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Until the last few weeks, investors have had everything to be excited about. The S&P 500 roared ahead by more than 15% in 2010, corporate profits were hefty last quarter, and unemployment has finally started to decrease.

And then there was Tunisia. Then Egypt. Bahrain. And now Libya, Africa's largest oil reserve holder, is experiencing a violent revolt that seems to only be getting worse. Investors, if only for a brief moment, are again awakened to the fact that their portfolios may not be as safe as they think.

Fortunately, I have some simple advice for you over the months ahead and can provide three specific stocks that I think you should consider buying today , if you don't own them already.

Setting up the right portfolio
As a retiree or someone nearing retirement, there's a lot you have to consider when building your financial roadmap. Not only do you want your money safe and sound, but you also want the ability to grow your wealth over time so you'll always have enough cash to cover your expenditures. This entails a careful combination of both income and growth.

You also want to make sure your investments are diversified. Ask anyone who was overweight in financial stocks in 2008 and they'll tell you that having too many eggs in one basket is not worth the potential upside. Sure, commodity stocks have done well as of late, but trouble in the Middle East or higher oil prices could easily upset a fragile supply/demand situation, pushing stocks lower. Holding stocks of every shape and size, in every sector, is the best way to ensure balance in your portfolio.

Lastly, because you're retiring, you probably don't have the wherewithal or the urge to stomach the ups and downs of the general market. We've already experienced two significant recessions in the past 10 years, and most investors would be thankful to know their money isn't going to gyrate wildly every time the market swings up or plunges downward. That's why I suggest to retirees that they hold stocks with minimal volatility, ones that are as recession-proof as possible.

3 stocks that fit your personal criteria
If you agree with the three pieces of advice I've offered above, then you'll hopefully find merit in the screen I recently ran to find three great retirement stocks. In order to decipher what would be the market's most promising investments, I wanted to find companies that (a) paid dividends, (b) offered potential for growth, (c) were trading at reasonable valuations, and (d) had low betas to illustrate minimal volatility.

Before I tell you why you should add these three stocks to your watchlist, check out the following statistics:


Dividend Yield

P/E Ratio

2-Year EPS Estimated Growth

5-Year Average Beta

Statoil (NYSE: STO  )





Philip Morris International (NYSE: PM  )





M&T Bank (NYSE: MTB  )





Source: Capital IQ, a division of Standard & Poor's.

Statoil is a Norwegian oil and gas producer with significant exposure to Scandinavian countries and particularly the Norwegian Continental Shelf. Although a decline in some of its older fields is a concern, it is believed that about one third of NCS resources have yet to be discovered, which should be able to provide production growth for quite some time. The company has also boosted its efforts in the past few years to increase its international exposure, which should help long-term growth (as illustrated by its estimated near-20% growth over the next two years).

The company is expanding in the Gulf of Mexico, Russia, Brazil, and Canada, and international expansion now constitutes about 50% of capital expenditures. In particular, in early 2010, it bought an additional 59,000 net acres in the Marcellus Shale play from Chesapeake Energy (NYSE: CHK  ) , adding to the 600,000 acres it had acquired in 2008. In addition, the company recently teamed up with ExxonMobil (NYSE: XOM  ) to utilize both companies' expertise to explore potential resources in the Faroe Islands. Expect Statoil's share price to keep rising as the price of oil rises (it recently reached a 29-month high); I believe it's probably undervalued by about 10% and suggest adding Statoil to your watchlist now to reap the benefits of rising energy prices.

Philip Morris might be an American company, but this is purely an international play. As one of the world's leading cigarette manufacturers, it earns about 40% of sales from the European Union, 24% from EMEA (Eastern Europe, Middle East, and Africa), 22% from Asia, and 12% from Latin America and Canada. The company holds the reins on seven of the most popular 15 cigarette brands (including Marlboro) and has leading market share almost everywhere it operates, with the exception of China (which has a government-owned monopoly) and the U.S. (where the company's former parent, Altria (NYSE: MO  ) , is most dominant).

