A new year is just around the corner, filled with opportunities and challenges. For many people in their 60s, an even bigger change is just around the corner: retirement. And it's also filled with opportunities and challenges.
Picking great stocks can help make the opportunities during your retirement years be greater than the challenges. The ideal stocks will be those for well-run companies that consistently reward shareholders with solid dividends. Here's why Digital Realty Trust (NYSE:DLR), Enterprise Products Partners (NYSE:EPD), and Iron Mountain (NYSE:IRM) are stocks to consider buying if you're in your 60s.
Digital Realty Trust
Digital Realty Trust manages data centers across the world. It owns 182 data centers located in many of the top metropolitan areas. Digital Realty has around 2,300 customers from a wide range of industries, including financial services, cloud and information technology services, manufacturing, energy, healthcare, and consumer products.
The company is organized as a real estate investment trust (REIT), which means Digital Realty must return at least 90% of its earnings to shareholders in the form of dividends. Its dividend currently yields 3.26%. Digital Realty has increased its dividend each year since the company was formed in 2004.
While Digital Realty is a great income stock, it's a pretty good growth stock as well. Over the past 10 years, the stock has nearly tripled in value. Digital Realty appears to have a good shot at generating big gains over the next decade as well. The company is gearing up for what it calls the "second wave" of cloud computing, with increased use of artificial intelligence and machine learning and a "massive incoming data flood."
Enterprise Products Partners
Enterprise Products Partners (EPD) is a limited partnership that owns assets including processing, storage, and transportation operations for natural gas and oil. EPD is one of the largest integrated midstream energy companies in the world.
EPD is a retiree's dream stock, thanks to its attractive and steadily growing dividend. The dividend yield stands at 6.39% right now. EPD has increased the dividend for 20 years in a row. Even more impressive, in October the company announced its 53rd consecutive quarterly dividend increase.
Don't look for EPD to deliver sizzling growth. Although the stock enjoyed a great run after the financial meltdown of 2008-2009, EPD's share price has generally declined the past couple of years. But lower oil prices caused most stocks in the industry to fare poorly. Importantly for investors, EPD continued to deliver solid dividends and return on investment capital during the period. The company's low cost of capital and financial flexibility should enable EPD to benefit from additional acquisitions and capital projects that position it well for the future.
Like Digital Realty Trust, Iron Mountain is a REIT. But while Digital Realty focuses on managing data centers, Iron Mountain's specialty is storage of records and data. The company has more than 230,000 customers around the world, including 95% of the Fortune 1,000.
Iron Mountain's dividend currently yields 6.24%. And although the company doesn't have the long track record of dividend hikes that Enterprise Products Partners has, Iron Mountain has raised its dividend a lot more, with its dividend payout more than doubling over the past five years. The company expects to continue increasing its dividend by at least 4% annually for years to come.
I view Iron Mountain as the kind of stock that you can buy and hold forever. The company enjoys a strong moat. It has a large customer base with a high retention rate. This high retention stems from Iron Mountain's performance as well as the hassle of moving records and data to a competitor. Business is also booming, as organizations generate increasingly more documents and data that need to be stored.
Not just for investors in their 60s
Digital Realty Trust, Enterprise Products Partners, and Iron Mountain are great stocks for investors in their 60s, because they have solid, enduring businesses and pay attractive dividends. However, those aren't just attributes that investors nearing retirement seek; they're attractive for investors of all ages.