Now more than ever, a comfortable retirement depends on secure, stable investments. Unfortunately, the right stocks for retirement won't just fall into your lap. In this series, I look at 10 measures to show what makes a great retirement-oriented stock.

Syngenta (NYSE: SYT) may not be the best-known name in the agriculture business. But its products are just as important to farmers as those of its main competitors, and its fortunes have been tied to those of the farming community. Will high crop prices produce big profits, or will drought conditions cause problems for the company? Below, we'll revisit how Syngenta does on our 10-point scale.

The right stocks for retirees
 With decades to go before you need to tap your investments, you can take greater risks, weighing the chance of big losses against the potential for mind-blowing returns. But as retirement approaches, you no longer have the luxury of waiting out a downturn.

Sure, you still want good returns, but you also need to manage your risk and protect yourself against bear markets, which can maul your finances at the worst possible time. The right stocks combine both of these elements in a single investment.

When scrutinizing a stock, retirees should look for:

  • Size. Most retirees would rather not take a flyer on unproven businesses. Bigger companies may lack their smaller counterparts' growth potential, but they do offer greater security.
  • Consistency. While many investors look for fast-growing companies, conservative investors want to see steady, consistent gains in revenue, free cash flow, and other key metrics. Slow growth won't make headlines, but it will help prevent the kind of ugly surprises that suddenly torpedo a stock's share price.
  • Stock stability. Conservative retirement investors prefer investments that move less dramatically than typical stocks, and they particularly want to avoid big losses. These investments will give up some gains during bull markets, but they won't fall as far or as fast during bear markets. Beta measures volatility, but we also want a track record of solid performance as well.
  • Valuation. No one can afford to pay too much for a stock, even if its prospects are good. Using normalized earnings multiples helps smooth out one-time effects, giving you a longer-term context.
  • Dividends. Most of all, retirees look for stocks that can provide income through dividends. Retirees want healthy payouts now and consistent dividend growth over time -- as long as it doesn't jeopardize the company's financial health.

With those factors in mind, let's take a closer look at Syngenta.

Factor

What We Want to See

Actual

Pass or Fail?

Size Market cap > $10 billion $29.3 billion Pass
Consistency Revenue growth > 0% in at least four of five past years 4 years Pass
Free cash flow growth > 0% in at least four of past five years 4 years Pass
Stock stability Beta < 0.9 0.34 Pass
Worst loss in past five years no greater than 20% (24.9%) Fail
Valuation Normalized P/E < 18 23.62 Fail
Dividends Current yield > 2% 2.5% Pass
5-year dividend growth > 10% 22.5% Pass
Streak of dividend increases >= 10 years 2 years Fail
Payout ratio < 75% 44.1% Pass
Total score 7 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Syngenta last year, the company has kept its seven-point score. Moreover, its stock has roughly matched the market over the past year, remaining roughly flat.

Like many of its peers, Syngenta has benefited greatly from positive trends in the agriculture industry. With high crop prices, farmers have disposable income to spend on measures to enhance yields, and that feeds Syngenta's seed and pesticide and herbicide business.

One area that has been especially lucrative for Syngenta has been Latin America. Although Monsanto (NYSE: MON) and DuPont (NYSE: DD) have seen a lot of success in their respective seed businesses, Syngenta has reaped its fair share of profits, with 40% growth in seed sales to Latin America during its most recent quarter. Syngenta is taking the opportunity to go beyond its mainstay corn business to expand into wheat as well.

One concern, however, is that Syngenta's stock looks relatively pricey compared to some of its peers. Monsanto has a similarly hefty valuation, but DuPont and Dow Chemical (NYSE: DOW) both have lower earnings multiples -- albeit with less attractive net margins than Syngenta as well.

For retirees and other conservative investors, Syngenta's relative stability is a mark in its favor. But with a lower dividend yield than Dow or DuPont and valuation a concern, you may prefer to wait until Syngenta's stock price moves more in your favor. Depending on the consequences of this year's drought in the U.S., you may get that chance sooner than later.

Keep searching
 Finding exactly the right stock to retire with is a tough task, but it's not impossible. Searching for the best candidates will help improve your investing skills, and teach you how to separate the right stocks from the risky ones.

If you really want to retire rich, no one stock will get the job done. Instead, you need to know how to prepare for your golden years. The Motley Fool's latest special report will give you all the details you need to get a smart investing plan going, plus it reveals three smart stocks for a rich retirement. But don't waste another minute -- click here and read it today.

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