Philip Morris throws off gobs of free cash flow ($23 billion in the past three years) and uses that cash to reward shareholders through dividends and share buybacks. Although environmental concerns and health regulations always pose a risk for cigarette manufacturers, this company has proved as recession-proof as they come, and with a nice safe dividend to boot, it seems only logical to add this company to your watchlist.

You may not be as familiar with M&T Bank as you are with Goldman Sachs or Morgan Stanley, and that's probably a good thing. This regional bank has grown its asset base from a mere $2 billion in 1983 to a whopping $70 billion at the end of this year. Similar to competitors like PNC Financial (NYSE: PNC  ) , M&T has been aggressively expanding in the lucrative mid-Atlantic region, purchasing banks and trusts in the Baltimore and Wilmington areas on the cheap. M&T sports a Tier 1 Capital ratio of 9.5% and has been able to increase its net interest income by about 5% annually over the past five years.

Even better, M&T Bank receives an "A" grading from Morningstar on its stewardship -- no doubt helped by the fact that 5% of shares are owned by insiders, with Warren Buffett also holding a 4.5% stake in the company. And throughout the entire financial crisis, it kept its dividend steady at $0.70 per share, rather than suspending or cutting it like so many other banks did.

The Foolish bottom line
When evaluating stocks to purchase, you can't look at them in isolation. You've got to evaluate how they fit into your overall portfolio, make sure they further diversify your investments (and not vice-versa), and most importantly, you need to ensure they add value in a meaningful way, through either dividends or capital appreciation.

I believe that the three stocks above have the exact characteristics that I would seek for a retiree; however, only you know how well they fit into your overall investing scheme. At the very least, I suggest watching each of these stocks, learning more about them, and deciding whether they make strategic sense. Don't waste any time getting started!

Jordan DiPietro doesn't own any shares but is watching all three companies for his mother's portfolio. Morningstar is a Motley Fool Stock Advisor choice. Philip Morris International is a Motley Fool Global Gains recommendation. Statoil is a Motley Fool Income Investor selection. The Fool owns shares of Altria, ExxonMobil, Morningstar, and Philip Morris International. Motley Fool Alpha owns shares of Chesapeake Energy, which is a former Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (33)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 11, 2011, at 5:41 PM, ds10 wrote:

    "Philip Morris throws off gobs of free cash flow" as

    well as gobs of human lives.


    DiPietro should feel shame.

  • Report this Comment On March 12, 2011, at 12:43 PM, Renhead wrote:

    Do you ever analyze socially and environmentally conscious stocks? Oil companies, banks and tobacco? Seriously? Don't forget your audience for retirement articles are boomers!

  • Report this Comment On March 12, 2011, at 5:35 PM, busterbuddy wrote:

    think twice before I'm buy Chesapeake Energy. And why invest in Philip Morris when Altria has a better dividend?

  • Report this Comment On March 16, 2011, at 4:14 PM, tradingbig wrote:

    Totally agree with Ren and DS -- Just because we want to make money doesn't mean we have to support companies that do harm to the earth or the other people on it. Let's change the world one company at a time...

  • Report this Comment On March 16, 2011, at 10:59 PM, Rk703 wrote:

    Really?? complaining about a legitimate company stock pick because its a tobacco stock... Do you invest in MacDonald's (low nutrition fast food), any companies that produce alcoholic sprits, how about Fed Ex (lot of carbon monoxide pumped out of those trucks and planes), any pharma or drug co.'s (animal testing)? Point is you can find a altruistic reason to complain about almost any stock or business. Don't preach - if it makes you feel better give your profits to a favorite charity.

  • Report this Comment On March 18, 2011, at 3:50 PM, Larry114 wrote:

    That's why you're called Fools! Boomers! All you've done so far with your "progressive ideas" is bring us to the brink. Keep your bleeding hearts and your investments in separate compartments. Better yet, stay out of the market; you're just screwing it up for the rest of us.

  • Report this Comment On March 29, 2011, at 12:07 AM, ershler wrote:

    Conservatives run up 11 billion in debt and suddenly the US is going to collapse after Obama adds a couple more.

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