.

During that same quarter, the company posted revenue of $3.47 billion, signifying a 155% year-over-year increase. In other words, ZIM had outstanding bottom-line and top-line quarterly results.

Were those results just a fluke, though? Let’s widen our scope to full-year 2021 and see what we come up with.

In 2021, ZIM reported net income of $4.65 billion, up a whopping 787% year-over-year. As for 2021’s revenue, the company generated $10.73 billion, showing year-over-year growth of 169%.

It’s just one jaw-dropping number after another. Truly, ZIM Integrated Shipping Services’ President and CEO Eli Glickman earned the right to engage in some boasting about his company’s performance:

With another quarter of exceptional financial performance, we generated our highest ever full year of revenues, adjusted EBITDA, net profit and operating cash flows, while once again delivering industry-leading margins. We also ended the year with a net positive cash position and strong financial flexibility.

What You Can Do Now

As supply-chain concerns mount, this is a great time to consider a long position in an in-demand company like ZIM Integrated Shipping Services.

Now you’ve seen the company’s financial stats, which are amazing. It’s clear that ZIM should be able to maintain its dividend.

Plus, ZIM stock is trading at a low valuation. Feel free, then, to pick up a few shares — and enjoy collecting those prodigious dividend distributions.

On the date of publication, David Moadel 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.

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• Exxon Mobil Corporation (NYSE:XOM) — Oil giant launched a new $1o billion large buyback program along with a 4.0% dividend yield
• The Allstate Corporation (NYSE:ALL) — The insurer announced a new $5 billion buyback program as the stock offers a 2.35% yield
• HP Inc. (NYSE:HPQ) — The computer maker has a decent 2.31% yield as well as a hefty, consistent buyback program
• Intel Corporation (NASDAQ:INTC) — This semiconductor maker has a 3.0% dividend yield as well as a steady buyback program
• Ameriprise Financial (NYSE:AMP) — This financial services firm has a 1.52% dividend yield with a significant repurchase program
• Marathon Oil and Gas Corporation (NYSE:MRO) — With its $3 billion buyback program and its 1% dividend yield, the stock is a “buy”
• Oracle Corporation (NYSE:ORCL) — The 1.6% yield and huge buyback program make the stock very attractive

These seven undervalued stocks are worth buying since they are dedicated to returning capital to shareholders through large buyback programs. This is through both dividend payments that are generous and share repurchases. The repurchases reduce shares outstanding, which has three immediate effects.

To begin with, it increases the remaining shareholders’ stake in the company. This allows them to gain a bigger portion of any shareholder capital returns, including spin-offs, dividends and rights offerings.

As well, a stock repurchase ultimately allows the company to make a higher dividend per share payment in the future for the same cost as before.

And, the smaller number of shares outstanding automatically increases earnings per share. Another major effect of share repurchases is that the stock price tends to rise as the company soaks up demand from selling shareholders.

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Let’s dive in and look at these undervalued stocks.

Undervalued Stocks: Exxon Mobil Corporation (XOM)

Market Capitalization: $370.5 billion

Exxon pays $3.52 per share in dividends, giving the XOM stock a dividend yield of 4.0% at yesterday’s closing price of $87.96. Morningstar indicates that the average yield over the last 12 months was 3.95%.

Moreover, the company has decided to initiate a new $10 billion share buyback program, on top of its generous dividend payments. This is also on top of Exxon’s paying down large amounts of its debt.

This is a direct result of the company’s free cash flow (FCF). Last year it generated almost $47.3 billion in cash flow from operations, including asset sales. After deducting $16.595 billion in capital expenditures (capex), its free cash flow was $30.5 billion.

Given its market cap of $370.5 billion, that works out to an FCF yield of 8.2%. That is double the payout of the 4.0% dividend yield to shareholders. As well, the $10 billion share buyback program is worth about 2.70% of its market valuation. This makes the total yield to shareholders worth 6.70% of the company’s market value.

The Allstate Corporation (ALL)

Market Cap: $39.5 billion

Allstate, the large property and casualty insurance company based in Chicago, pays an annual dividend of $3.40 per share, which works out to an annual yield of 2.40%. In the last 12 months, the average yield was 2.35%, and 1.96% over the last five years, according to Morningstar. This implies that if ALL stock were to rise to reach the average yield in the past five years, it would reach $173.47 (i.e., $4.30/0.019). This is 22.1% higher than the present price today of $142.00 per share.

Last year the company spent $3.3 billion in share repurchases, which works out to about 8.35% of its $39.5 billion in market value. So, combined with its 2.40% dividend yield, investors stand to make a total yield of over 10% in shareholder returns. This is the amount of capital the company is returning to shareholders through dividends and buybacks.

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For example, in the company’s fourth-quarter slide presentation, it said that it had reduced common shares outstanding by 7.8% over the last 12 months. If Allstate keeps that up this year, the total yield for shareholders will be 10.2% (i.e., 2.4% dividend yield plus 7.8% buyback yield).

Undervalued Stocks: HP Inc. (HPQ)

Market Cap: $41.5 billion

HP, the imaging and printing products company, now pays an annual dividend of $1.00 per share, giving HPQ stock a 2.54% dividend yield. This is actually higher than the average 2.31% yield in the last 12 months, according to Morningstar.

Not only that, the company has been consistently raising its dividend per share every four quarters and investors can expect this to continue, given the company’s ample free cash flow (FCF).

On Feb. 28, HP announced that for the quarter ending Jan. 31, it produced cash provided by operating activities of $1.7 billion and FCF of $1.4 billion. This funded the company’s dividend payments, share buybacks and debt repayments.

For example, based on HP’s slide deck, it spent $271 million on dividends, $1.5 billion on share repurchases, as well as $3.7 billion in net debt repayments. The share repurchase activity works out to 3.68% of its $40.8 billion market valuation.

As a result, the buyback yield plus the 2.31% dividend yield works out to about a 6.0% total yield to shareholders. That provides a very good potential ROI for most investors in HPQ stock. No wonder Warren Buffett, who likes companies with dividends and buyback programs, recently took a large 11.4% stake in the company.

Intel Corporation (INTC)

Market Cap: $196 billion

Based on Intel’s annual $1.46 dividend per share, INTC stock has a 3.05% dividend yield at today’s price of $48.11. This is about even with its average 3.02% yield over the last 12 months, according to Morningstar. However, over the last five years, INTC stock has had an average yield of 2.48%. This implies that the price could rise to $58.87 per share or 22.8% higher (i.e., $1.46/0.248), if it were to rise to the historical average yield.

On top of this, Intel has a large share buyback program. Last year the company produced $11.3 billion in FCF and used $2.4 billion of this to repurchase 39.5 million shares of stock. Given its $196 billion market value, this works out to a buyback yield of 1.22%. And, it brings the total yield to shareholders over 4.0%, including the 3.0% dividend yield.

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That’s a decent return for most investors, especially since it is much higher than they can earn leaving money in the bank. That is especially the case if the INTC rises 22% more to reach its average historical dividend yield.

Undervalued Stocks: Ameriprise Financial (AMP)

Market Cap: $32.9 billion

Ameriprise, a financial products and wealth management company pays out an annual dividend of $4.52 per share. At yesterday’s closing price just pennies above$300, this gives AMP stock a dividend yield of 1.52%, about even with its average of 1.56% over the last 12 months. However, it’s lower than the 2.28% average yield over the last 5 years.

Moreover, the company is very profitable and it can fund a large share buyback program. With its year-end earnings announcement, the company said it would fund $3.0 billion in share repurchases through March 31, 2024. In Q4 2021, it bought back $499 million, which puts it on a $2 billion annual repurchase rate. This works out to 6.07% of its $32.9 billion market valuation.

This means that with the 1.52% dividend yield and the 6.07% buyback yield, the total yield to shareholders is about 7.6%. That is a very good return for most investors. In fact, Morningstar reported that the average total yield over the last 12 months was 7.88%.

Marathon Oil and Gas (MRO)

Market Cap: $19.2 billion

Marathon has been raising its quarterly dividends by a penny each quarter and now has an annual run rate payment of 28 cents per share. This gives it an annual yield of 1.05%. Given that the dividend is likely to keep rising each quarter due to higher oil and gas revenue, investors can expect to have a higher dividend yield.

Moreover, based on its huge and growing free cash flow (FCF), Marathon can afford its large $3 billion share buyback program. That works out to 15.6% of the company’s large $19.2 billion market valuation. So this is a very generous buyback program. That is especially so compared to other stocks in this list of undervalued stocks with dividends and buybacks.

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For example, its FCF in Q4 was $898 million. That works out to an annualized rate of almost $3.6 billion. That is more than its buyback program of $3.1 billion and also the cost of its dividends of about $205 million.

This will likely help the stock move higher as investors realize that its large dividend and buyback program are both affordable and very generous for its shareholders.

Undervalued Stocks: Oracle Corp (ORCL)

Market Cap: $212.3 billion

Oracle pays an annual dividend of $1.28 per share, giving it a yield of 1.61%, based on a 32 cents per quarter payment. This has been the same payment for the past five quarters.

Typically, the company will raise its quarterly dividend after five quarters. This implies that the company might be getting ready to raise its quarterly dividend in its next reporting cycle. That will likely happen in mid-June 2022.

Last quarter the company spent $600 million in share repurchases of 7 million shares. That works out to an annual rate of $2.4 billion or about 1.1% of its market valuation. This is based on its fast-growing business, especially its cloud division, which represents about 26.7% of its total revenue as of Q4. Its free cash flow (FCF) last quarter was $6.59 billion, which is more than enough to fund the $600 million in share buybacks.

As a result, investors can expect the stock to reflect its healthy dividend and buyback programs over the long run.

On the date of publication, Mark Hake did not hold (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.

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Dividend reinvestment plans, or DRIPs, can be effective ways to accumulate shares of high-quality companies for those with limited capital to invest. Often times, investors can buy fractional shares of companies for as little as $25 a transaction.

Many companies offer ways to acquire shares of their business without a fee, allowing the investor to use all of their capital to build a portfolio. This can help the investor create wealth over time even if the amount invested each month is smaller.

There are also many DRIPs available for companies with multiple decades of dividend growth.

Three of our favorite no-fee DRIP stocks include:

• O. Smith (NYSE:AOS)
• Hormel Foods (NYSE:HRL)
• S&P Global (NYSE:SPGI)

DRIP Stocks: A.O. Smith (AOS)

The first DRIP stocks name to consider is A.O. Smith, which develops energy-efficient products and solutions. The company is valued at $10.3 billion and generates annual revenue of $3.5 billion.

A.O. Smith is a leading manufacturer of boilers, water treatment products and water heaters for residential and commercial use. The company also produces air purification products.

There are three key markets for A.O. Smith going forward, the U.S., China, and India. The company’s water heater business already has an entrenched position in the U.S., with 40% commercial and 30% residential market share.

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A robust housing market in the U.S. coupled with low unemployment encourages consumer investment in household upgrades, such as new water heaters. The company’s top spot among manufactures of water heaters means that A.O. Smith’s products are trusted by the market, which allows for pricing power.

China and India are two important sources of future growth as well. Both nations have very large populations where the middle class has just begun to emerge as these economies have grown at faster rates. Household upgrades, such as water heaters, have only recently become an option for many of these consumers. As their financial situations improve, there should be higher demand for products that can increase the quality of life. This puts A.O. Smith in an advantageous position going forward due to its strong business model.

The strength of the domestic business and the possible future growth from international markets should help A.O. Smith to continue to grow its dividend, something the company has done for 28 consecutive years. A.O Smith is one of less than 70 companies with the title of Dividend Aristocrat.

Investors should see dividends totaling $1.12 this year. With our expectation for $3.45 of earnings-per-share in 2022, A.O. Smith has a forecasted payout ratio of just 33%. This is just marginally higher than the average payout ratio of 30% since 2012. Shares of A.O. Smith yield 1.7%, slightly higher than the average yield of 1.4%.

Hormel Foods (HRL)

Next on our list of DRIP stocks is Hormel, a top name in the of consumer-packaged goods industry. The company has a market capitalization of $29 billion and generated revenue of almost $12 billion in 2021.

Hormel was founded more than 130 years ago. Since then, the company transformed into a leader in its industry. The company has operations in 80 countries around the world, giving it a reach that many competitors cannot replicate.

The company is blessed with a product portfolio that is incredibly well known and trusted by consumers. Some of the company’s products include Planters, Skippy, Applegate and SPAM. Products are separated into four separate categories, including center store foods, international, Jennie-O turkey, and refrigerated foods. Hormel also sell products to the food service industry, allowing it to diversify away from the grocery or convenience store.

The company isn’t over reliant on any one product or area either. Hormel’s portfolio is so deep that the company holds the first or second spot in terms of market share in 40 different product categories.

Hormel has also taken steps to augment its core business through the use of acquisitions. The company purchased the Planters snack nuts line for nearly $3.4 billion from Kraft-Heinz (NASDAQ:KHC) last year. Doing so gained entrance to an area where Hormel had limited exposure. The acquisition also immediately added another product to the portfolio that had significant market share and brand recognition.

This level of market share control throughout the portfolio enabled Hormel to grow its dividend for 56 consecutive years. Hormel is one of just 40 Dividend Kings, which are those companies with at least five decades of dividend growth.

Hormel should pay out dividends of $1.04 per share in 2022. We project that the company will earn $1.95 per share this year, implying a payout ratio of 53%. This is isn’t too far off the 10-year average payout ratio of 45%. Hormel offers a yield of 1.9%.

DRIP Stocks: S&P Global (SPGI)

Our final DRIP stocks entry is S&P Global, a leading provider of financial services and business information. The $137 billion company has annual revenue of $8.3 billion.

S&P Global was formed following the 1917 merger of McGraw Publishing and Hill Publishing. Years later, the company created the S&P 500 index, largely viewed as the most important index of large-cap U.S.-based stocks.

The company offers a broad range of financial services, which includes analytics, benchmarks, credit ratings and data. S&P Global provides vital information for investors that help to analyze and understand potential investments. The company is the market standard in several of these areas, which drives business as investors of all sorts seek out the company’s products.

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S&P Global happens to operate in a industry that is highly concentrated. There are just three major credit ratings agencies that together control more than 90% of the global financial debt rating business. Clients want the best research available allowing for pricing power for S&P Global due to its industry leading services. Trust is a crucial element when it comes to finances and customers have long trusted the company’s products and services.

S&P Global’s business has been so successful for long periods of time that the company has raised its dividend for 49 years in a row. This places the company one year away from achieving Dividend King status.

Shareholders should see $3.32 of dividends-per-share this year. With expected earnings-per-share of $14.60 for 2022, S&P Global’s payout ratio is forecasted to be just 21%. This is below the average payout ratio of 26% for the last decade and would be the company’s lowest payout ratio for the period. The stock offers a yield of 0.9%.

Final Thoughts

Investors with limited capital shouldn’t be discouraged from building a retirement portfolio. They can use DRIPs to invest in high-quality stocks that have demonstrated long-term commitment to growing dividends, often for no fees.

A.O. Smith, Hormel and S&P Global are three examples of stocks with long track records of dividend growth that provide ways for investors to build positions in their respective businesses. Each company has multiple decades of dividend growth and very reasonable payout ratios, making it likely that each name will continue to grow its dividend for years to come.

Using DRIPs in these names could create a portfolio of top-notch dividend paying stocks.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Pfizer (NYSE:PFE): A leading drug manufacturer whose balance sheet received a COVID-19 vaccine boost.
• Toronto-Dominion Bank (NYSE:TD): Strong dividend and earnings growth profile built in a highly regulated jurisdiction.
• Kimberly-Clark Corp. (NYSE:KMB): Supplies everyday essentials that the global population will need even a century from now.
• Lockheed Martin (NYSE:LMT): A defense stock that may give retirement portfolio defensiveness a new meaning.
• Brookfield Infrastructure Partners LP (NYSE:BIP): Earns contracted cash flows from real assets with strong entry barriers.
• American Electric Power (NASDAQ:AEP): A utility growing its dividends while turning environmentally green.
• Crown Castle International (NYSE:CCI): A REIT with growing distributable funds to support long-term retirement income growth.

Investors seeking shelter from extreme market volatility and searching for inflation protection may still find resilient dividend-paying stocks to fortify retirement portfolios during tough times, and we have seven long-term stocks to buy for a robust retirement portfolio up for consideration.

Rising inflation rates, geopolitical risks and the threat of a global recession are causes for concern for any retirement-focused investment portfolios.

Honestly, the realities of inflation’s impact on retirement plans can be somewhat sad. A recent Bloomberg report that about two-thirds of surveyed people starting retirement in 2022 in the U.K. expect to continue working (at least part-time) as living costs surge.

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Although some cited boredom as a plausible reason to continue working, only 25% of survey respondents felt very confident that they have saved enough to fund their retirement.

A deep thought on retirement investing has never been more important.

Investing in companies with defensive, tried and tested business models with decent growth prospects, strong management teams, shareholder-friendly capital return policies and dedication to dividend growth could help create a formidable and robust retirement portfolio that can survive bouts of inflation and the usually short-lived recessions.

Retirement can be a very long time; hence some level of growth will be necessary to maintain the size of that nest egg. Dividend growth will be important for recurring and regular inflation-adjusted cash flows during retirement.

Here are seven retirement stocks to consider as long-term holdings in a robust retirement portfolio.

Long-Term Stocks to Buy: Pfizer (PFE)

Pfizer is one of the largest drug manufacturers in the world. COVID-19 vaccine sales aside, the company retains a multibillion critical drugs sales portfolio with huge cash flow generating capacity.

They can’t be counted upon to stay, but COVID-19 vaccine sales boosted PFE’s revenues by 95% in 2021. Net income surged 140% while cash, cash equivalents, and short-term investments shot up 154% to restore liquidity levels last seen back in 2014. Pfizer has more capital to deploy in drug research and development activity after the COVID-19 boost to cash flow.

