The coronavirus pandemic is making it harder for Americans to avoid tapping into their retirement savings. According to one survey last year, close to 30% of people either stopped saving or decreased the amount of money they were putting aside for retirement. And many were tapping into their savings just to cover basic expenses.
Unfortunately, it’s impossible to predict an event like the COVID-19 pandemic and how much money you’ll need to get through it. But that makes it all the more important for retirees to have solid, blue-chip stocks in their portfolios that pay dividends that can bolster their savings as much as possible.
1. Eli Lilly
Drugmaker Eli Lilly has a diverse portfolio of products that makes the business resilient, even during tough times like a pandemic. Its top-performing drugs treat diabetes and cancer, and revenue for those segments has remained strong amidst broader market chaos. During the nine-month period ending Sept. 30, 2020, the Indiana-based company’s total sales were $17.1 billion — up 5.5% from the prior-year period.
Sales from diabetes drugs totaled $8.5 billion and grew 6.3% year over year, while oncology revenue of $3.8 billion rose by 13.3%. As a result, the company’s pre-tax income of $4.8 billion remained strong, and it was 32% higher than last year’s.
But there could be even more revenue growth in store for the company, as the U.S. Food and Drug Administration (FDA) has issued emergency use authorizations for two COVID-19 treatments, antibody therapy bamlanivimab and baricitinib, which is to be used in conjunction with antiviral remdesivir. Baricitinib treats rheumatoid arthritis, but last year, a study showed that when taken with Gilead Sciences‘ remdesivir (which the FDA has fully approved to treat COVID-19), it can speed up the recovery time for patients by about one day.
With a strong, diverse business that can potentially get a boost from its COVID-19 treatments, Eli Lilly is a solid investment for retirees that can generate long-term returns for their portfolios. Over the past five years, the stock is up more than 130%, outperforming the S&P 500, which has risen 100% during the same period. And on top of that, the healthcare stock also pays a dividend that yields 1.8% — which is slightly higher than the 1.6% yield that investors can typically expect to earn from a stock that’s included in the S&P 500 index.
Restaurant chain McDonald’s is another stock that retirees should consider investing in. Its five-year returns total a little over 82%. That’s slightly less than the market’s returns, but the fast food giant pays its investors a higher yield of around 2.5%. What also sets the dividend stock apart from Eli Lilly and other income stocks is that it’s a Dividend Aristocrat, and the company has raised its payouts for more than 40 years in a row.
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