Seasoned investors realize blue-chip stocks could help achieve financial independence in retirement. A blue-chip business is a well-established company that typically has a long and robust earnings history, tangible assets, stable dividends, and proactive management. Share prices of blue-chips also tend to recover quite quickly from market declines. All these characteristics make them strong choices for retirement portfolios. Today’s article, therefore, discusses seven blue-chip retirement stocks that may be perfect for those golden years.
Members of the Dow Jones Industrial Average (DJIA) are accepted as blue-chip stocks. Over the past year, the DJIA has returned over 14%. In addition, the annual average dividend yield of the index stands around 2%.
Many investors in their later years consider living off the cash flow generated by dividend payments in their portfolio holdings without even tapping into their capital. Therefore, these fiscally-stable blue chip retirement stocks could be appropriate for such passive-income seekers.
S&P Global (NYSE:SPGI) suggests, “Since 1926, dividends have contributed to approximately one-third of total return while capital appreciations have contributed two-thirds. Therefore, both sustainable dividend income and capital appreciation potential are important to total return expectations.”
Blue-chip stocks also help investors in portfolio diversification. The U.S. Securities and Exchange Commission (SEC) suggests, “By picking the right group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.”
With that information, here’re seven options you may want to check for investing in blue chip retirement stocks in 2021.
- CVS Health (NYSE:CVS)
- Health Care Select Sector SPDR Fund (NYSEARCA:XLV)
- International Business Machines (NYSE:IBM)
- International Paper (NYSE:IP)
- Invesco Dow Jones Industrial Average Dividend ETF (NYSEARCA:DJD)
- iShares U.S. Consumer Goods ETF (NYSE:IYK)
- Procter & Gamble (NYSE:PG)
Retirement Stocks: CVS Health (CVS)
52-week range: $52.04 – $77.23
Dividend yield: 2.90 %
Rhode Island-based healthcare CVS Health needs little introduction. It has over 10,000 retail pharmacy locations in close proximity to 80% of the U.S. population. The company is also the largest pharmacy benefit manager stateside.
CVS Health reported Q4 and full year results on Feb. 16. Total revenue was $69.6 billion, a 4% YoY increase. GAAP net income decreased 44.1% to $975 million. This decline was mainly due to lower operating income because of the pandemic as well as a loss on early extinguishment of debt of $674 million during the quarter. Adjusted diluted earnings per share was $1.30, compared to $1.73 in the prior year quarter.
On the other hand, net income increased 8.5% for the year ended Dec. 31, 2020. CEO Karen Lynch stated:
We utilized the full depth and breadth of our capabilities and our presence in local communities across the country to play a leadership role in COVID-19 testing and vaccine administration. Our ability to deliver 2020 full year results above expectations is a testament to the strength of our strategy and the flexibility of our diversified health services model.
The group is increasingly playing a key role in vaccine distribution. As a result, foot traffic is likely to increase in those locations, helping boost revenues in the long-run. Passive-income seekers could consider buying shares of this retirement stock.
Health Care Select Sector SPDR Fund (XLV)
52-Week Range: $73.54 – $118.99
Dividend Yield: 1.5%
Expense Ratio: 0.12% per year
Over the past year, health became one of the most important parts of our lives. Therefore, our next choice in this list of retirement stocks is an exchange-traded fund (ETF). The Health Care Select Sector SPDR Fund focuses on biopharma and life sciences firms. Other business in the fund include providers of healthcare equipment and supplies. Since its inception in December 1998, funds under management have grown close to $25 billion.
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