That said, PFE stock has risen by only 29% over the past year, and shares look cheap compared to industry peers. A price to earnings (PE) multiple of 13.2 is far lower than the industry average PE of 21.7. PFE’s price-to-cash flow (P/CF) multiple of 9.9 makes it cheaper when compared to the industry average multiple of 18.4.

Pfizer stock pays a 3.1% yielding well-covered dividend that has increased by an average of 4.6% over the past five years. Wall Street analysts project a 5.7% earnings growth rate over the next five years.

An economic recession or not, the world will still need drugs to maintain its population’s health. PFE stock could play a key defensive role in any retirement portfolio. $10,000 invested in PFE stock 10 years ago could be worth $35,600 today, with dividends fully reinvested.

Toronto Dominion Bank (TD)

Financial stocks make very good value investments and reliable dividend payers that add robustness and fortification to a retirement income portfolio.

Tight regulation makes banks better risk-takers, and one of the best, most stable, and highly regulated financial jurisdictions could be Canada – home to the Toronto Dominion Bank (TD Bank)

It’s Canada’s second-largest chartered bank which has built strong retail and wholesale banking footprints in the United States.

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TD stock beats most peers in earning margins and returns metrics to attract premium valuation, but its forward PE of 10.5 doesn’t look that expensive right now. The bank’s return on equity of 14.3% trounces its industry average of 11.6% by a wide margin.

Wall Street analysts expect TD Bank to grow its revenues by 11.7% next year and improve its earnings by nearly 9% year-over-year in 2023. They attach a five-year earnings growth rate of 7.5% which could strongly support TD’s religiously growing dividend payout.

TD stock pays a quarterly dividend that yields 3.8% annually and has increased the payout by an average of 8.2% every year over the past five years. The bank stock could be one of the long-term stocks to buy for a robust retirement portfolio.

A $10,000 investment in TD stock 10 years ago could have grown to more than $25,700 today.

Long-Term Stocks to Buy: Kimberly-Clark Corporation (KMB)

Kimberly-Clark Corp. supplies hygienic products to 175 countries of the world. Its most popular brands include Huggies, Scott, and Kleenex.

User demand for the company’s tissue, diapers, and hygiene products could be recession-proof. The company claims that a quarter of the world’s population uses one of its products every day, and such high demand may not go away even during crisis times.

After 150 years in the business, KMB stock investors trust the company’s accumulated management, marketing, and production experience to propel the business for decades to come.

Most noteworthy, KMB stock has paid and increased its annual dividends for 50 consecutive years. Kimberly-Clark’s strong dividend growth streak isn’t about to be broken any time soon. The company’s current quarterly dividend yields a respectable 3.7% annually.

Wall Street analysts expect KMB stock to grow its earnings per share by 19% next year and by about 7.5% annually over the next five years. Growing earnings could support growing free cash flows and dividend raises into the future.

KMB stock could play a defensive and income generation role in a retirement portfolio.

Long-Term Stocks: Lockheed Martin (LMT)

It’s working on a huge $135 billion backlog already, but defense contractor Lockheed Martin and peers could enjoy more than a decade of higher client orders as the United States and its allies increase defense budgets as a result of Russia’s invasion of Ukraine in 2022.

The Russian-Ukraine conflict is likely a long-term catalyst to trigger the dawn of a new global arms race. Russia’s deployment of hypersonic missiles already puts several European Cities in harm’s way.

Current missile defense systems can’t stand hypersonic threats which can change course mid-flight. New, high-tech missile launch and missile defense systems are critically needed to counter hypersonic missiles, and Lockheed Martin is already developing them.

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Lockheed Martin is a specialist contractor in missile defense systems, and satellite systems and produces combat aircraft. The U.S. and its NATO allies are compelled to significantly expand their defense budgets to introduce cutting-edge tech to their military weapon capabilities.

Investing in LMT stock could fortify portfolio performance, even during recessions and inflation bouts.

A shareholder-friendly capital budgeting policy saw Lockheed increase its dividend every year for nearly 20 years now. The current dividend yields 2.4% annually. Coupled with billions in share repurchases, investors in LMT could enjoy above-average returns for longer.

$10,000 invested in LMT stock 10 years ago could have grown to more than $70,000 today, with full dividend reinvestments.

Brookfield Infrastructure Partners LP. (BIP)

Brookfield Infrastructure Partners has billions invested in long-life hard assets that generate stable, contracted cash flows protected by high barriers to competitors’ entry.

The company operates globally and its Utilities, Transport, Midstream, and Data segments and about 90% of its adjusted earnings before interest, taxes, depreciation, and amortization expenses (Adjusted EBITDA) is comprised of cash flows from regulated or long term contracted revenue.

BIP’s high sought-after units have returned a strong 103% in capital gains over the past three years, including an 8% year-to-date gain that beats the S&P 500’s negative return so far this year.

Brookfield’s low maintenance physical infrastructure appreciates over time, more so with inflation. Management is committed to a 5% to 9% annual dividend growth policy. The current quarterly payout yields a respectable 3.3% annually.

$10,000 invested in BIP stock 10 years ago would be worth more than $51,400 today, with all dividends reinvested.

Long-Term Stocks to Buy: American Electric Power (AEP)

One of the largest regulated utilities in the United States, American Electric Power provides electricity generation, transmission, and distribution services to millions of retail customers in 11 states.

AEP’s ongoing upgrades to its aging transmission lines and wide opportunities to connect remotely located green energy projects like solar fields and wind farms to the American main grid opens up new growth potential for an old, tried, and tested business model.

Most noteworthy is an opportunity to move away from environmentally dirty coal-powered power plants as the business invests in renewables and improves its environmental, social, and governance (ESG) profile.

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AEP plans to add 16,000 megawatts of renewables to its regulated power by 2030. It owns one of the largest single wind farms in America, the Traverse, which went online this year.

AEP stock pays a 3.1% yielding dividend that has been on an uninterrupted 12-year growth streak so far. The utility has grown its dividend by an average of 5.7% per annum over the past five years.

Management raised AEP’s long-term earnings growth rate to 6% to 7% in February. Sustained earnings growth will support further dividend growth into the future.

A $10,000 investment in AEP stock 10 years ago could have grown to $38,600 today, with full dividend reinvestment.

Long-Term Stocks to Buy: Crown Castle International (CCI)

Crown Castle International is a real estate investment trust (REIT) that owns and leases cell tower and fiber network properties.

The REIT leases space on its towers to wireless services providers who install their equipment. Riding on a 5G growth wave, demand for small cell towers is surging, and CCI could reap growing annual cash flows as a result.

CCI was one of my best REITs to buy for March, and it remains a long-term retirement play today. The trust pays a dividend that yields 3% currently. Management increased the payout by an average of 9.1% annually over the most recent five years.

An 8% rent revenue growth to $5.72 billion in 2021 powered a strong 14% increase in adjusted funds from operations (AFFO), and management announced an 11% dividend increase on CCI stock in 2021. Wall Street analysts expect an 8.6% revenue growth in 2022 that could power further dividend increases.

A $10,000 investment in CCI stock 10 years ago could have grown to nearly $47,000 today. Although past performance may not predict future returns, Crown Castle International’s business outlook remains stellar, and the REIT could be a reliable income-generating machine in a robust retirement portfolio.

On the date of publication, Brian Paradza did not hold (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.

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• Franklin Resources (BEN): Asset management giant with a forward yield of 4.41%.
• First Interstate Bancsystem (FIBK): Under-the-radar banking play with a 4.76% dividend yield. It could see big earnings growth next year.
• Leggett & Platt (LEG): Hit hard in the past year, despite a 50-year track record of raising its annual dividend.
• LyondellBasell Industries (LYB): A great commodities play with a 4.45% forward yield.
• Southern Copper (SCCO): Booming demand for copper will enable it to maintain its quarterly dividend of $1 per share.
• Walgreens Boots Alliance (WBA): Recession-resistant stock yielding 4.21%.
• Western Union (WU): Beaten down due to “disruption” fears, the money transfer giant currently yields nearly 5%.

With interest rates continuing to rise, the market pullback that took a pause in March has started back up. The market, after bouncing back a bit in mid-to-late March, so far in April has resumed moving lower. But as fear, uncertainty and doubt (FUD) starts to ratchet up again, it may be the perfect time to add dividend stocks to your portfolio.

Why? As concerns loom that soaring interest rates will cause an economic slowdown (or worse, a recession), it hasn’t just been no-earnings, high-growth stocks that have been under pressure. Even many of the less speculative names have experienced a downward slide during the month.

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There is, however, a silver lining to this pullback. With this recent weakness, you have the opportunity to load up on some of the highest-quality, highest-yielding dividend stocks out there. These seven, for example, have an “A” rating in my Dividend Grader.

Dividend Stocks: Franklin Resources (BEN)

One of the largest investment managers in the world, Franklin Resources (NYSE:BEN), has around $1.5 trillion in assets under management (AUM). The firm is best known for its series of mutual funds under the Franklin Templeton brand.

For 25 years in a row, Franklin Resources has raised its dividend. Annual dividend growth over the past five years has averaged 8.45%. Lately, there has been some concern about the company. Namely, the slight declines in its AUM figure so far in 2022.

But while seeing this move lower is certainly not a positive, at the same time, investors have likely overreacted to this news. Shares have taken a 24% plunge year-to-date. As a result, the stock hasn’t only become cheap valuation-wise (a forward price-to-earnings ratio of 7.1x), but it has become a high-yielder as well.

At today’s prices, BEN stock sports a high yield of 4.41%.

First Interstate Bancsystem (FIBK)

Outside of the six states in which it operates, First Interstate Bancsystem (NASDAQ:FIBK) may not be a household name. Yet this more under-the-radar financial institution definitely belongs on any list of high-quality, high-yield dividend stocks.

Currently, FIBK stock sports a forward yield of 4.76%. It may have room to grow this dividend further in the years ahead, due to two factors. First, rising interest rates will improve this bank’s profitability. Second, its recently completed merger with Great Western Bancorp could also help with earnings growth.

When this deal was announced last fall, management touted that consolidating Great Western into its existing system would result in major cost savings by 2023. Next year, it expects earnings-per-share growth of 20%.

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Knocked down due to uncertainty about its recent mergers and acquisitions (M&A) deal, now may be a great time to add this high-yield banking stock to your portfolio.

Leggett & Platt (LEG)

Bedding and furniture maker Leggett & Platt (NYSE:LEG) took off in the first half of last year. However, since last May, it has experienced a severe drop in price. Due to both company-specific and market-wide concerns, the stock has slid from nearly $60 per share, to around $35 per share today.

But while investors were buying (then selling) it based on near-term factors, keep in mind the long-term approach works best with a name like LEG stock.

Raising its annual dividend 50 years in a row, it has been a great choice over a long timeframe for income-focused investors. For those who don’t own it, today may be a great time to initiate a position. Fears of an economic slowdown/recession have become overly reflected in shares.

This has resulted in the stock moving down to a price that gives it both a low forward multiple (13x) and a high-yield (4.72%).

Dividend Stocks: LyondellBasell Industries (LYB)

Headquartered in the Netherlands, LyondellBasell Industries (NYSE:LYB) is one of the large petrochemical companies in the world. The recent geopolitical chaos, and its impact on commodity prices, has this stock in the green year-to-date in 2022.

Even so, at 6.6x forward earnings, and with a 4.45% forward yield, it’s not too late to buy. Thanks to robust demand for chemicals and plastics, this company stands to generate big profits this year and the next.

With its dividend payout ratio at just 26.46%, management has plenty of room to raise its current dividend. The company is also consistently buying back stock through a share repurchase plan.

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Put it all together, and LYB stock has a strong chance of delivering solid returns. From both further price appreciation, as well as from its return of capital efforts. If you’re looking for a dividend stock with commodities exposure, consider it a buy.

Southern Copper (SCCO)

Southern Copper (NYSE:SCCO) is another of the commodities-focused dividend stocks you should consider. As copper prices have gone through the roof since 2020, this mining play has seen big appreciation since then.

Over the past year, however, enthusiasm for SCCO stock has calmed down considerably. In fact, it’s down almost 2% over the past twelve months. The market is worried that copper prices will fall back. In turn, that would lower this company’s profits, and cause it to slash its high dividend (5.42% forward yield).

Even so, it’s possible the market is being overly cautious. Demand remains high. In large part, due to demand stemming from EV proliferation. With supply levels low, analysts at Goldman Sachs believe copper could hit a new all-time high by mid-year.

With signs that the copper boom is far from peaking, buying SCCO stock and collecting its $1 per quarter dividend may be the way to play it.

Walgreens Boots Alliance (WBA)

Global pharmacy giant Walgreens Boot Alliance (NASDAQ:WBA) expects to see a growth slowdown during this quarter, as the pandemic-related boost to its business recedes.

With this, it’s not surprising that the market hasn’t been overly excited about WBA stock lately. Although it saw a spike in price from December through January, since then it has given back these gains.

But now, back near its 52-week lows, may be the time to dive into this recession-resistant stock. Despite the likely stability of its business during an economic downturn, the stock trades at what some may say is a fire sale forward valuation (9x earnings).

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Not only that, this stock offers a high dividend yield of 4.21%. Walgreens has grown this dividend an average of 5.05% per year over the past five years. With a payout ratio of just 32.65%, this dividend is well-covered, with room for further expansion.

Dividend Stocks: Western Union (WU)

Founded more than 170 years ago, to say Western Union (NYSE:WU) is an old-school company is an understatement. Yet don’t let its age fool you. Jumping to conclusions that this money transfer giant is a “dinosaur” could result in missing out on this fantastic dividend stock.

Due to pessimism about the risk fintech “disruptors” disrupt it right out of business, WU stock has been pushed to a super-low valuation. At today’s prices, it trades for only 9.7x this year’s estimated earnings. At today’s prices, it also has a dividend yield nearing 5%.

Concerns about “disruption,” however, may be exaggerated. The company is expected to deliver steady earnings in 2022 and 2023. It’s also at work adapting its business for the fintech era.

Add in its 13-year history of dividend growth, and moderate payout ratio (42.92%), and there’s plenty to make a case this is a great name for income-focused investors.

On the date of publication, Louis Navellier has no positions in the stocks in this article. 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.

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• Lumen is the old US West, but highlighting fiber and hosting assets.
• Lumen uses depreciation to afford an enormous dividend.
• That dividend was once much bigger, which is what makes LUMN stock so cheap.

Lumen Technologies (NASDAQ:LUMN) stock, previously known as CenturyLink, was the US West of the last century.

The stock looks cheaper than AT&T (NYSE:T) before it agreed to spin out Warner Brothers Discovery (NASDAQ:WBDWV). It is cheap for the same reason, a dividend cut. We’re talking today about a yield of 8.77%, a price-to-earnings ratio of 6.03, and a market cap that is just 60% of sales.

Our Thomas Niel recently called Lumen “a solid deep value play.” You can look at it that way.

Of you can look at it like Wall Street does, as a yield trap.

What’s Lumen?

US West was the weakest of the Baby Bells, comprised of regional telephone companies. US West became weaker when it sold its cellular operations in 1997 for just $4.5 billion. This left it with an enormous wired network stretching from the upper Midwest to Washington state. The company was then sold to Qwest in 2000. There, it was run by Joseph Nacchio, who was convicted of insider trading in 2002. It was then bought by CenturyLink, a roll-up of small Baby Bell companies, in 2011. The group bought Savvis, a managed hosting company, the same year. It took its present name in 2020.

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Lumen is run out of Monroe, Louisiana, a small city along I-20 that was once home to Delta Airlines (NYSE:DAL). It has always been operated with an eye toward income rather than growth. Revenues have been falling steadily since 2018, when they were $23.4 billion. They were $19.69 billion in 2021.

There was a rare sighting of net income in 2021 of $2 billion, or $1.91 per share. Usually, the company reports a loss, but it always has operating cash flow. This came to $6.5 billion last year. So, the dividend, which costs over $1 billion per year, seems affordable. Lumen’s secret is depreciation of $4 billion last year. Earnings before income taxes, depreciation and amortization (EBITDA), so beloved by takeover analysts, runs at over $8.6 billion per year. 

Where’s Lumen Going?

Like an old dowager, Lumen is under constant renovation or reorganization. Like faded gentry, it also sells assets. Last year, it sold its Latin American assets to Stonepeak for $2.7 billion, 9 times EBITDA. The rest of the company isn’t worth 1.5 times EBITDA.

Lumen loves to highlight cutting-edge technology in its press releases. Here is one on blockchain. Here is one on global network services. Here is one on cybersecurity.

Underneath it all, however, Lumen quietly lives off its depreciation, writing down and writing off those old US West assets. Lumen now reports revenue based on customer size. Reading the press release, you would never know the company offers phone services at all. It does. It even bought what was left of Sprint’s network, then called Embarq, in 2009.

Most of the Embarq operations are now being sold to Apollo Capital Management in a $7.5 billion deal that closes later this year. What is left will be the old US West territory and some customers in Florida.

The Bottom Line on LUMN Stock

Lumen is playing the hand it was dealt. Its days as a growth company ended a quarter-century ago, when those cellular operations were sold to AirTouch. AirTouch eventually sold to Vodafone (NASDAQ:VOD), which sold to Verizon Communications (NYSE:VZ).

The choice of wired over wireless services doomed the company, whatever it came to be called. But investors have done well through depreciation and divestment. That dividend looks solid, but so did the old dividend of 54 cents per share before it was chopped in 2019.

When a dividend is the only reason to buy a stock and then that dividend is cut, it is going to take a long time to re-establish trust. That is why Lumen stock is so cheap.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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The investment choices are limited for those investors who need more regular distributions of income as the vast majority of securities make quarterly dividend payments. However, there are approximately 50 companies that offer monthly dividend stocks.

Monthly dividend stocks can work to the investor’s advantage, especially if they require more consistent cash flows.

Even better, many of these stocks provide yields that are several times the 1.3% average yield for the S&P 500.

Some of our favorite high-yield monthly income names include:

• EPR Properties (NYSE:EPR)
• Main Street Capital (NYSE:MAIN)
• Realty Income (NYSE:O)

Monthly Dividend Stocks: EPR Properties (EPR)

First on our list of high-yield monthly dividend stocks to discuss is EPR Properties, which specializes in owning and developing experiential properties in the U.S. and Canada. The trust has a market capitalization of $3.9 billion and generates annual revenue of more than $530 million.

