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If You're Retired, Consider Buying These 2 Stocks

By Lawrence Rothman, CFA - Jan 28, 2021 at 11:30AM

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These stocks allow you to focus on your retirement activities without worrying your investments will sour.

Retirement provides a host of benefits, such as not having to set the alarm clock or deal with the daily grind. It also means your investment approach has likely changed. You are probably looking at more conservative, income-producing stock investments.

Here are two blue-chip companies that offer stability and increasing dividends.

Dollar bills surrounding a golden egg.

Image source: Getty Images.

Walmart

Walmart (WMT 1.26%), the world's largest retailer, has offered customers ultra-low prices on a variety of goods since the early 1960s. Management has also been investing in digital initiatives and pushing an omnichannel approach that allows customers to order their goods in a variety of ways. This includes Walmart+, its subscription service that the company launched in September, helping Walmart keep up with online competitors, namely Amazon (AMZN 2.31%).

Its laser focus on costs and low prices works well for Walmart, no matter the economic situation. This was proven during the pandemic and subsequent recession in the U.S. and other countries. Its results have been strong, with Walmart's fiscal third quarter adjusted sales growing by over 6% to $135.8 billion and adjusted operating income increased by better than 16% to $5.8 billion. This covered the period that ended on Oct. 31.

The business generates plenty of free cash flow, including $16.4 billion for the first nine months of fiscal 2021. It uses part of this to pay dividends, which was $4.6 billion for the period.

Better still, rewarding shareholders with higher payments is deeply ingrained within the company. The board of directors has increased dividends every year since first making a payment in 1974. Walmart's stock offers investors a 1.5% dividend yield.

Johnson & Johnson

Johnson & Johnson (JNJ -0.34%), the approximately 135-year-old company, has businesses that span pharmaceuticals (prescription drugs and treatments), medical devices (products used in fields such as surgery, orthopedics, and cardiovascular), and consumer (a range of products that includes brands like Band-Aid, Neosporin, Tylenol, Aveeno, and Listerine).

While the pandemic hurt certain businesses' 2020 results, typically Johnson & Johnson's revenue and earnings are impervious to the economic cycle since it sells necessities, which in some cases are even life-saving products. The situation improved throughout the year, and the company's fourth quarter revenue and earnings beat the consensus estimate, and its 2021 outlook is better than Wall Street's expectation.

Management also expects to release data on its COVID-19 vaccine shortly. Only requiring people to take a single dose, this is a departure from the double dose vaccines currently on the market. Its guidance may prove conservative since it doesn't include any contribution from the potential treatment.

Although Johnson & Johnson didn't provide cash flow information for the year, despite the challenges, its free cash flow for the first nine months was $13.2 billion and its dividends were $7.8 billion.

Last April, the company announced that it was raising the quarterly payment by over 6% to $1.01. This made it 58 consecutive years that it boosted dividends, qualifying Johnson & Johnson as a Dividend King, or an S&P 500 company that has increased payouts for at least 50 years. Its dividend yield is 2.4%.

As you enjoy your retirement, the last thing you need is to stress over your investments. Both Walmart and Johnson & Johnson will let you sleep well at night knowing these are secure, and you can comfortably rely on continually receiving dividends.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$178.85 (-0.34%) $0.61
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$127.58 (1.26%) $1.58
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,272.78 (2.31%) $51.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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