EPR Properties is a specialty real estate investment trust, or REIT, in that it focuses on properties that can be used for entertainment, recreation and education. The trust’s leases are structured as a triple net, meaning that the tenant is responsible for all of the costs associated with the property. This includes rent, maintenance and taxes. EPR Properties essentially acts as a landlord with the primary responsibilities of identifying new properties to invest in and tenants to fill vacant spaces.

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As of the most recent quarter, EPR Properties had $7 billion invested in more than 300 locations in 44 U.S. states. The trust counts more than 250 separate tenants in its portfolio, providing EPR Properties with a highly diversified business model. The trust has been in business for more than 20 years, so leadership has vast experience in finding, developing and renting highly specialized properties to meet market demand.

That said, EPR Properties did struggle during 2020 during the worst of the Covid-19 pandemic. Movie theaters (45% of properties) and eat-and-play tenants (28% of properties) were some of the most impacted business types when social distancing restrictions were implemented. Revenue fell 40% for the year.

The good news is that EPR Properties experienced a strong rebound last year as revenue grew 29% for 2021. While top-line performance hasn’t reached pre-pandemic levels yet, the expectation is to achieve revenue results this year that are close to what they were in 2019. EPR Properties collected 97% of rent in the fourth quarter of 2021, a positive sign for the trust.

As a result of the Covid-19 impact on the business, EPR Properties suspended its dividend from June 2020 to July 2021. The trust reinstated its dividend in August of last year, but at a 35% reduction compared to the last distribution. EPR Properties recently raised its dividend 10% for the April 18, 2022, payment date.

A dividend suspension and reduction could turn off some investors, but it took a pandemic to end the EPR Properties’ 10-year dividend growth streak. Shareholders should see $3.23 of dividends per share this year, equating to a projected funds-from-operation payout ratio of 73%. EPR Properties often has a payout ratio in the low 80% range. Shares yield 4.4% today.

EPR Properties’ dividend is not yet back above its pre-pandemic levels, but the trust has seen a sharp recovery in its business. This is expected to continue into the current year as well. Absent another nationwide shutdown of the economy, we believe that EPR Properties’ high-yield monthly dividend is very secure.

Main Street Capital (MAIN)

Next up is Main Street Capital, a top business development company, or BDC. The company is valued at nearly $3 billion and generates annual revenue of $289 million.

Main Street Capital provides long-term debt and equity capital solutions to companies in the lower middle market range, which are those that have annual revenue in the $10 million to $150 million range. The company also provides debt capital to middle market companies, which are those that generate revenue of $150 million to $1 billion per year.

With its ability to invest in both debt and equity, Main Street Capital is different than most other companies in the space that use private debt or private equity alone. The lower middle market private debt and equity space is more of a niche environment as it is too small for most commercial banks. At the same time, its too large for smaller retail banks, leaving the company with few major rivals.

In addition, the company operates a geographic diverse business model, with no one region of the U.S. accounting for more than a quarter of invested capital. Most of Main Street Capital’s transactions are through recapitalization and leveraged buyouts, but the company is also diversified by industry group.

Main Street Capital owns two small business investment company funds that provide clients with access to low cost, fixed rate loans. The company operates its own investment funds, which helps to keep management fees low, giving it an advantage over peer groups.

Main Street Capital’s revenue fell 8.5% in 2020 as the company’s business wasn’t immune to the impact of the pandemic. Revenue surged nearly 30% last year as Main Street Capital has already surpassed its 2019 revenue totals, demonstrating the resilient nature of the company’s business model.

The company’s resiliency also benefited its shareholders as Main Street Capital raised its dividend twice during 2020 as well as distributed a special dividend at the end of the year. The dividend has been increased for six consecutive years. The company has never decreased its monthly dividend payments, an excellent characteristic for investors seeking income.

With expected dividends of $2.58 per share for the year, we project Main Street Capital a payout ratio of 94%. This is a high payout ratio, but below the stock’s 10-year average payout ratio of 113%. Shares yield 6.2%.

Monthly Dividend Stocks: Realty Income (O)

Our final company for high-yield monthly dividend stocks is Realty Income, one of the more well-known REITs in the market. The $43 billion company has annual revenue of nearly $2 billion.

Realty Income was founded in the late 1960s, but didn’t have its public listing until 1994. In that time, the trust has transformed into one of the largest REITs in the country. Today, Realty Income has more than 11,000 total properties across 60 different industries.

The company also has operations in every U.S. state as well as Europe. This provides broad diversification across tenants and geographic regions. No industry group contributes more than 10% of annual rents, which will likely help Realty Income during the next recession.

This diverse business model helped Realty Income withstand the worst of Covid-19 as revenue grew 10.5% in 2020 and the occupancy rates stayed in the mid-to-high 90% range. The most recent quarter saw an occupancy rate of 98.5%. Importantly, Realty Income collected most of rent due, including 100% from movie theater clients.

The trust has made strategic business decisions to improve its core business even further. Realty Income merged with VEREIT, a leading manager of more than 3,8000 single-tenant properties, on Nov. 1, 2021. Following this, the trust spun off its office property business into Orion Office REIT (NYSE:ONL), divesting one of the weaker areas of business for Realty Income during the 2020 period. The trust also has expanded its European footprint and now owns properties in both the U.K. and Spain.

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A strong business model has enabled Realty Income to grow its dividend for 26 consecutive years, qualifying the trust as a Dividend Aristocrat. The trust is one of just two REITs that is a member of this exclusive index. Realty Income raised its dividend four times in 2020 as the trust performed very well during the pandemic.

Realty Income should distribute at least $2.96 of dividends per share this year, resulting in a projected payout ratio of 75%. This compares well to the average payout ratio of 84% since 2012 and would be the lowest payout ratio during this period. Realty Income yields 4.1%.

Final Thoughts

For investors requiring monthly dividend payments, there are limited options. Fortunately, there are several high-quality companies that offer high yields.

EPR Properties, Main Street Capital and Realty Income are three examples of monthly dividend stocks we feel investors should consider. Each stock yields at least three times the average yield of the S&P 500 Index. EPR Properties did struggle in 2020 as a result of the Covid-19 impact, but it has since reinstated and raised its dividend. Main Street Capital and Realty Income both raised their distributions several times in 2020 and, especially in the latter’s case, escaped the pandemic must better than peers.

Each name also has a reasonable payout ratio relative to its respective historical average, which should provide confidence to investors that the dividend is safe for each company.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• CenterPoint Energy (NYSE:CNP) – Crude oil is a key raw material for the company, and its prices are on the rise. This is good news for the company because they’ve had a few recent setbacks.
• NextEra Energy (NYSE:NEE) – NextEra, one of the largest utility companies in North America, has made significant progress this year.
• DTE Energy (NYSE:DTE) – DTE has been consistently growing in recent years, which means dividends are highly safe and have a high margin.
• WEC Energy Group (NYSE:WEC) – In 2035, WEC is planning to eliminate the use of coal in its energy mix and focus on the growing renewables space.
• Edison International (NYSE:EIX) – The company is fully committed to becoming carbon-neutral and is working with local and state authorities to reach this goal.
• Entergy Corporation (NYSE:ETR) – This company serves customers in four different states. More recently, they have been putting more concentration on the solar energy industry presence and development in their business than on coal power for now.
• Duke Energy Corp (NYSE:DUK) – Duke Energy has announced a capital spending program that includes new projects and larger amounts of maintenance. The bulk of the plan will be dedicated to zero-carbon generation and grid modernization.

Dividend utility stocks might seem bad for your portfolio during high inflation and rising interest rates. However, the sector has done well since the start of the year.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU) is up 6% in the year thus far. There are a lot of companies in the utility industry that offer great operating models and excellent payouts.

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The benefits of investing in dividend utility stocks include:

• A consistent stream of income
• Low volatility
• High liquidity

Here are seven companies in the utility space offering excellent dividends and strong operating models to cover them.

Dividend Utility Stocks: CenterPoint Energy (CNP)

Dividend yield: 2.1%

CenterPoint Energy provides natural gas and electricity services for all residential, commercial, and industrial customers in the United States.

The last few years have been troubling for the company. First, it had trouble integrating Vectren Corp., a utility company focusing on customers and businesses in Indiana and Ohio. Then the pandemic hit, and the company’s unit, Enable Midstream Partners, was underperforming. However, with the price of crude oil rising once again, things are looking good for the company.

CenterPoint is based in Houston, a metropolitan area that leads the nation in economic growth. It also has some of the most accessible and cheapest natural gas reserves, making it an ideal target for expansion.

The construction of new pipelines will help the gas industry increase its reach in this region and provide growth opportunities for businesses. This infrastructure is also required to support residential and commercial customer growth – providing a long-term business opportunity.

Natural gas, which has been very important in recent years and has been relevant as an industrial fuel provider, is expected to see even more growth in the near and medium-term. On top of this, the company’s midstream investment could help it strengthen its presence throughout North America and worldwide.

NextEra Energy (NEE)

Dividend yield: 1.9%

NextEra Energy is the largest independent power producer in Florida and one of the largest in the United States. It has been growing much faster than the average utility company over the past decade, powered by its investments in renewable energy.

Its ability to produce clean energy keeps it at the forefront of the field and has allowed it to become one of the most recognized players in the industry. NextEra has been providing clean energy for more than 30 years and is the world’s largest wind and solar energy producer.

NextEra Energy primarily makes use of solar, wind, geothermal, and hydroelectric power for its electricity. It has also been a major player in developing emerging renewable energy sources such as biomass and hydrogen fuel cells.

On the financial side, NextEra, which was known for its consistent double-digit earnings growth, delivered yet again in 2021. It is one of the largest utility companies in North America, with $3.57 billion in net income this year. It has been ranked as one of the best performing utilities by Standard & Poor’s.

NextEra Energy has a better-than-average return on investment and very strong growth. The company’s investments in renewable energy are helping the company support a growing population. Buying shares of this utility stock should result in continuous long-term financial returns.

DTE Energy (DTE)

Dividend yield: 2.6%

DTE Energy is a nationwide energy company rooted in Detroit. It provides electricity to 2.2 million customers of southeast Michigan and delivers gas to 1.3 million customers. It’s also active in trading energy, and specializes in bringing business needs to the table when building solutions for clients across the U.S.

The company has seen stable growth in the past three years. As a result, if you are looking for a steady performer for your portfolio, DTE fits the bill.

In 2020, DTE raised its quarterly dividend to $1.085 per share, its 11th consecutive dividend hike. However, in 2021, the company had to slash its dividend by 24% because of the separation of its midstream business. However, now the company can prioritize giving a healthy dividend to its shareholders.

Ultimately, utility companies are considered a safe, low-risk investment for retirement portfolios because they are recession-resistant. These companies distribute a lot of their earnings to shareholders because they are not subject to volatile or unsteady cash flows. Therefore, while DTE might look unattractive to someone looking for hyper-growth, it is still one of the safest stocks for your investment needs.

Dividend Utility Stocks: WEC Energy Group (WEC)

Dividend yield: 2.8%

WEC is a Wisconsin-based energy company that provides electricity, natural gas, heating, and cooling solutions to more than 4.6 million customers.

In 2020, almost 36% of the electricity generated for the company came from coal. In 2035, the plan is to eliminate the use of coal in its energy mix. This will allow for more strategic decisions and less energy waste. The company is looking to spend an additional $1.3 billion on renewables under its latest five-year capital plan to complete this goal.

WEC Energy has been paying dividends for three decades now and shows no slowing down. They’ve paid out their dividend every year since 1988, making them one of the industry’s most popular companies to invest in. It has the policy to increase dividends by 6% to 7%, subject to board approval.

WEC has raised dividends consistently over the past 10 years with no signs of slowing down. Investors should look forward to similar growth in the future. The recently announced dividend of $2.91 per share is a 7.4% increase from last year’s dividend, continuing this trend and providing valuable income for shareholders.

Edison International (EIX)

Dividend yield: 3.9%

Much like other companies in the utility space, Edison International is looking to increase its exposure to the renewables space. At the moment, the company’s primary market in Southern California. However, it is also active in other markets.

Much like several other energy companies at the moment, the company is emphasizing the shift to sustainable energy. Now that the company is fully committed to becoming carbon-neutral, it has a detailed plan to reach that goal.

Consequently, Edison International has been trying to meet its long-term decarbonization goals. It plans on building 38,000 EV chargers in southern California and has completed about 200 miles of EV charging infrastructure.

Piloting these projects has been more expensive than a benefit, but the long-term promise could mean higher returns, leading to reliable dividend growth.

This is a long-term investment, but you are looking at an excellent company. EIX has been profitable for decades, and the dividend payout has been steady throughout. The price of dividends will vary with market conditions and other factors, but you should be able to count on the business staying profitable through the near future.

Most recently, Edison International declared a dividend of 70 cents per share, which will increase the annual dividend by 15 cents per share, with plans to continue this increase through 2022.

Entergy Corp. (ETR)

Dividend yield: 3.3%

Entergy serves 2.9 million customers across four states in the south. It is exceedingly pivoting towards solar energy from coal power. If utility companies invest in clean energy, customers should be willing to increase their rates for future investments.

Entergy has faced several major barriers which impact its financials over the last year. First, there was the global pandemic. Second, there was the global recession. Third, there were multiple record-breaking hurricanes, and fourth, we had rising gas prices during and after this winter storm season. Entergy cut the costs of operating and maintaining facilities to maintain profitability.

The company maintained a high payout despite all of these issues. Quarterly payments have increased in the last two years and reached $1.5 billion in total. And with the company increasingly pivoting towards renewables, we can expect these excellent payouts to continue.

Dividend Utility Stocks: Duke Energy (DUK)

Dividend yield: 3.4%

Duke Energy is among the biggest electricity providers in America, with a market value of nearly $89 billion. The company owns or operates 50,000 megawatts of generating capacity and serves 8.2 million customers.

Plus, the company has been investing heavily in the utility sector and is hoping to garner lots of investment opportunities that will help it stay afloat during economically challenging times.

Duke Energy has announced a $63 billion spending program that includes new projects and increased maintenance across natural gas, coal, and nuclear energy. However, the bulk of the plan will do towards renewable power generation sectors. That kind of future-oriented thinking will help maintain the company’s high dividend yield.

On the publication date, Faizan Farooque 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.

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There’s one main reason why people buy stock in Lumen Technologies (NYSE:LUMN). That’s for LUMN stock’s juicy 8.8% dividend yield. In a world where interest rates have been low seemingly forever, a nearly 9% dividend seems like a gift. However, Lumen may end up being more of a nightmare for income-seeking investors, at least ones that can’t afford any potential dividend cuts.

Lumen operates a telecom business with a focus on consumer broadband, voice and enterprise services. However, much of these are legacy operations are in natural decline as people upgrade to newer and better telephony options. As a result, Lumen is a company that has been in consistent decline from an operations basis.

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The company’s revenues peaked in 2018 at $22.6 billion. They’ve fallen to $21.4 billion in 2019, $20.7 billion in 2020, and just $19.7 billion in 2021. The company’s voice business is shrinking the most quickly, as traditional phone service just isn’t an attractive market nowadays. Voice shrunk 15% for Lumen in 2021 alone. However, more worryingly, its consumer broadband business also declined 3% in 2021 — broadband is still a competitive technology so you’d at least hope to see flat results there. And, incredibly, on the enterprise side of things, all four Lumen categories declined in 2021. Compute and application, fiber and IP and data services were all down 2-3% in 2021. Meanwhile enterprise voice was down by double-digits. Lumen has a lot of businesses but virtually all of them are shrinking at the moment.

This makes Lumen a dangerous holding as a dividend play. For the company to keep paying out its oversized dividend, it needs stable operating results from the business. Instead, as earnings are pressured, the company may struggle to keep paying out its current 25 cent per quarter dividend. We’ve already seen this play out once before. Between 2013 and 2018, Lumen paid a quarterly dividend of 54 cents per share. In 2019, it slashed this by more than half to the current 25 cents per quarter payment. Now, even that figure is looking less and less secure.

Analysts see the company earning $1.33 per share in 2022. That’s more than enough to cover the $1.00 of annual dividends that it will pay out if it wants to maintain the current quarterly rate. So far, so good. In 2023, however, analysts see Lumen’s earnings dropping to 98 cents. That’s right on the border line of being too low to support a $1.00 dividend. In 2024, analysts see Lumen’s earnings falling to 90 cents, which is well short of meeting the current dividend level. And this assumes that Lumen is willing to spend 100% of its earnings on paying its dividend.

With interest rates surging, perhaps Lumen will want to address its considerable debt load instead, before it becomes too expensive to manage. And Lumen will probably also want to invest more capital in next-generation telephony services to try to reverse the decline in its operating results. All that leads to a real chance of a dividend cut. It might not be in 2022, but sooner or later, if Lumen can’t get its earnings trending upward again, the dividend is likely to end up on the chopping block.

On the date of publication, Ian Bezek 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.

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In an attempt to put a lid on inflation, the Federal Reserve has stated that it intends to raise its benchmark federal-funds rate by 0.25% at least six more times this year after already raising rates once. The Fed could also decide to move rates 0.50% if it deems necessary to combat inflation, which has some investors thinking about recession-proof stocks.

Add to this the unknown impact of the Russian invasion of Ukraine and there is a lot of risk in markets.

While we believe investors should be aware of potential headwinds, this doesn’t imply that we are suggesting they should head for the exits. Instead, we encourage long-term investors to seek out recession-proof stocks in order to protect their portfolio.

We also believe that a special emphasis should be placed on owning those companies with long track records of dividend growth as the income they provide can cover costs in retirement, be used to purchase new shares at what could be lower prices, and help to offset any weakness in the share price.

Three of our favorite recession-proof stocks include:

• ABM Industries (NYSE:ABM)
• Bristol-Myers Squibb (NYSE:BMY)
• UGI (NYSE:UGI)

ABM Industries (ABM)

Our first company on the list of recession-proof stocks to consider is ABM Industries, a leading name in facility solutions. The company is valued at $3 billion and generated revenue of just over $6 billion in fiscal year 2021.

Since its founding in 1909, ABM Industries has become one of top providers of facility solutions. Among their offerings include janitorial, energy solutions, facilities engineering, HVAC, parking, and electrical and lighting services.

The variety of service offerings is appealing to a wide variety of customers and used in many kinds of facilities, including airports, data centers, hospitals, industrial complexes, public schools and universities. This provides ABM Industries some diversification both among service offerings, but also among clients.

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ABM Industries has used acquisitions to expand its reach. For example, the company acquired GBM Support Services Group Limited, a top name in building maintenance, waste and facilities and management services in the U.K., in 2014. ABM Industries followed that deal with its purchase of Westway Services Holdings, a leading technical engineering systems service provider also located in the U.K., in 2015. Both acquisitions bolstered ABM Industries’ a presence in the region.

More recently, the company completed its purchase of Able Services, the largest family-owned facility services company in the U.S., late last year. This was one of the largest acquisitions in ABM Industries’ history, showing that the company remains aggressive in purchasing growth to augment its core business.

ABM Industries’ business model is quite strong and the needs for services remains robust even in recessionary environments. Earnings-per-share grew a total of more than 34% from 2007 to 2009, with each year showing a higher result.

As a result of a strong business even in difficult times, ABM Industries has amassed a very impressive dividend growth streak of 54 years. The lengthy growth streak qualifies the company as a Dividend King, of which there are just 40 other names that have the required five decades of dividend growth for membership.

With an expected payout ratio of just 23% for 2022, ABM Industries is well positioned to continue to grow its dividend in the coming years. The stock yields 1.7%, above the 1.3% average yield for the S&P 500 index.

Bristol-Myers (BMY)

Bristol-Myers, one of the top names in healthcare, is next for recession-proof stocks. The company is valued at $158 billion and generated revenue of $46 billion last year.

Bristol-Myers has a very large portfolio of brands that have helped make the company into one of the largest healthcare companies in the world. Eliquis, which is used to prevent blood clots, is one of the company’s top grossing products and is showing high growth rates. Eliquis grew close to 20% in the most recent quarter. Opdivo, which is used to treat advanced renal carcinoma among other cancers, was up 11% as demand in the U.S. has accelerated.

Like ABM Industries, Bristol-Myers hasn’t been shy about making large acquisitions to improve its business. The best example of the is the company’s $74 billion purchase of Celgene in late 2019. This purchase added Revlimid, treatment for myeloma and certain anemias, into the fold, but also added additional blood cancer medicines.

Healthcare is typically a more recession-proof sector as people seek out treatment for aliments to improve quality of life. This was the case for Bristol-Myers during the last recession as earnings-per-share grew 151% from 2007 to 2009. The company also posted gains each year for the period.

Bristol-Myers has raised its dividend for 15 consecutive years. Dividend raises were very minimal for much of this growth streak, often just a penny per share per quarter. However, dividend growth has greatly accelerated recently as the last three increases have been in the high single-digit range.

Higher than usual dividend increases could potentially become the norm for shareholders as Bristol-Myers has an expected payout ratio of just 28% for the year. Shares of the company yield 2.9%, more than twice that of the market index.

UGI (UGI)

Last on today’s list of recession-proof stocks to consider is UGI, a gas and electric utility company. The $7.6 billion company has annual revenue of $7.5 billion.

UGI distributes natural gas and electricity to more than 670,000 customers in Pennsylvania, but the company is much more than a regulated utility. UGI operates a large energy distribution business. Through its subsidiaries, the company transports and markets energy and energy related services.

Among its segments are AmeriGas Propane, the largest propane company in the U.S., and Midstream & Marketing, which sells natural gas, renewable energy, liquid fuels and electricity to close to 14,000 residential, commercial and industrial customers in 12 U.S. states and the District of Columbia. UGI also has substantial European operations. The company provides liquid petroleum gas to customers in 17 countries on the continent, including the U.K, France, and the Netherlands.

In total, UGI has six business segments, with the largest contribution a little more than a third of annual net income. This makes the company not as reliant on any one segment, something many utility companies do not share. Most utility companies do not have business operations that expand beyond the U.S. either. This diversification and foot print helps protect UGI in case of challenges in any one area.

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The utility sector often performs better during recessions that most other sectors as customers usually prioritize sources of energy even in economic downturns. UGI is an excellent example of this as earnings-per-share improved 33% from 2007 to 2009 as the company saw its bottom-line grow each year of the period.

This unique business model and the ability to withstand harsh downturns has enabled UGI to grow its dividend for 34 consecutive years. The expected payout ratio for 2022 is 45%, a very low figure for a company in the utility sector. The company has maintained a payout ratio around 50% for most of the last decade, demonstrating how successful UGI has been at growing both its dividend and earnings-per-share during the period. UGI yields 3.8%, almost three times that average yield for the S&P 500 Index.

Final Thoughts

There are numerous headwinds that markets are dealing with at the moment, none of which appears to be dissipating in the near term. This could cause investors anxiety, but, instead of moving to cash, we encourage investors to consider owning stocks of companies that successfully navigated the last recession.

ABM Industries, Bristol-Myers and UGI are three examples of companies that saw earnings-per-share grow by high rates during the 2007 to 2009 period. All three companies have extensive dividend growth track records and each stock yields higher than what the S&P 500 is paying. This suggests that these stocks could be excellent investments for investors worried about the possibility of a recession in the near future.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Apple (AAPL): Strong growth with emerging segments likely to help in sustaining the growth momentum. Robust cash flows will ensure dividend upside.
• Chevron (CVX): Among the top picks from the energy sector with a healthy balance sheet, low break-even assets, healthy cash flows and an attractive dividend yield.
• Pfizer (PFE): Strong growth and cash flow upside from the covid-19 vaccine business. Deep pipeline of drugs to ensure that growth sustains in the long-term.
• AT&T (T): A contrarian pick that seems significantly undervalued. Communications business has growth potential and there is renewed dividend growth visibility after the media division spin-off.
• AstraZeneca (AZN): Low-beta stock with an attractive dividend yield. A strong portfolio of products and a deep pipeline of innovative drugs. Double digit top-line growth visibility.
• Costco (COST): Sustained growth in membership fees provides cash flow upside. Omni-channel retail strength backs growth story and dividend upside visibility.
• Altria (MO) – Another low-beta undervalued contrarian pick. Robust cash flows ensure dividend growth even during the period of business transformation.

Quality dividend stocks are a critical part of any well-diversified portfolio, but as the markets take on more volatility, even growth investors may want to take a minute to re-balance their portfolios.

Inflation has been rising with energy prices likely to remain firm. Further, geopolitical tensions have increased the risk of a recession. A recent survey indicated that U.S. might be poised for a recession in 2023.

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At the same time, the Federal Reserve is considering multiple rate hikes this year. This mayt translate into a relative tightening of liquidity and increases the possibility of a market correction. I am not anticipating a big crash. However, a 10% to 15% correction cannot be ruled out.

I would therefore re-balance my portfolio and consider exposure to some high-quality dividend growth stocks. My focus is on relatively undervalued and low-beta stocks that would help preserve capital if there is a meaningful market correction.

Dividend Stocks to Buy: Apple (AAPL)

From a price action perspective, AAPL stock has been in an uptrend with returns of 27% in the last six months. However, at a forward price-to-earnings ratio of 28.3, the stock looks attractive for further upside.

AAPL stock has a current dividend pay-out of $0.88. This implies a dividend yield of 0.5%. However, I believe that there are two important factors that support sustained dividend growth.

First, Apple has a cash glut. As of December 2021, the company has more than $200 billion in cash and equivalents. Second, for the first quarter of 2022, the company generated $47 billion in operating cash flows.

The cash resources are likely to be used in dividends and share repurchases. Of course, Apple will be deploying cash in innovation-driven organic and inorganic growth.

Finally, the iPhone segment remains the company’s cash flow machine. However, emerging segments like wearable and services will support top-line and earnings growth. This is likely to ensure that cash flows remain robust.

Overall, AAPL stock is attractive for the core portfolio. I expect investors to continue benefitting from dividend and capital gains.

Chevron (CVX)

In the last six months, Chevron stock has surged by 54%. However, at a forward P/E of 12.3, the stock still looks attractive.

CVX stock has a healthy dividend yield of 3.46%. With oil trading above $100 per barrel, there is clear visibility for dividend growth.

From a fundamental perspective, there are three major reasons to like Chevron. These include a strong balance sheet, a strong asset base and low break-even assets.

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Currently, Chevron has a net-debt ratio of less than 20%. With high oil prices, the company is positioned to deliver robust cash flows. This will be deployed towards aggressive share repurchasing and higher dividends. For the current year, the company has a share buyback guidance in the range of $5 to $10 billion.

It’s also worth noting that Chevron has a resource base of 88bboe. With a healthy record of reserve replacement, the company has multi-year cash flow visibility.

Chevron is also deploying additional cash flows into the renewable energy sector. The company has a target of renewable fuels of 100mbd by 2030. For the same year, the company expects hydrogen fuel capacity at 150Ktpa.

Overall, Chevron is a quality pick from the oil and gas sector. Even if oil trades around $80 per barrel, the company is positioned to generate robust cash flows and there is visibility for sustained dividend growth.

Dividend Stocks to Buy: Pfizer (PFE)

Pfizer stock has trended higher by nearly 30% in the last six months. However, the stock remains significantly undervalued at a forward P/E of less than 10.

A dividend yield of 3.14% makes PFE stock among the quality dividend growth stocks to consider.

For 2021, Pfizer reported strong top-line growth and cash flow upside from the vaccine against covid-19. Even for the current year, Pfizer has guided for revenue of $100 billion (mid-range). This would imply a year-on-year growth of 23%.

It’s also worth noting that the recent surge in covid-19 cases and a new variant have strengthened the case for another booster dose. Therefore, Pfizer is likely to deliver revenue that’s on the higher end of the guidance.

With strong cash flows, Pfizer is well-positioned to accelerate the deep pipeline of clinical trials. For the current year, Pfizer expects to invest $11.0 billion in research and development. That’s one reason to believe that healthy growth will sustain in the coming years.

At the same time, Pfizer has made acquisitions in the recent past to boost its drug pipeline. Strong cash flows would also help Pfizer is boosting dividends on a y-o-y basis. Pfizer has a strong track record of dividend growth at a CAGR of 6.32% in the last five-years. I would not be surprised if the dividend growth exceeds the last few years average.

AT&T (T)

With the impending spin-off of the media division, AT&T has already cut its annual dividend nearly in half to $1.11 per share. Dividend growth for T stock has also not been impressive in the last few years.

However, I would consider T stock at current levels for two reasons.

First and foremost, AT&T trades at a forward P/E of 7.8. With the dividend cut being discounted, the valuations look attractive. Once the demerger is completed, it’s likely that T stock will trend higher.

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Furthermore, for 2021, AT&T reported communications segment revenue of $30.2 billion. For the same period, the segment EBITDA was $10.6 billion. With growth in the mobility and wireline business, cash flow is likely to be robust. In particular, AT&T stands to benefit from the adoption of 5G. I therefore expect dividends to increase for the communications pure-play.

It’s also worth mentioning here that AT&T plans to deleverage and reduce net debt to 2.5x by the end of 2023. With a stronger balance sheet, the company will be positioned to deploy more cash towards dividends and possible share buybacks. Overall, T stock is a good contrarian bet at current levels.

Dividend Stocks to Buy: AstraZeneca (AZN)

AstraZeneca stock is up nearly 18% in the last six months. The 2.95% dividend yield stock still looks attractive.

One reason for the rally is robust top-line growth. For 2021, AstraZeneca reported revenue of $37.4 billion. On a y-o-y basis, revenue increased by 38%. Even after discounting the revenue growth from the covid-19 vaccine, revenue growth was healthy at 23%.

For the current year, revenue growth will continue to be supported by the covid-19 vaccine. Additionally, the company’s antibody cocktail to prevent covid-19 has received approval in the United States, Europe and U.K. This will also support growth.

AstraZeneca has also guided for double-digit revenue growth through 2025. This seems entirely likely with the company having an innovative late-stage pipeline.

Overall, AstraZeneca is positioned for sustained EBITDA and cash flow growth. This is likely to translate into stock upside and dividend growth. At a forward P/E of 16.0, the stock is worth holding in the portfolio.

Costco (COST)

Costco (NASDAQ:COST) is another of my favorite names among dividend growth stocks. Since it initiated dividends in May 2004, they have grown at a CAGR of 13%.

I expect dividend growth to sustain with higher cash flows.

One reason to like Costco is the recurring income from membership fees. In the last twelve months, Costco has earned $4.0 billion in membership fees. With a healthy renewal rate, the cash flow from memberships is likely to remain steady.

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At the same time, as the company expands its presence in the U.S. and globally, the membership fee is likely to swell. As an example, Costco has just two stores in China. With a big addressable market in the country, the number of member households is likely to remain in an uptrend.

It’s worth noting that for Q2 2022, Costco reported net sales growth of 16.1% to $50.94 billion. With the company ramping up omnichannel sales capabilities, it’s likely that comparable-store sales growth will remain strong.

I must however mention here that COST stock trades at a forward P/E of 44.0. I would consider fresh exposure to the stock on dips. However, a significant correction seems unlikely for the low-beta stock.

Altria (MO)

Altria stock has a dividend yield of 6.83% and trades at a forward P/E of 10.9.

It’s worth noting that Altria has not been on a high-growth trajectory. To some extent, this factor explains the depressed valuation.

However, even with moderate growth, the business has been a cash flow machine. As a matter of fact, the company has increased dividends in the last five years at a CAGR of 8.25% against a sector median of 5.72%.

For 2021, Altria reported revenue from smokable products of $95.6 billion. Therefore, the free cash flow for the company is entirely attributable to the smokable product segment. These cash flows are being deployed for expansion in the non-smokable product category.

In the oral tobacco business, Altria already has a growing market share. It’s also worth noting that Altria has a 45% stake in Cronos (NASDAQ:CRON). With the Congress clearing a key legislation that would legalize marijuana at Federal level, the stake in Cronos is likely to create value in the next few years.

Overall, MO stock is another low-beta name with healthy free cash flows. Even with the business transformation, dividend growth has been healthy. At current valuations, there is also scope for capital gains.

On the date of publication, Faisal Humayun did not hold (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.

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• Raytheon Technologies (RTX) is due to raise its dividend at the end of April – trades at 20x and 2% yield;
• Apple (AAPL) is due to raise its dividend in June – trades for 28 times earnings and a 0.5% yield;
• Chubb Limited (CB) has paid the same dividend for 4 quarters – likely to hike in May – 14.6x P/E and 1.48% yield;
• Marathon Oil and Gas (MRO) will likely raise its dividend at the end of April – 7x forward and 0.85% yield;
• Devon Energy (DVN) has a quarterly base and variable dividend – likely to rise in April – 8.8x and 6-7% yield;
• Chesapeake Energy (CHK) quarterly fixed and variable dividend – likely to rise this quarter – 9x and 6% yield.

These seven  dividend stocks are worth buying now. They are highly likely to raise their dividends shortly or in their next dividend declaration. Moreover, their stock prices are very cheap.

In addition, at the end of the article, I list three additional dividend stocks that are likely to raise their dividends after their next payment or soon thereafter.

These dividend stocks tend to rise when the company announces a dividend increase. Their consistency, their value metrics and their ability to fund the dividend raise are reasons why the stocks tend to rise.

Let’s dive in and look at these stocks.

Raytheon Technologies (RTX)

Market Capitalization: $147 billion

Raytheon, the defense and aerospace company, usually raises its dividend every four quarters. Its last dividend announcement was on Feb. 11 for 51 cents, the fourth in a row. The company’s next dividend announcement is likely to be at the end of April, around the week of April 25. Therefore, the company is likely to announce a dividend increase later this month.

Raytheon has paid cash dividends on its common stock every year since 1936. Lately, the company has been raising the dividend by around 3 to 4 cents, or about 7% or so. So the next quarterly dividend could take it to 54.5 cents or higher. That works out to $2.18 annually, giving RTX stock a dividend yield of 2.2% at today’s price of $98.86.

Presently RTX stock trades at a forward price-to-earnings multiple of 20.24 times this year’s earnings and 17 times next year. Given the company’s expected earnings growth, its potentially higher dividend and a recent buyback announcement, RTX is likely to rise.

For example, in its Jan. 25 earnings release Raytheon said it intends to buy back a least $2.5 billion of shares this year. That works out to 1.7% of its present market capitalization.  This gives RTX stock a total yield of 3.9% from its combined dividend and buyback yields. That makes it a good investment prospect for value investors.

Apple (AAPL)

Market Cap: $2.8 trillion

Apple has made four quarterly dividend payments at 22 cents. The last one was declared on Jan. 27, and it’s due to make another quarterly announcement by the end of April.

Apple can clearly afford to increase the dividend given its huge free cash flow (FCF) generation. FCF is the cash flow left over after all spending and expenses that can pay for dividends, dividend increases and continuing share buybacks.

For example, Apple produced $44.16 billion in FCF during Q4. Its dividend expenses were just $3.73 billion, as can be seen in its Cash Flow statements on page three of its latest quarterly financials. So it has plenty of room to make another annual increase.

Assuming Apple increases its dividend to 24 cents quarterly, up from 22 cents, the annual dividend rate is 96 cents annually. That would give AAPL stock an annualized yield of 0.56% going forward.

Most of the FCF it produces is spent on buybacks. In a previous article, I pointed out that Apple is also likely to raise its buyback authority at the end of the month or even earlier.

If these two announcements are made at the end of the month, expect to see AAPL stock move even higher.

Chubb Limited (CB)

Market Cap: $91.2 billion

Chubb, the large insurance company, has paid 80 cents per quarter for the last four quarters. It’s due to hike the dividend around May 20 or so. The dividend is likely to rise by 3 cents, bringing it to 83 cents or $3.32 annually. That will give CB stock an annual yield of 1.55% or higher at today’s price of $214.05.

Chubb is fairly cheap at a forward price-to-earnings (P/E) multiple of 14.2x for this year and 13.1 times next year’s forecast earnings. The company can certainly afford to pay a higher rate. In the last quarter ending Dec. 31, it made $2.6 billion in cash flow from operations, but its dividend payments cost just $345 million. On top of that Chubb bought back $920 million of its shares.

So the stock is cheap, the company is shareholder-oriented and the dividend is likely to rise. That is a winning formula for most value investors.

Marathon Oil and Gas (MRO)

Market Cap: $17.9 billion

Marathon has been raising its quarterly dividends by 1 cent per quarter and will likely keep on doing so. Its next dividend announcement will be at the of April and shareholders can likely expect a hike. As you might suspect, this is basically because the price of oil is rising. It is likely producing well over the level of cash flow that the company made even last quarter.

Right now the company is paying 7 cents per quarter, up from 6 cents in the prior quarter and 5 cents before that, and 3 cents a year ago. This progression leads one to believe it could rise to 8 cents at the end of April, putting it at an annual rate of 32 cents. That will give MRO stock an annualized yield of 1.3% at $24.43 per share.

Up until Q4 of 2015, it had been paying a rate of 21 cents per quarter. It’s possible that management is trying to build back up close to that level.

As it stands, MRO stock trades on a forward P/E multiple of just 9 times this year and (assuming a lower oil price next year) 9.4 times for 2023. Its FCF in Q4 was $898 million. That works out to $3.6 billion annually. That is more than its buybacks of $3.1 billion and also the cost of its dividends of about $205 million.

This is a value stock with growing dividends and a robust buyback program. When the next dividend is announced, MRO stock will look attractive to value investors.

Devon Energy (DVN)

Market Cap: $40 billion

Devon Energy paid a $1 per share fixed and variable quarterly dividend last quarter. This puts it on a $4.00 annual run rate. At today’s price of $58.13, that gives DVN stock a 6.88% dividend yield.

The fixed portion of the $1.00 dividend was 16 cents and the variable portion was 84 cents. This includes an increase of the fixed component by 45% to 16 cents quarterly or 64 cents annually.

The variable portion is calculated as 50% of quarterly free cash flow, after deducting the fixed dividend slice. My estimate is that the total dividend could rise to $4.68 annually starting with the Q1 announcement. This declaration will likely be made on or before May 2 when Devon announces its Q1 earnings.

If my estimate is correct, that works out to a quarterly dividend of $1.17. At the annual $4.68 rate, the stock would have a yield of 8.05%, which is likely too high. This could push DVN stock higher by at least 17% or more.

All eyes will be on the company when it announces its quarterly earnings and fixed and variable dividends. Value investors will find this stock attractive if the company keeps raising its dividends as expected.

Dividend Stocks: Chesapeake Energy (CHK)

Market Cap: $11.7 billion

As the last of our main dividend stocks, Chesapeake Energy’s dividend also has a base and variable component. The latter is 50% of free cash flow, after base dividends. Last quarter CHK paid 43.75 cents in a base dividend and $1.33 in variable dividends. That works out to an annual rate of $1.75 in base and $5.32 in variable dividends, or $7.07 annually. That gives CHK stock an annual yield of 7.85%.

However, Chesapeake recently said its base dividend will rise to 50 cents quarterly or $2.00 annually. This gives CHK stock a base yield of 2.22% ($2.00/$90.00).

I recently estimated that the variable dividend could rise to $8.43 annually, up from $5.32 annually. That is based on $2 billion in FCF and after the 50% reduction, $1 billion for the variable dividend. With less than 120 million shares outstanding, that works out to about $8.43 per share annually. So the total fixed and variable dividend will be $10.43 per share.

That brings the annual yield to 11.4%. That’s too high. As a result, CHK stock will rise significantly. Once the dividend is announced in early May, CHK stock could move higher if the variable portion is significantly higher due to higher oil prices.

Likely to Soon Hike Their Dividends: Oracle Corp (ORCL)

Market Cap: $218.8 billion

Oracle Corp (NYSE:ORCL) has now paid dividends of 32 cents per quarter for the last five quarters. The latest announcement was made on March 10. Now it’s possible that the company could raise the dividend this next quarter, or after the eighth quarterly payment at the same rate. So it’s possible the company could raise its dividend again after the next three dividend payments or earlier.

Certainly, the company can afford to do so earlier than after eight quarters. For example, in its last quarter ending in February 2022, Oracle produced $2.744 billion in free cash flow. However, its dividend payment was just $855 million. So there is plenty of room for a dividend increase.

Microsoft Corp (MSFT)

Market Cap: $2.25 trillion

Microsoft (NASDAQ:MSFT) has now made three dividend announcements at 62 cents, as of March 14. Microsoft almost always hikes its dividend per share after the fourth dividend payment. So after this upcoming dividend in June, analysts will start to price in another per share raise.

The last dividend raise was 10.7%. This implies the next dividend, probably in mid-September, will rise to 69 or 70 cents. That brings it an annual rate of $2.80 or 0.9% at its price today of $300.21. Expect to see MSFT stock rise as a result. This makes it one of the worthwhile dividend stocks.

Caterpillar Corp (CAT)

Market Cap: $115.7 billion

Caterpillar (NYSE:CAT) is due to announce its fourth dividend at $1.11 in mid-April. After that, analysts will begin pricing in a dividend increase. Assuming it rises to $1.20 in early June, that gives the stock an annual dividend rate of $4.80. Assuming there is no recession on the horizon, Cat stock could get a nice boost as one of the dividend stocks that raises its dividend rate.

On the date of publication, Mark Hake did not hold (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.

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Not only did the pandemic jumpstart the reality of remote jobs, it made employees realize there were more options in their current job market. Introducing the Great Resignation, one of the most unusual movements in the American job market, causing employees to take action and create a new future for themselves after re-evaluating their opportunities.

But are the newly migrating employees looking at all aspects of their future, such as retirement plans? Does the change in jobs put their retirement at risk? There are typically four choices that one can make with their retirement savings when changing careers. The decision should certainly be made carefully.

Retirement Advice: Cash Out

One of the more simple options available for employees: Cash out your retirement plan from the previous job and receive the amount you’ve accumulated. Although, you may run into some problems depending on the amount of money.

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If the total amount is less than $1,000, the employer will reimburse in full without penalties (not including taxes). Most companies will send it back within 60 days after it is taken out. But, when the balance is between $1,000 to $5,000, the company may not refund the funds to you. Instead, the funds would go to a new retirement account, which is usually another IRA under your name.

In either situation, the cash-out option does not exclude penalties.

Keep Your Old Plan

Now, if the retirement account balance exceeds $5,000 or more, some will keep it under their old employer. It is impossible for your employer to move those funds without your permission.

In many circumstances, this may not be the best strategy because your past employer stops making contributions to that fund. There will also be annual limits you on how much you can contribute. On top of everything, all your investments and where they are allocated is managed by your employer.

As mentioned, you might not even have this choice if your balance is between $1,000 and $5,000 — your old employer must direct your funds to a new IRA.

Retirement Advice: Roll Over to the New Employer’s Plan

One of the easier solutions in theory is to roll your old retirement fund into the one your new employer offers. Although on the surface it does seem easier, there are still some penalties that can come with it.

“Your new employer might not allow transfers from an old 401(k),” says Ty J. Young, Chief Executive Officer of Ty J. Young Wealth Management. “If they do, you may need to fill out a pile of paperwork. There’s a lot of red tape to sort through, depending on how much you’re transferring, your account history, tax status, and the investment choices you have at the new organization.”

Some other penalties to think about is if the new employer charges higher account fees and doesn’t offer many options for direct management. Ultimately, you’re leaving the control of a fund to a manager you likely don’t know.

Roll Over to a Self-Directed IRA

If your balance is more than $1,000, the best and final choice may be changing your account balance to a separate, self-reliant IRA under your name. This is one of the top predictors in improving your financial health score.

The biggest change and benefit is total control. No more being subjected to someone else’s plan for your future. Total control over your retirement plan, investments and fund allocation.

Many companies will limit your investment in the traditional stocks, bonds and funds; but with this choice, you get to invest in nontraditional assets such as life insurance, non fungible tokens (NFTs), cryptocurrencies and more.

This offers more tax advantages than traditional IRA’s. With a self-directed Roth IRA, qualified distributions from the account are tax-free.

With this movement unfolding and allowing employees to take back control and grow to their full potential, the self-managed IRA allows them to do the same: explore their opportunities and take back their control.

On the date of publication, John Rampton 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.

John Rampton, the founder and CEO of Due, is an entrepreneur and connector. While recovering from a serious construction accident when he was 23, he studied how to make money work for you, not against you. He has since written many articles about finance, entrepreneurship and productivity.

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• Altria (NYSE:MO): Profit margins are expected to increase significantly this year
• Societe Generale (OTCMKTS:SCGLY): Excessive bearish sentiment offers a good entry point into this leading European bank
• Rubis (OTCMKTS:RBSFY): Despite underperforming crude markets, the niche oil company has solid financials
• Engie SA (OTCMKTS:ENGIY): Utility hard hit by rising gas prices, but the group still offers good fundamentals
• BASF (OTCMKTS:BASFY): Dividend distribution is safe, despite a deteriorating cost-structure
• Archrock (NYSE:AROC): Analysts expect weak cash flows in 2022, but the constructive gas market outlook will support operations

Dividend stocks are typically used by investors as a source of passive income on top of capital gains generated by stock increases. The best dividend stocks typically are high-quality companies that have a leading position in their respective markets.

Dividend stocks are also a good way to help investors hedge against inflation. Most of these corporations have a high pricing power that makes it easier to adapt to changing market conditions.

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The first quarter of 2022 has been defined by high volatility in the equity market. Some dividend stocks exposed to the geopolitical developments in Eastern Europe have been hit hard and are now offering a good long-term buying opportunity.

Here is a diversified selection of dividend stocks to invest in now, nearly all with an estimated yield of more than 6%.

High Dividend Stocks to Buy: Covestro AF (COVTY)

Covestro is one the leading suppliers of polymer materials, used in a bunch of different sectors such as construction, automotive, and electronics.

After a solid year in 2021, revenues surged 48.5% year-on-year to $17.59 billion and are projected to advance at a rapid pace in first quarter 2022, up 9.2% quarter-on-quarter to $5.79 billion.

Despite this robust top-line growth, COVTY shares lost 16.13% year-to-date to $26.14 per share. Net debt climbed considerably last year, up 294.7% to $1.55 billion compared to $393.9 million. The consensus of analysts expects a moderate decline in 2022, down 9.3% to $1.47 billion, representing a low leverage ratio of 0.47x.

The decline in the COVTY stock price is an opportunity for investors looking to enter a leading player in the polymer industry, that offers an attractive dividend yield of 6.46% in 2022. In addition, Covestro trades at low valuation multiples, with a forward Enterprise Value (EV)/ Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of 3.95x and price-to-earnings (P/E) of 7.17x.

Altria (MO)

Altria is a “sin” stock, defined as a company involved in or associated with an activity that is considered unethical or immoral. The company operates in the tobacco industry and owns a 10% share in Anheuser-Busch InBev (NYSE:BUD), one of the largest producers of beer in the world.

MO stock outperformed the equity market since the beginning of the year, gaining 8.51%. The tobacco giant is a defensive stock that is less affected by market volatility, because of the incompressible demand for the tobacco products it sells.

Fundamentally, the company is growing at a slow rate, posting a revenue increase of only 1.3% in 2021 to $21.1 billion. Nevertheless, MO stock is projected to increase net income fourfold in 2022 to $8.75 billion versus $2.47 billion last year. With this boost, net margins are expected to expand significantly, reaching 41.5% per year.

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MO stock is a promising dividend stock, providing a high expected yield of 6.83% in 2022, with reasonable valuation metrics of 9.46x in terms of 2022e EV/EBITDA and 10.7x forward P/E.

High Dividend Stocks to Buy: Societe Generale (SCGLY)

Societe Generale is one of the largest banking groups in France and is the third-biggest investment bank in Europe.

SCGLY stock price has tumbled 19.02% year-to-date to $5.26 per share, due to increasing concerns that the lender’s $20 billion exposure to the Russian banking system will be stripped out of business if Western sanctions on the Russian economy stiffen.

Nevertheless, SCGLY last month announced that the situation would have no effect on its dividend for 2021, as “…the group has more than enough buffer to absorb the consequences of a potential extreme scenario, in which the Group would be stripped of property rights to its banking assets in Russia.”

The excessive bearish sentiment on SCGLY stock offers a cheap entry point for this high dividend stock. While the French traded shares of the bank carry a compelling dividend of 6.75%, the U.S.-traded version offers less, at 2.49%. Still those shares trade a low forward P/E ratio of only 6.03x.

Rubis (RBSFY)

Rubis is an independent oil operator in the downstream and chemical sector throughout the world. The company is specialized in niche markets where it can control supply infrastructures, enabling it to enter into a leading market position, with a competitive product cost structure.

RBSFY stock underperformed crude oil markets year-to-date after shares decreased more than 3% to under $6 per share. The market seems to underestimate the future potential of Rubis, given that the oil specialist beat analyst expectations with its full year 2021 earnings release.

The fundamental picture of the company remains solid. After jumping by 17.6% to $5.07 billion in 2021, revenues are projected to advance by 9% in 2022 to $5.53 billion.

On the negative side, net debt is expected to nearly double this year to $1.21 billion, representing a leverage ratio of 1.92x and net profit should flatten to $325.3 million, offering a reasonable net margin of 6.38%.

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Despite that, the dividend of RBSFY is not expected to be compressed. The oil dividend stock specialist delivers a robust 2022e yield of 7.11% and is valued at a forward EV/EBITDA of only 6.78x and 10.2x P/E.

High Dividend Stocks to Buy: Engie SA (ENGIY)

Engie is another dividend stock with a high yield. The company is a worldwide energy and services company, committed to the energy transition.

Since the beginning of the year, ENGIY stock lost more than 10% to $13.17 per share and has been hit hard by the volatile European gas market.

Net sales are anticipated to advance slimly this year, up only 2.5% to $65.6 billion, nevertheless, the profitability of the utility is expected to remain comfortable versus industry peers, with a net profit of 5.29% expected in 2022.

In terms of the balance sheet, ENGIY’s net debt is projected to decrease 12.1% to $23.9 billion in 2022, offering a leverage ratio of only 1.96x. More interestingly, free cash flows (FCF) are expected to surge this year to $9.59 billion, up 556% year-on-year, which will be enough to maintain or increase dividend distributions over the year.

With the stock declining moderately this year, ENGIY stock delivers a compelling 2022e dividend yield of 7.46%. In addition, the energy giant exchanges at a low valuation of 4.62x forward EV/EBITDA and 9.64x P/E.

BASF (BASFY)

BASF stock is the world’s biggest chemicals maker. BASFY stock dipped 16.2% to $14.82 per share because of rising commodity prices that will no doubt weigh on BASF’s cost structure.

The top line of the company is expected to flatten out, with expected revenues of $87.5 billion in 2022. On the other side, net income is expected to dip 10.4% to $5.5 billion in 2022, bringing net margins to 6.25% per year.

Nevertheless, BASFY stock has a well-capitalized balance sheet, posting a leverage ratio of only 1.5x in 2022 and a solid anticipated FCF of $3.98 billion in the period.

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BASF increased dividends over the last 10 years and offers an expected dividend yield of 6.47% in 2022. In addition, it shows low valuation multiples, with 2022e EV/EBITDA of only 6.17x and 9.67x P/E.

High Dividend Stocks to Buy: Archrock (AROC)

Archrock is a U.S. small-cap energy infrastructure company operating in the midstream natural gas compression market and delivering its services to the oil and natural gas industry. Since the beginning of the year, the compression specialist stock surged 19.02% to more than $9.50 per share, benefitting from soaring oil and gas prices.

The top-line decreased moderately in 2021, down 10.7% year-on-year to $781 million, nevertheless, Archrock’s profitability is expected to improve this year, as net income is anticipated to advance 25.2% to $35.3 million.

AROC stock is weighed down by the company’s debt. With net debt of $1.61 billion this year, the leverage ratio stands at $4.73x, which is not a good sign for long-term shareholders.

Besides, FCF is projected to turn negative this year, posting a deficit of $39.4 million, compared to $195 million in 2020. Nevertheless, net cash provided by operating activities and free cash flow after dividends for 2021 reached respectively $237.4 million and $164.2 million.

Despite the deteriorating fundamental picture, AROC stock returns a compelling dividend yield of 6.26% in 2022. It also trades a low forward EV/EBITDA of 8.94x, but exchanges at a less inviting 2022e P/E of 31.9x.

On the date of publication, Cristian Docan 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.

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Dividend Kings, stocks with at least 50 consecutive years of dividend growth, are favorites of many income investors.

High-dividend yields can be a warning sign that the underlying company’s business is struggling or, worse for income investors, that the dividend could be at risk for of being cut.

However, when those stocks offering high yields also have extremely long track records of dividend growth, investors can rest easier knowing that the company has demonstrated a long-term commitment to growing its distribution.

This article will examine three of our favorite high-yield Dividend Kings, including:

• Kimberly-Clark (NYSE:KMB)
• Northwest Natural (NYSE:NWN)
• Universal Corp. (NYSE:UVV)

Dividend Kings: Kimberly-Clark (KMB)

Topping our list of Dividend Kings is Kimberly-Clark, a top name in consumer products. The $42 billion company grosses annual revenue in excess of $19 billion.

Kimberly-Clark maintains a portfolio of well-known brands used and trusted by consumers. The company’s personal care segment includes Huggies, Pull-Ups, Kotex and Depend while the Consumer Tissue business holds brands such as Kleenex, Scott and Cottonelle. Kimberly-Clark’s professional segment includes products used to support workplace health and safety, including soaps, sanitizers, tissues, wipes and apparel.

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The company’s brands hold leading positions in a number of categories in development markets, which doesn’t leave much room for additional market penetration. In emerging and developing markets, however, Kimberly-Clark has only begun to scratch the surface of its potential. The company has focused on accelerating its growth in these regions, choosing to highlight its offerings in the personal care and professional segments as a means to reach a greater number of consumers.

Areas such as China and Latin America are likely going to be the key for Kimberly-Clark’s ability to grow its business in the coming years. To this end, the company is investing in its infrastructure and marketing in these regions. The company typically spends more than $1 billion in advertising and research and development in order to grow its brand presence. Focusing some of these dollars on areas where the company has a lesser position should help to grow the business.

In addition, Kimberly-Clark is also undertaking a talk about cost reduction program in order to reduce operating costs. This has led to gradually higher margins over the last decade.

Kimberly-Clark’s has so successfully grown its business over a long period of time that the company has been in a position to return capital to shareholders. Following a 1.8% increase for the April 4, 2022 payment date, Kimberly-Clark has raised its dividend for 50 consecutive years. The expected payout ratio for 2022 is 77%, which is elevated, but close to the long-term average payout ratio of 71%. Shares of Kimberly-Clark yield 3.7% today, ahead of the 10-year average yield of 3.2%.

NW Natural (NWN)

Our next pick among high yielding Dividend Kings is NW Natural, a natural gas utility company. NW Natural is valued at $1.7 billion and has annual revenue of $860 million.

NW Natural was found in the 1850s and began providing service just a few customers. Over time, the company has grown and expanded and services more than 760,000 connections today. In total, NW Natural provides natural gas to close to 2.5 million people, primarily in Oregon and southwest Washington state. Though small compared to most other utility companies, NW Natural happens to operate in fast-growing areas.

The company also owns and operates underground gas storage facilities capable of holding close to 35 billion cubic feet of natural gas.

In addition, NW Natural has expanded to include water and wastewater services. The company has nearly 28,000 connections providing services to 67,000 people across Oregon, Washington state, Idaho and Texas. These areas are seeing some of the fastest population growth in their respective regions. Natural gas still contributes the bulk of net income, but the water business is expected to grow steadily over time while also offering some diversification for the business model.

Regulated utilities require rates case to be approved in order to earn a return on their investments in infrastructure. NW Natural historically has had difficulty seeing rate increases approved. That said, guidance from the company shows that rate base growth is projected to be 4% to 6% over the next few years. This growth will be supported by customer growth of 1.4% going forward.

Despite its size and limited earnings growth, NW Natural has been one of the most reliable dividend growth companies in the market. The most recent raise was just 0.5%, but it extended the company’s dividend growth streak to 66 years. Our expected payout ratio for 2022 is 75%, which is below the long-term average payout ratio of 83%. NW Natural yields 3.5%, matching the average yield since 2012.

Dividend Kings: Universal

Our final pick for high-yield Dividend Kings is Universal, the global leader in the exporting and importing of leaf tobacco. Universal is valued at $1.4 billion and had revenue of just over $2 billion.

Universal is engaged in the purchasing, selling, and processing of flue-cured, burley and other leaf tobaccos used in the manufacturing of consumer tobacco products. The company acts as a conduit between farms and those companies involved in the production of tobacco related products, such as cigarettes and pipe tobacco.

Universal has operations in more than 30 countries on five continents, giving the company a vast global network that is difficult for peers to match. The company has leveraged this leadership position to create contracts with leading tobacco companies.

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More than three-quarters of sales are to those customers with leading market share in their respective markets. This includes such companies as Altria Group (NYSE:MO) and Philip Morris International (NYSE:PM). The biggest names in tobacco control more than 80% of the global market. Though tobacco usage has been in steady decline, Universal’s partnerships with the top names in the tobacco industry means that the company is likely to weather this storm better than the competition.

Universal increased its dividend just over 1% for the August, 2, 2021 payment date, which is in-line with recent raises. This gave Universal the required 50th year of dividend growth to gain entrance into the Dividend Kings. Universal has a projected payout ratio of 71% for the year. This is well above the long-term average payout ratio of 58%, but just ahead of the medium-term average of 66%. Shares of the stock yield 5.5%, superior to the 10-year average yield of 4.5%.

Final Thoughts

In order to become a Dividend King, a company must have a business that supports dividend growth. Without this support, increases likely to cease or the dividend could be cut under difficult economic conditions.

Kimberly-Clark, NW Natural and Universal are three examples of companies whose business models work in all portions of the economic cycle. This has enabled the three companies to grow dividends for at least five decades.

Dividend growth for all three is on the low side, but each stock offers a high yield that looks to be safe considering the payout ratios.

This suggests that investors looking for sources of safe and secure income consider owning Kimberly-Clark, NW Natural or Universal.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Return on invested capital is often an under-utilized metric when searching for high quality stocks.

Investors who ignore return on invested capital as a means of evaluating stocks can miss out on companies that are making good use of invested capital. Warren Buffett, perhaps the most successful investor of all time, often stresses the importance of looking at return on invested capital when making an investment decision.

If the Oracle of Omaha finds it a worthwhile metric to consider, then we feel that the average investor should as well.

This article will examine what the metric is, why it is important, and provide a few examples of companies with excellent returns on their invested capital. The stocks are:

• Apple (NASDAQ:AAPL)
• Domino’s Pizza (NYSE:DPZ)
• AutoZone (NYSE:AZO)

What is Return on Invested Capital?

Companies typically have to borrow capital to grow the business. The old adage “it takes money to make money” is often very true in business. In order to grow earnings, companies usually have to invest to increase its ability to produce more goods and services.

Each investment of capital should be expected to grow future earnings. Those companies that don’t successfully reinvest in the business are at risk at seeing results plateau or, worse, decline.

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Return on invested capital is calculated by dividing the company’s net operating profit after taxes by the combination of debt and equity. This quick ratio can tell investors how successful the company has proven itself at properly allocating capital within its business. A healthy return on invested capital varies across industries, but a figure above 10% is usually what passes as a solid rate.

Buffett often stresses the importance of this return as a means of detecting strong businesses to own.

In his 1992 Berkshire Hathaway Shareholder letter, Buffett wrote:

“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.”

Buffett is clearly looking to identify the companies that are best at extracting value out of invested capital.

The reason is that companies that can achieve a higher rate of return on capital are often those that can outpace the competition. The ability to do so can lead to better business results. Companies outperforming their peer groups often have stocks that enjoy a valuation superior to that of its competition.

On the other hand, companies that make poor investment decisions are essentially destroying shareholder value. For this reason, we feel that investors should consider owning companies that have high a return on invested capital ratio.

Why is Return on Invested Capital Important?

Measuring this return provides investors with a way to evaluate management’s effectiveness.

Regardless of size, good management teams are needed for businesses to succeed. There are multiple examples throughout history of large, iconic companies who lost their way because of poor managerial decisions. If a company’s leadership is showing weak or declining return on invested capital it will show up fairly quickly using this metric.

Good management teams can also use return on invested capital to measure what return their reinvested dollars are producing. This figure can help assist with planning, budgeting and evaluating where reinvested dollars should go. That way, management teams can pivot their strategy if they determine that capital isn’t being used wisely in one area of the business.

Finally, this statistic is a tool that investors can use to compare between two companies in the same sector. For example, if company ABC is earning a 15% return on invested capital while company DEF is earning just 5%, investors can see that the former is considerably better at turning invested capital into profits.

Examples to Consider

One of the best examples of a company that has seen high rates of return on invested capital is Apple.

The then-focused computer company was on the verge of bankruptcy in the mid-1990s. A lack of innovation had almost doomed the company, but Apple invested immense amounts of capital into its business to create products that consumers would purchase.

As a result, Apple has created an entire ecosystem as consumers now buy millions of units per year of the company products, which include iPhones, Macs, iPads, the Apple Watch and Apple TVs. Apple has a return on invested capital of 54%, meaning that the company is generating $1.54 of earnings for every dollar that it has invested. This is a primary reason that Apple is now one of the largest companies in the world.

Companies with strong return on invested capital ratios are found in a wide variety of industries. Take Domino’s Pizza, for example.

For many years, Domino’s was just like every other pizza chain, but the company began to invest heavily in technology. The ease of use has attracted customers at considerably higher rates than its competitors.

Today, Domino’s has more than 18,000 stores worldwide, making it the largest pizza chain in the world. Domino’s has so successfully reinvested in its business to grow earnings that its return on invested capital is 59%.

One final example of a company posting incredibly high rates of return on invested capital is AutoZone. The company, which is a leading retailer and distributor of automotive replacement parts, has a return on invested capital of 110%.

The company was able to achieve this level of return because it moved to aggressively expand its store count to more 6,000 across the U.S., Puerto Rico, Mexico and Brazil.

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The automotive replacement part business is highly fragmented with many smaller and independent operators. This store expansion allowed AutoZone to increase its market share at the expense of the smaller players in its industry.

Final Thoughts

With so many ways for investors to value stocks, investors might not realize that return on invested capital is an excellent way to see how efficiently companies are generating earnings from investments in the business.

This can help separate the great companies from the mediocre, which can lead to outsized returns for a portfolio. Investors wishing to understand how Buffett became the investor that he is would do well to add this figure to their investment tool kit.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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U.S. defense stocks like Raytheon Technologies (NYSE: RTX) have been explosive.

In fact, since Russia attacked Ukraine on Feb. 24, RTX ran from about $89.31 to a high of $104.34. While the stock has since pulled back to $101.23, I’d use weakness as opportunity.

For one, no one knows when the war will end.

Neither side is giving up. Russia wants total victory. Ukraine doesn’t want to concede and things could escalate for months down the road. On top of that, NATO Secretary-General Jens Stoltenberg said, “the alliance is likely to bolster troops along its eastern flank, deploying four new battle groups in Bulgaria, Hungary, Romania, Slovakia,” as noted by CNBC.

Two, the U.S. Senate just finalized a $1.5 trillion spending bill, which includes $13.6 billion in new aid to Ukraine. It also includes $728.5 billion in discretionary funding for the U.S. Department of Defense. That is an increase of 5% year-over-year.

And finally, third, European nations are also increasing their defense spending.

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All of these points could send defense stocks, like Raytheon Technologies, to higher highs.

Raytheon Is in a Prime Position

With a dividend yield of 2.01%, Raytheon is an attractive opportunity – especially with its anti-drone and its hypersonic weapons a timely offering as war rages.

Also, with the crisis showing no signs of slowing, analysts are turning their attention to companies like Raytheon. Jefferies analyst Chloe Lemarie said:

“With the open war situation in Ukraine, and NATO forces being deployed to neighboring countries, defense consumables (ammunition, countermeasures etc.) should be the first products to experience restocking and order uplift.”

While the analyst didn’t mention RTX by name, it falls into their argument.

In addition, RTX should benefit from Stinger anti-aircraft demand. Especially as Ukraine’s use of stinger missiles outstrips U.S. production. In fact, Forbes contributor Craig Hooper notes that:

“For air threats, America’s well-known portable antiaircraft missile, the FIM-92 Stinger, is out of production in the U.S. and cannot be replaced easily. The missile system was first produced in the 1970s, and with tens of thousands of updated Stingers sitting in the U.S. inventory, the missile wasn’t expected to be replaced until the 2030s. The Ukraine conflict may well change the supply calculations.”

Raytheon Technologies Is Fundamentally Strong

The company just hiked its dividend to 51 cents, payable on Mar. 24, 2022, to shareowners of record on Feb. 25, 2022.

Earnings haven’t been anything to write home about in its last quarter, but chances are good that will change with an increase in defense spending. In its fourth quarter, the company posted adjusted earnings per share (EPS) of $1.08 per share on sales of $17 billion. Analysts were looking for adjusted earnings of $1.02 on sales of $17.3 billion.

Moving forward, Raytheon expects to post full year adjusted EPS of $4.60 to $4.80 a share, with sales falling within a range of $68.5 billion and $69.5 billion. While both are below expectations, I expect that to change moving forward.

Bottom Line on RTX Stock

I would use any weakness as an opportunity with RTX stock.

Currently trading at $101.23, I’d like to see the stock up to $110 in the longer-term. With no end in sight to the war, increased demand for defense and an increase in military spending could make RTX stock soar.

Barclays analyst David Strauss just raised his firm’s price target from $100 to $107 with an overweight rating on the stock. Wolfe Research analyst Michael Maugeri also raised his firm’s price target from $110 to $111 with an outperform rating.

Again, with tensions still high and no end in sight to the war, RTX should be in your portfolio.

On the date of publication, Ian Cooper 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.

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• Devon Energy (DVN) stock now pays a $1 per share quarterly dividend ($4.00 annually), giving it a 6.50% dividend yield.
• This will likely rise, as the variable component of the dividend grows with higher free cash flow (FCF).
• Devon has expanded its buyback program to $1.6 billion, or 3.9% of its market capitalization, pushing DVN stock higher.

Devon Energy (NYSE:DVN) is moving up again this year after being the best performing stock in the S&P 500 last year. This was because of its super generous dividend and buyback policy. DVN stock. So far this year as of March 28, at $60.66 per share, it’s up 37.66% year-to-date.

Right now Devon Energy pays a $1 per share quarterly dividend, or $4 annually. It has fixed and variable dividends components. That gives it a dividend yield of 6.50%.

The variable portion is calculated as 50% of quarterly free cash flow, after deducting the fixed dividend slice. So far this gives it a 6.50% dividend yield (i.e., $4.00/$60.66).

Dividend Projections for DVN Stock

In a recent article, I projected how the company can probably pay out a higher dividend through the year. This could raise the dividend to as high as $4.68 per share. That raises the dividend yield to 7.49%. Here is how that works out.

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There is good reason to believe that Devon Energy can produce higher free cash flow this year and hence its variable dividends.

First, last year we know that in 2021 Devon produced 209 million barrels of oil equivalent (MMBoe) based on page 10 of its 10-K. Last year its revenue was $12.206 billion. So that implies Devon’s average barrel of oil price equivalent was $58.40 (i.e., $12,200 million/209m bb).

This is a lot lower than where the price of oil is today. For the past quarter, it has been well over $100, probably twice the $58 level from last year.

Just to be conservative let’s say that it makes $100 per barrel this year on average. In its 2022 guidance, Devon said that it will produce 570,000 to 600,000 barrels of oil equivalent daily. That works out to an annual rate of 208 million barrels of oil equivalent (MMBoe) to 219 MMBoe.

The 600MBoe estimate can be seen in the guidance document table on the right:

Click to Enlarge

Therefore, if we multiply these MMBoe forecasts by $100/barrel you can see that revenue will skyrocket to between $20.8 billion and $21.9 billion. Again, that is up from $12.2 billion last year, or a rise of 70.5% to 79.5% in sales this year.

Moreover, last year, Devon’s operating cash flow margin was 40% (i.e., $4.899 billion/$12.2 billion). Therefore, this year we can assume that its operating cash flow will be about $8.5 billion at the midpoint of the revenue targets.

After deducting the fixed dividend payments of $106 million and $2.44 billion in capital expenditure (capex) from its guidance, its FCF will be $5.966 billion. The capex guidance can be seen in the table on the right:

Click to Enlarge

The variable dividend deducts 50% of FCF, so it could be $2.98 billion. Let’s call it $3 billion. Since there are 664 million shares, the variable dividend could be as high as $4.52 per share this year.

After adding back the 16 cents in fixed dividends, the total dividend this year could reach $4.68 per share. That is 17% over the $4 present dividend rate. It will give DVN stock a very high yield at 7.488%.

The Bottom Line

Moreover, Devon has raised its buyback program significantly. Devon announced on Feb. 15 that it upped its buyback authorization to $1.6 billion by 60 percent. That works out to 3.9% of its $40.96 billion market capitalization. If it were to buy back this amount in one year that would use up 55% of the $2.9 billion in FCF it generated last year.

Going forward, DVN stock trades for just 8.66x forward earnings. This makes it one of the cheapest and most profitable energy stocks in the U.S.

Therefore combined with its high yield (6.50%) and its new powerful buyback program, and cheap P/E metric, DVN stock looks like good value. It very likely can move substantially higher from here.

On the date of publication, Mark Hake did not hold (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.

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• Dollar General (DG): Slow and steady wins the race
• Steel Dynamics (STLD): It’s giving Nucor a run for its money

The Financial Times reported in February that global dividend growth is set to stall in 2022. Therefore, if you’re looking for dividend stocks to buy that are boosting their payouts, you might have a tough time finding possible options.

“Global dividends hit a record $1.47tn last year, staging a full recovery from the sharp cuts to payouts during the worst of the Covid-19 pandemic, according to the Janus Henderson report,” Financial Times reported. 

“Total corporate payouts to shareholders rebounded in 2021 from the depressed levels recorded the year before, when many companies held onto their cash to weather the initial economic impact of the Covid-19 pandemic, according to the report.”

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In 2021, dividends paid out rose 17% worldwide. However, in North America, they were up just 4.1%. In 2022, the Janus Henderson report expects dividend payouts to increase by just 3%.

The seven names on this list are all great companies. However, it is their latest dividend increases that ought to have income investors interested in checking them out more closely in the weeks ahead. 

Dividend Stocks to Buy: Home Depot (HD)

When Home Depot (NYSE:HD) announced its Q4 2021 results in February, it also announced a 15% increase in its quarterly dividend to $1.90 with the March payout. The annual rate of $7.60 yields a reasonable 2.4%. 

When dividends go up by double digits it’s usually because earnings are also moving in the right direction. In the fourth quarter, the company’s earnings per share were 21.1% higher than Q4 2020. For all of 2021, EPS rose 30.1%. 

As Chief Operating Officer Ted Decker stated in the Q4 2021 conference call, PRO sales growth outpaced DIY in the quarter. Both segments experienced accelerated growth from the third quarter. Transactions of more than $1,000 were 18% higher than Q4 2020. HD remains in the driver’s seat.   

Danaher (DHR)

Danaher (NYSE:DHR) announced on Feb. 23 it would increase its dividend payment by 19% to 25 cents from 21 cents a share. With the April 2022 payments, its annual dividend of $1.00 yields 0.4%.

The healthcare company reported its Q4 2021 results at the end of January. Its adjusted EPS were $2.69, 19 cents higher than the consensus estimate, and 29.3% higher than Q4 2021. For all of 2021, it had adjusted EPS of $10.05, 59.3% higher than in 2020.

The company’s sales in the fourth quarter for both its Life Sciences and Diagnostic segments increased by more than 20%. For all of 2021, its sales rose by 32.2% to $29.5 billion. 

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In 2021, the company increased its free cash flow (FCF) by 30.5% to $7.08 billion from $5.43 billion. That’s a healthy 24% of its top-line sales.  

Dividend Stocks to Buy: American Express (AXP)

Financial services company American Express (NYSE:AXP) announced at the end of January that it would increase its quarterly dividend by 20% to 52 cents from 43 cents. The annual payout of $2.08 yields a reasonable 1.12%.

At the same time, it increased its dividend, it also reported its Q4 2021 results. As part of the report, it raised its forecast in 2022 for both sales and earnings. It now expects revenue to grow 19% year-over-year at the midpoint of its guidance while EPS should be $9.45 at the midpoint, up from $9.05 previously. 

In the years ahead, Amex plans to grow annual revenue by at least 10% and earnings by 15%. “Our investment strategy enabled us to reach record levels of Card Member spending, maintain customer retention and … deepen our digital engagement with customers,” Barron’s reported CEO Stephen Squeri said in a statement.

AXP stock is up more than 12% year-to-date.

Prologis (PLD)

As if Prologis (NYSE:PLD) doesn’t own enough warehouses already, the California-based real estate investment trust is rumored to have bid $23 billion for Mileway, Blackstone’s (NYSE:BX) European warehouse and logistics business. 

Acquisitions have been a big part of the REIT’s growth in recent years as it has ridden the e-commerce wave. The company now has more than $215 billion in assets under management with more than one billion square feet on four continents. 

However, the most exciting part of its business might be its energy business. Prologis Energy is now the third-largest private solar provider in the U.S.

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In February, the REIT’s board approved a 25% increase in its quarterly dividend. With the March 2022 payment, investors will now receive 79 cents. Its annualized payout of $3.16 yields 2.0%.

“It is [dividend] underpinned by strong organic growth from same store NOI and Strategic Capital earnings, as well as our unique ability to source profitable deployment opportunities globally — all of which position us for an extended period of durable earnings growth,” said Thomas S. Olinger, chief financial officer, Prologis.

Dividend Stocks to Buy: Occidental Petroleum (OXY)

Boy, have times changed for oil and gas company Occidental Petroleum (NYSE:OXY). In 2020, it was hanging on by a thread. Warren Buffett was worried he may have made a really dumb move backing the company in its acquisition of Anadarko.  

With oil prices way above $100, the cash is flowing and Buffett is buying more OXY stock. Right now, he owns 7.2 billion of OXY. However, he has warrants to exercise stock at 84 million shares that would give Berkshire Hathaway (NYSE:BRK.B) 22% of its stock. 

Remember, Buffett won’t pay dividends, but he loves collecting them. 

Feb. 24, Occidental announced that it was increasing its dividend to 13 cents a share from one cent previously. That’s a 1,200% increase. For Buffett, should he exercise all those warrants, he’ll be collecting $115 million in dividends on his investment. He would now be getting paid to wait for OXY to head to $100. It last traded above $100 in 2014. 

He’s not the fifth wealthiest person in the world for nothing.

Dollar General (DG)

Discount store Dollar General (DG) announced its Q4 2021 results on March 17. Included in the announcement was a 31% increase in the dividend to 55 cents with the April payment. The annual payment of $2.20 yields 1.0%.

This might not seem like much, but I’ve always said that it’s not the yield that matters, but the increase. Despite the company missing on revenues, gross margin, operating margin and same-store sales growth in the fourth quarter, the business is still quite healthy.

Dollar General’s FCF in fiscal 2022 was $1.80 billion, down from $2.85 billion in 2021. However, it was the second-highest FCF in its history. That’s got to count for something.     

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In 2022, it expects revenue growth of 10%, 2.5% same-store sales growth, and 13% EPS growth at the midpoint of its guidance. 

Down 5.9% YTD, now is the time to take advantage of Dollar General’s lull in the action.

Dividend Stocks to Buy: Steel Dynamics (STLD)

Although I’m a big fan of Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD) isn’t exactly slumping. 

The steel producer announced on Feb. 28 that it would increase its quarterly dividend by 31% to 34 cents a share. The annual rate of $1.36 yields a reasonable 1.6%. In addition, the company announced a new $1.25 billion share repurchase program to go along with the $92 million remaining on the current one. 

Steel Dynamics stock is up more than 43% YTD. That’s more than 800 basis points better than Nucor. It’s definitely on fire. 

On March 16, Steel Dynamics updated its Q1 2022 guidance. It expects an adjusted EPS of $5.87 at the midpoint of its guidance. They were $5.78 in Q4 2021. 

On the date of publication, Will Ashworth 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.

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Wall Street investors have been on edge for a long while. There are faint signs this week that the volatility has already peaked. This is not to say that the threats have receded, but rather their effect on stocks is fizzling. Meanwhile, the pendulum swings are still large, but narrowing. Today the focus is on a relatively calmer bunch of stocks. The goal is to find three dividend stocks to buy to combat runaway inflation.

In spite of sentiment, the symptoms of the risks at hand are healing For instance, the CBOE Volatility Index was up slightly.

Under such conditions, it becomes easier to find bargain stocks. But for today, that is not as important as the dividends they pay. The task of finding fixed income has become much easier after the recent run-up in yields. The U.S. 10 Year Treasury, for example, now pays a 2.3% reward. Technically, yields have more room to run, but I would bet against a complete runaway. The effects of TINA will matter more the higher they go.

The TINA acronym stands for “there is no alternative.” It should remain in effect for as long as the differential between U.S and other bonds is so large. Besides, this is not nearly enough to offset the effects of inflation. Therefore, investors must pursue extra risk just to stay even. Luckily, there are stocks that yield a much higher percentage than even the highest U.S. bond.

Not All Dividend Stocks Are Foolproof

It is important to choose equities that have little downside risk in the short-term. This is because collecting a high premium can lose its effectiveness if we chase runaway stock prices. The oil sector, specifically Chevron (NYSE:CVX) and Exxon (NYSE:XOM) come to mind. You will not find me suggesting to buy such stocks for a bit of dividend income. The companies are excellent, but their runaway rallies leave large downside potential.

Conversely, I prefer high dividend stocks that are near support. It is even more important to pick companies that have strong financials and a long history on Wall Street. I would caution against buying stocks that yield double digits. Those rarely last and often end in tears.

The three dividend stocks to buy on my list today have almost nothing in common. Therefore, they would make for an excellent basket in the same portfolio. Earlier, I noted that volatility levels are falling. But I reemphasize that the geopolitical threats are still real and very high. The situation in Ukraine could be far from over, so investors need to make room for error.

The U.S. Federal Reserve (Fed) is also a threat because they will be aggressive in trying to cool the hot economy. Luckily, the macroeconomic conditions are still near record levels. Companies are reporting record sales even when their stock falls, like Adobe (NASDAQ:ADBE).

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Without further ado, here are the three dividend stocks to buy for the next few months:

• AT&T (NYSE:T)
• ZIM Integrated (NYSE:ZIM)
• USD Coin (USDC-USD)

Dividend Stocks to Buy: AT&T (T)

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AT&T has a long history of success under its belt. But for the last few years, they have had a few misses, so the stock has suffered. As a result and even after a dividend cut, T stock still offers a 9% reward for its owners. That is as high as I want from a major mega-cap company. Since they’ve already cut the dividend, there is no guarantee that they won’t do it again.

Unlike Chevron and Exxon who have vehemently defended theirs, investors in AT&T don’t have assurances. Nevertheless, there are signs that management is doing well in righting its ship. It is on track to regain investor confidence. Coming out of the pandemic, most companies were managing tight cash flow situations. Under current conditions, I don’t see the potential for a dividend cut without a severe deterioration in the business.

Currently, AT&T is still a financial beast generating $66 billion in gross profit and $42 billion in cash from their own operations. Even at high debt levels, this should be ample to service their commitment to the dividend. Moreover, T stock is in a multi-year swoon, so it has the opportunity for a long-term recovery from that. Its February lows were higher than December, which is better than the entire market. That relative performance bodes well for the future.

ZIM Integrated (ZIM)

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ZIM stock made headlines this week because of its $17 dividend payout.

I was long the stock until two days ago. I closed my position just before the dividend payout. I know it sounds crazy, but my trade was with options. Had I not done that, it would have left me liable for paying the dividend.

Now that the stock has shed the special payout premium, investors can reconsider it long. The crash this week brought it into support and will soon start to make sense to own as an investment. While they may not pay another $17 for a long while, they still do pay a substantial dividend. The two prior payouts were over $2 each on a $50 stock base.

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Usually, when companies pay a high dividend, I worry about the reason behind it. In this case, their financial statements show a solid footing. In 2021, they generated almost $6 billion in cash from operations. Business must be good, so they are likely to pay well again.

When a company is comfortable giving $17 back to its shareholders, it inspires investor confidence.

Dividend Stocks to Buy: USD Coin (USDC)

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My last pick today will surprise many because it is a crypto coin. Yes, I am a holder of USD Coin and it has been rewarding me extremely well. On the crypto.com platform, I can stake my USDC coin and collect a 10% annual reward. My commitment is only for three month lock periods. The process is painless and I can do it right from my phone in seconds.

I consider this a trade with sure 10% results unless the company goes bankrupt. This is a stable coin, so USDC value tracks one U.S. dollar. Therefore, I don’t have to worry about the wild price action in crypto. This is one way to fight inflation in this crazy environment.

So far, the Fed action has been brutal on fixed income investors. They recently restarted a rate hike cycle, which should revive some alternative dividend income for them. However, I find comfort in diversifying my portfolio with this non-central source of income. You just can’t get more decentralized than a decentralized currency.

The process of investing in crypto and staking has been rewarding financially and otherwise. The term “staking” is the part that earns the dividend. Think of it like the old school CD accounts, minus the Federal Deposit Insurance Corporation part. I encourage you to read up on the subject because eventually we will all be dealing with electronic currency. This is one that is setting the framework for what is to become the norm later.

On the date of publication, Nicolas Chahine held USDC coin. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Lumen Technologies(LUMN) is expanding into edge-computing infrastructure to facilitate the blockchain.
• Meanwhile, the company continues to trade at a low multiple and pay high dividend distributions.
• Investors should buy some shares of Lumen Technologies while the price is still reasonable.

Louisiana-headquartered Lumen Technologies (NYSE:LUMN) was formerly known as CenturyLink, a company noted for its extensive fiber-optic network. In the age of modern satellite communication technology, some folks might be reluctant to hold LUMN stock.

Yet, it would be hasty to dismiss Lumen as an outdated business. First of all, fiber isn’t dead: as InvestorPlace.com contributor Chris MacDonald put it, “Lumen’s fiber optic network is a key piece in the technological fabric of America.”

There’s even more to the story here, though. As we’ll discover, LUMN stock trades at a surprisingly low valuation multiple, and Lumen offers a healthy dividend to loyal investors.

Besides, Lumen isn’t mired in old-school technology. Indeed, the company is involved in edge computing and even the blockchain, demonstrating that Lumen is still a forward-looking tech-market competitor.

What’s Happening with LUMN Stock?

There’s no denying that LUMN stock has disappointed some buyers in 2022 so far. The stock started the year at nearly $13, only to drift lower for several months.

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Is this entirely Lumen’s fault? Probably not, since technology stocks have generally struggled during 2022’s first quarter. Wall Street, it seems, has generally ditched tech stocks due to supply-chain constraints and worries about the U.S. Federal Reserve hiking interest rates.

This has only made LUMN stock a terrific bargain, however. Consider, first of all, that Lumen Technologies’ trailing 12-month price-to-earnings ratio is an absurdly low 5.59.

Such a low valuation multiple won’t persist forever, so expect this window of opportunity to close soon.

Furthermore, Lumen pays a forward annual dividend yield of 9.02% — not too shabby. The company’s board declared a regular per-share quarterly cash dividend of 25 cents not long ago.

Progress and Profits

Need more reasons to invest in LUMN stock? No problem — here are two of them.

First of all, Lumen shifted from an unprofitable profile to a recently profitable one.

Here’s the essential data: during the fourth quarter of 2020, Lumen Technologies reported a net earnings loss of $2.289 billion. Fast-forward to 2021’s fourth quarter, and Lumen announced not a loss, but net income totaling $508 million.

Still not convinced that Lumen is a luminary among tech businesses? Maybe a future-facing blockchain connection will convince you, then.

Not long ago, Lumen Technologies disclosed that the company is providing high-speed edge-computing infrastructure for node operations and developers on the Solana (SOL-USD) network.

This, evidently, is being done to support Solana’s community of blockchain validators, application programming interface providers and developers.

The Solana community will, if everything works out as planned, benefit from Lumen’s edge-computing architecture and fiber connectivity. This should provide the Solana community with enhanced network speed and security while also reducing latency and saving bandwidth.

“By working with Lumen, we can provide node operators on the network easy access to fast, secure edge computing resources around the world,” clarified Dan Albert, executive director of the Solana Foundation.

What You Can Do Now

Hopefully, today I’ve illuminated you about Lumen and provided multiple reasons to consider a long-term stake in LUMN stock.

Don’t assume that the former CenturyLink is an outdated company. By collaborating with the Solana community, Lumen is demonstrating that it’s still on the cutting edge of technology.

Moreover, LUMN stock is trading at a low valuation and the company pays an enticing dividend. Therefore, investors are encouraged to consider a position in the stock if they don’t have one already.

On the date of publication, David Moadel 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.

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Risk aversion and risk preference are two attitudes that play up in the minds of investors while they make investment decisions. Generally, a risk averse investor would choose capital preservation over the promise of potential, uncertain superior returns. In other words, they prefer certainty over uncertainty. On the other hand, risk-taking investors choose the other way around.

Before getting into strategies that can be deployed for risk aversion, let’s understand what risk is from the perspective of investing. Risk, by definition, is the uncertainty associated with an investment option that could potentially negatively impact the committed capital. Reduced variability in returns, therefore, makes an investment option a safer bet or a safe haven.

What Are Safe Havens?

A safe haven is an asset that will retain its value or even grow in the face of negative shocks such as economic downturns, geopolitical tensions, broader financial market collapse, etc.

Every coin has two sides to it. Preferring safe havens shuts an investor out of the opportunity of making disproportionate profits that are usually associated with risky bets.

Few financial assets are historically designated as safe havens. Therefore, one should be mindful of the fact that even these purported safe haven assets behave differently under different market conditions. So, the best way to insulate your investment against any potential risk is to have a well-diversified portfolio.

Gold has historically been the go-to safe haven. It is considered as a store of value during times of uncertainty and also a hedge against inflation. Of late, Bitcoin (BTC-USD) backers have begun touting the apex crypto as a safe haven, claiming it can also hedge against inflation.

There is some merit to the argument that Bitcoin can protect against rising prices in times of uncertainty. We can see through the conflict in Eastern Europe that crypto lock-stepped with equities and underwent wild gyrations.

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Here are a few safe haven investing ideas that could come in handy amid the evolving fluid scenario:

• Government Bonds
• Currencies Such as the U.S. Dollar, Yen, Swiss franc
• Real Estate
• Infrastructure Projects
• Defensive Stocks

Safe Haven Investing Ideas: Government Bonds

Government bonds are debt instruments issued by governments that guarantee investors a steady stream of interest income and eventually principal repayment. In the U.S., short-term bonds maturing in a year or less are called Treasury Bills (T-Bills). Those with a maturity period of two to 10 years are called T-notes. Similarly, those with a maturity period of 20 to 30 years are called T-bonds.

U.S. treasuries have long been considered the safest bet for investors, given the lack of safer alternatives and the clout that the U.S. wields as a global superpower. U.S. treasuries are, however, losing their appeal in recent times vis-à-vis bonds offered by countries such as Germany and Japan, according to Bloomberg.

The primary reason for this is the unsustainability of the U.S. debt that has now-and-then threatened to bring the country to the brink.

Amid the most recent market turmoil that manifested in full force since the start of 2022, the yield on the 10-year Treasury note continued to spike. It increased from 1.512% at the end of 2021 to around 2.19%, sending bond prices lower. This suggests there has been a flight away from the instrument. The shorter maturity bonds, however, are fairly insulated.

Investors have more than one way to invest in bonds. They can invest through TreasuryDirect, a system run by the U.S. Treasury Department. Through the website, they can directly subscribe to bill, note and bond offerings from the government.

The other avenues are buying bonds in the secondary market, or investing in a treasury money market mutual fund or government bond ETFs.

Currencies (U.S. Dollar, Yen, Swiss franc)

The U.S. dollar’s status as a reserve currency has rendered it as a safe haven. The bulk of international forex reserves held by central banks are held in dollars. Additionally, most commodities, including gold and crude oil, are dollar denominated. Even more, the dollar is the dominant currency when it comes to financing cross-border trade and funding.

Washington’s recent decision to freeze Russian central bank assets that are held in the U.S. raised doubts about the safety that is associated with the dollar.

Morgan Stanley seems to think the greenback will hold its own. The firm’s Head of FX and EM Strategy James Lord said in a market podcast on Thursday:

“Despite frequent calls for the end of the dollar based international financial system over the last couple of decades, the dollar remains overwhelmingly the world’s dominant reserve currency and preeminent safe haven asset.”

Outside of the dollar, the Japanese Yen and Switzerland’s Franc are also considered safe havens.

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One can invest in the U.S. dollar by buying it directly in the forex market. Alternatively, an investor can choose to put their money in USD ETFs, such as Invesco DB US Dollar Index Bullish Fund (NYSEARCA:UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA:USDU).

Safe Haven Investing Ideas: Real Estate

Real estate investing is another avenue to hedge against risks and uncertainties. It appeals due to a host of factors such as utility value, exchangeability, relative permanence and the scope of generating returns in the form of rent.

Investors also view real estate as a hedge against inflation. Inflation is based on consumer prices, while real estate prices are a function of supply, construction and demographics. Additionally, the lack of correlation with volatile assets classes, such as stocks, increases real estate’s appeal as a safe haven. It also vests other advantages, such as allowing leveraged investment and availing tax benefits.

Real estate investing, however, is not without its risks. The initial investment for this option is considerably higher and there are recurring expenditures, such as maintenance fees and property taxes.

There are a variety of ways to commit your investment dollars into real estate. Some examples are buying rental properties, real estate flipping, participating in real estate crowdfunding and investing in real estate investment trusts (REITs).

Infrastructure Projects

The Covid-19 pandemic and the war in Ukraine underline the vagaries associated with investment in financial asset classes. Against this backdrop, investment in infrastructural projects, especially green energy projects, present a better alternative.

Given the paucity of funds to finance infrastructure projects, debt funds of institutional investors, pension funds and insurance companies have stepped in to make up for the shortfall following public funding. The demand and supply equation for infrastructure funding is tilting more toward the demand side, rendering attractive returns.

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Investors may choose to invest in infrastructure trusts. Like mutual funds and REITs, they allow investors to purchase units of the trust. In return, these trusts make distributions to unitholders on a period basis.

Safe Haven Investing Ideas: Defensive Stocks

Defensive stocks generate relatively stable returns for investors irrespective of the economic conditions. These could be stocks of blue-chip, high-quality companies, which can weather the impact of external uncertainties due to their promising businesses, strong competitive positioning, deep pockets and flawless execution.

Apple (NASDAQ:AAPL) for one, is a blue-chip stock that comes close to a defensive stock. The tech giant’s stock did come under pressure in the recent market-wide downturn. However, its underperformance was far less severe than many others in the industry.

Companies with diversified businesses, such as Berkshire Hathaway (NYSE:BRK-A,NYSE:BRK-B) can also serve as defensive stocks, as outperformances in certain businesses can help offset the setbacks faced by the other businesses.

Healthcare stocks, specifically biopharma companies, qualify as evergreens. This is because their products and services are sought after irrespective of what is happening with the economy and markets. Utilities also qualify as defensive stocks due to their ubiquitous need and their ability to pay stable and relatively high dividends to investors.

On the date of publication, Shanthi Rexaline 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. 

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• Marathon Oil is an attractive oil and gas play with a 1.21% dividend yield and a forward P/E below 10x.
• Analysts forecast 88.5% higher earnings this year, along with significant FCF growth.
• It has cut the share count by 8% in over four months, implying a 14.2% buyback yield and a 15.4% total yield — making MRO stock very attractive to value investors.

Marathon Oil Corporation (NYSE:MRO) is a very attractive total yield (i.e., dividend yield plus buyback yield) oil and gas exploration and production play. Most of its production comes from the Eagle Ford Basin in Texas and the Bakken area in North Dakota and Montana. Value investors are attracted to it due to its low price-to-earnings (P/E) ratio, growing dividend, huge free cash flow (FCF), huge buybacks, and quarterly rising dividend payments. The bottom line is that MRO stock is an attractive dividend and buyback yield company for investors.

Marathon Oil’s Standout Features

For example, Marathon Oil says it “returned over 70% of fourth quarter cash flow from operations to equity holders (equates to over 90% of free cash flow generation).”

This includes buying back $1 billion of its shares since October, reducing its share count by 8%. That works out to an annualized buyback yield of about 14.2%. The reason is its market capitalization is $16.88 billion at the time of writing, so $1 billion is 5.92% of that amount. Since this was done over 5 months, we can multiply that by 2.4x (i.e., 12/5 months) on an annual basis. That gives MRO stock a 14.2% total yield.

Moreover, Marathon Oil produced $1,149 million of net cash provided by operating activities in the fourth quarter (Q4). After $251 million in capex spending, its FCF in Q4 was $898 million. That works out to an annualized rate of almost $3.6 billion. That is well over the $2.24  billion it produced last year in FCF, and approximately covers the cost of its buybacks.

In addition, Marathon has been raising its quarterly dividends by 1 cent each quarter. As of Jan. 26, its last declaration date, the quarterly dividend was at 7 cents, up from 6 cents the prior quarter and 5 cents before that. Investors can probably expect that on or around Apr. 26 it could raise the dividend again. After all, as of August 2015, it used to pay a 20 cent quarterly dividend. The company may be slowly trying to get back to that level.

As of Mar. 18, with the price of MRO stock at $23.08, the 28 cents annualized dividend per share works out an annualized yield of 1.21%.

Where This Leaves Investors in MRO Stock

As long as oil and gas prices stay high, Marathon will produce a huge amount of FCF. A war in Europe is likely to keep prices high, but rising inflation and slowing economies, as a result, could push energy prices lower.

So, investors should take some caution about the standout value features of Marathon Oil. As always, there is no guarantee. There is no recurring price in the energy business.

That said, the company has hedges known as “three-way collars.” For example, these options contracts are listed on page 15 of its earnings release. It shows that the company can profitably sell about 37% of its crude oil production in prices between the mid-$50s and just below $100 per barrel. The remainder of its production sells at the spot market rate. That helps provide some assurance that the company can realize at least almost 40% of its production at good prices.

The bottom line here is that MRO stock is a calculated risk for value investors. The company is dramatically reducing its share count. In the long run, this will allow it to increase the dividend per share. Meanwhile, the dividend yield pays investors while they wait for the stock’s value to rise.

By combining its 1.2% dividend yield with its 14.2% buyback yield, investors can expect to make a total yield of 15.4% this year from MRO stock.

On the date of publication, Mark Hake did not hold (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.

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There’s a lot of ways to go about picking recession-proof stocks. Certain industries such as consumer staples, utilities, and health care tend to fare well even during economic downturns.

Other analysts might point to certain statistics, such as high profit margins, low variation of earnings, or a net cash position on a company’s balance sheet.

Those all have their merits in terms of determining a company’s quality and safety. However, for this list, I’ll be using dividend aristocrats as the primary filter. A dividend aristocrat is a company that has increased its dividend payout each and every year for at least the past 25 years.

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As of this year, that means that any current dividend aristocrat has increased their dividend annually without fail dating back to 1987. Since then, companies have endured the crash of 1987, the fall of the Soviet Union, the 1990s dot-com bubble, the 9/11 attacks, the 2008 financial crisis and Covid-19. Any company that has run that gauntlet and come out with a steadily increasing stream of earnings and dividends can withstand any mere recession that comes along.

With that in mind, here are seven dividend aristocrats that make for high-quality recession-proof stocks in 2022:

• Aflac (NYSE:AFL)
• 3M Company (NYSE:MMM)
• Brown-Forman (NYSE:BF.A, NYSE:BF.B)
• Colgate-Palmolive (NYSE:CL)
• Hormel Foods (NYSE:HRL)
• Walmart (NYSE:WMT)
• Kimberly-Clark (NYSE:KMB)

Recession-Proof Stocks: Aflac (AFL)

Interest rates are going up. The Federal Reserve hiked its key benchmark interest rate on Wednesday, marking the first rate increase since 2018. The bank signaled that this would hardly be a one-off, either. Rather, the market is currently pricing in roughly eight hikes over the next 12 to 24 months.

This should be pure gravy for an insurer like Aflac. After all, the business model is to collect premiums from customers and invest them. A large part of an insurers’ investments are typically in fixed income securities. These have not been particularly fruitful in recent years with interest rates near zero.

With a Fed funds rate closer to the 2% to 3% range, however, interest rates would lift across the board, allowing Aflac to earn a much higher yield on the income portion of its investment portfolio.

Even as things stand today, with interest rates still at a low level, Aflac stock is trading at just 10x earnings. With the upcoming rise in returns on fixed income products, Aflac’s profits could jump considerably.

AFL stock also offers a reasonable 2.5% dividend yield for its shareholders.

3M Company (MMM)

Industrial conglomerate 3M is most known for its Post-it notes and other adhesive products. However, it’s far more than that.

The company is a big player in the auto parts market, it makes workplace safety products, and it offers a diverse line of goods in the health care industry, among other endeavors. This makes 3M one of the most all-encompassing ways to profit from the American industrial sector.

MMM stock has sold off lately around some legacy legal issues. Once those are cleared up, however, look for MMM stock to stage a swift recovery. In the meantime, shares are trading for just 14x forward earnings and offers a dividend yield of greater than 4%.

Those are strong figures for a company that has hiked its dividend for an incredible 63 years in a row. Out of the American industrial companies, it’s hard to top 3M for consistent growth and income.

Brown-Forman (BF.A) (BF.B)

Brown-Forman is one of the largest American spirits companies. It is primarily known for its Jack Daniels whiskey. It also has a popular franchise in the rapidly-growing field that is tequila.

Alcohol tends to do well during recessions for obvious reasons; people may actually drink more during hard times, in any case, demand doesn’t slip too much. The company is also the best in breed of the spirits companies as it routinely earns the highest profit margins and returns on its investments.

Brown-Forman stock always tends to look expensive on an earnings or free cash flow basis. However, it’s worth the premium, given its impeccable quality and safety. And, as things stand now, shares are near 52-week lows, offering a better value than usual for this rock solid defensive play.

Finally, it’s worth noting that there are two share classes of BF stock. The B shares are more widely traded, and are the ones commonly owned by exchange-traded funds. However, the A shares are cheaper while paying out the same dividend as the B shares.

In addition to that, the A shares have voting rights, whereas the B class does not. Thus, the A shares are superior in all ways except trading liquidity, and thus are the preferred option for long-term holders.

Recession-Proof Stocks: Colgate-Palmolive (CL)

Toothpaste and cleaning products giant Colgate-Palmolive is another reliable consumers staples company. Regardless of what happens with the economy, people need to brush their teeth and clean their homes, after all.

Colgate shares moved up to new all-time highs during the pandemic. That was understandable, as demand temporarily surged. Now, however, things have moved back to normal. Meanwhile, inflation pressures are hitting the bottom line.

CL stock has backed off 15% from the highs given these developments. However, the business should be back to normal in 2023. Analysts see earnings recovering and CL stock is trading at just 20x those projected earnings. That’s not bad at all for a company that makes indispensable products such as toothpaste.

Hormel Foods (HRL)

Hormel Foods is one of the nation’s leading food companies. It specializes in proteins. Hormel has built a wide array of protein-focused brands. It is most famous for its Spam canned meat offering, however that is actually only a small portion of its overall revenues. Hormel is also a leader in bacon, pepperoni, deli meats and other such foods.

In addition, it has taken on a wide variety of non-meat products to appeal to younger consumers. These include guacamole, Mexican salsas, Justin’s nut butters, plant-based meat offerings, and most recently, the acquisition of the Planters nut and snack business.

Hormel has exceeded most of its packaged foods peers in terms of earnings growth and stock performance in recent years. This is largely because Hormel focuses on owning its categories rather than being one of many brands selling a commodity good.

Hormel would rather sell the No. 1 guacamole, canned chili or organic deli meat rather than be one of many makers of a more competitive product like cereal or chips. Hormel’s niche-dominating strategy has led to higher profit margins and has resisted the encroachment of store-brand options.

Hormel is projected to set a new record for earnings this year, and the stock price appears set to follow as the company has overcome the current inflationary wave that has crippled so many of its food industry peers.

Walmart (WMT)

Walmart was one of the very few large-cap blue-chip companies that went up during the financial crisis. That’s right, if investors bought WMT stock at the market peak in 2007, they actually made a small profit over the next two years while the rest of the stock market collapsed.

What made Walmart shares a lighthouse during the storm? Simply put, when the economy stumbles, people have to trade down. Instead of going to upscale stores, they shop for value. And few retailers offer more value than Walmart and Sam’s Club.

Meanwhile, Walmart is showing life in the e-commerce game. Back around 2016, WMT stock fell to historically low valuations as investors feared that Amazon (NASDAQ:AMZN) would leave it in the dust. Since then, however, Walmart has fought off Amazon’s grocery store push, and the pandemic gave Walmart the opportunity to show off its improved e-commerce and omnichannel capabilities.

Long story short, Walmart is still the king of delivering everyday low prices, and that’s a feature that never goes out of style during hard times. That’s what makes it one of our recession-proof stocks.

Recession-Proof Stocks: Kimberly-Clark (KMB)

Toilet paper and cleaning products company Kimberly-Clark has had an up and down couple of years. Like Colgate, Kimberly-Clark excelled during the pandemic as toilet paper was briefly a coveted product.

However, that surge in buying activity led to a natural slump the next year as consumers were already stocked up. Throw in the supply chain headaches and a surge in the price of wood pulp, and Kimberly-Clark wasn’t able to keep 2020’s momentum going for long.

The current downturn in earnings and the stock price should lift over the next year, however. At the end of the day, Kimberly-Clark sells absolutely essential products, and the supply chain and inflation issues will be ironed out in due time. Meanwhile, the company is down to 17 times next year’s earnings while offering a nearly 4% dividend yield. That’s a standout offer from this long-running dividend aristocrat.

On the date of publication, Ian Bezek held a long position in HRL, BF.A and MMM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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• Microsoft (MSFT) — This dividend stock’s yield is low, but increasing quickly.
• Costco (COST) — Its dividends have grown by 12% annually over the past five years.
• AbbVie (ABBV) — AbbVie currently boasts a 3.8% yield.

Year-to-date, the S&P 500 is down by 7%, while the Nasdaq and Russell 2000 are down even more with losses of 12% and 8%, respectively. Initially, stocks sold off due to the Federal Reserve signaling a number of rate hikes in 2022 to combat multi-decade-high inflation. Then, Russia invaded Ukraine, which drove the price of oil and other commodities up significantly.  This both adds to inflation and increases the risk of recession.

Historically, uncertain times like these are some of the best times to invest.  This is when the opportunity emerges to buy high-quality stocks at a discount. 

One characteristic of a high-quality stock is paying dividends — and a consistent track record of hiking those dividends. This indicates a strong business that can thrive in all types of economic conditions, and a management team focused on returning capital to shareholders.

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Here are three such dividend growth stocks that investors should consider now:

Microsoft

Microsoft (NASDAQ:MSFT) is one of the leading companies in the software, enterprise software, and cloud computing markets. It also sells PCs, tablets, gaming consoles, other intelligent devices, and related accessories through direct-to-consumer channels, OEMs, distributors, resellers, digital marketplaces and retail stores.

Currently, Microsoft pays $2.48 per share in annual dividends, which equates to an 0.9% yield. This is significantly less than many other companies. However, it’s had a streak of increasing its payout by more than 10% over the last three years. Over the last decade, the company has increased its payout by 259%. Management has also been rewarding shareholders through buybacks which lift EPS.

Further, unlike other dividend stocks, MSFT continues to grow revenues and earnings by an impressive amount. Not surprisingly, MSFT has been one of the best-performing stocks over the last decade as it successfully pivoted to being cloud-focused and subscription-based. It’s also finding growth both organically and through acquisitions like the recent purchases of Nuance Communications and Activision Blizzard.

MSFT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to “buy” in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B for Quality due to its leadership in many large markets and a track record of growth and execution. It also has a B for Sentiment, as 22 out of 23 analysts covering the stock have a buy rating with a consensus price target of $363, implying a 23% upside.  Click here to see the complete POWR ratings for MSFT, including Growth, Value, and Momentum. 

Costco

Costco (NASDAQ:COST) operates membership warehouses in the U.S., Canada, Puerto Rico, the United Kingdom, Mexico, Australia, China, Japan, and other countries. It offers branded and private-label products in a wide range of categories and operates more than 800 locations.

Like MSFT, COST isn’t really considered a major dividend stock, because its payout is relatively low. However, it has all the signs of becoming a major dividend stock in the future based on the steady growth of its payouts. Over the last decade, its dividend payout went from 89 cents per share to $3.16 per share. Over the last five years, its dividends have increased by a 12% annual rate.

The company’s recent financial performance has been quite strong, indicating that this trend is nowhere near exhausted. In its last quarter, it had 16% revenue growth. Clearly, value-conscious investors are increasingly buying COST stock in bulk to maximize their purchasing power during this inflationary period. 

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COST has an overall B rating, which translates to “buy” in our POWR Ratings system. It has a B for Stability due to its track record of growing sales, earnings, and dividends. In terms of Industry grade, COST is a member of the A-rated Grocery/Big Box Retailers which has been a beneficiary of inflation. Click here to see COST’s complete POWR ratings including grades for Momentum, Sentiment, Growth, Value, and Quality.

AbbVie

AbbVie (NYSE:ABBV) is a biopharmaceutical company engaged in the research and development, manufacturing, commercialization and sale of medicines and therapies. ABBV offers products in various categories, including immunology, oncology, aesthetics, neuroscience, and more.

Healthcare stocks are a great place to find dividend growth stocks, because they tend to have stable, growing revenues. After all, healthcare spending has grown at a faster rate than the economy since the 1950s. Two main factors are the aging population and increasing government spending on healthcare services.

ABBV only started paying a dividend in 2013. Since then, it’s hiked that dividend every single year and currently pays $5.64 per share which equates to an average annual increase of 28%. Given that ABBV has several strong drugs, a well-regarded pipeline, and the track record of successfully developing new treatments and bringing them to market, this trend should continue. 

Its last earnings report shows strong momentum as well, with 7.4% revenue growth. Wall Street analysts are forecasting 6% revenue growth for Q1 and an 8% increase in EPS, which makes the stock quite appealing with a forward P/E of 11. 

These positives are reflected in ABBV’s POWR Ratings. The stock has an overall A rating, equating to a “strong buy” in our rating system. In terms of its component grades, ABBV has a B for Value and Quality. This is consistent with its low P/E, 3.8% dividend yield, and expectations of continued dividend growth. In addition to the component grades highlighted, click here to see ABBV’s full POWR Ratings. 

On the date of publication, Jaimini Desai did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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