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2 Stocks for a Better Retirement

By Lawrence Rothman, CFA - Feb 16, 2021 at 11:30AM

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These stocks have survived and thrived for years.

If you have been saving and investing for retirement, your goals will undoubtedly change once you have collected your last paycheck and left the workforce behind for good.

Most likely, you are looking for safer, income-producing stocks to supplement your retirement income. These two stocks fit the bill. Let's find out what each has to offer.

A golden egg atop a pile of bills surrounded by charts.

Image source: Getty Images.

1. Colgate-Palmolive

Colgate-Palmolive (CL 1.90%) has a strong market position in toothbrushes and toothpastes that it sells under its Colgate brand. It also sells items like soap, dishwashing liquids, and deodorants under popular names like Palmolive, Irish Spring, Ajax, and Speed Stick. These are items people need no matter their financial situation, which means its results won't fluctuate with the economy.

That's why Colgate was able to continue growing sales during the pandemic and subsequent recession. Selling goods across the globe also helps offset problems in one geographic area. Its fourth-quarter adjusted sales grew by 8.5% to $4.3 billion, and earnings per share were $0.77, 5% higher.

The business also produces steady and plentiful free cash flow. Last year, the company generated $3.3 billion, paying half of this total out as dividends.

It's no wonder Colgate has increased its dividends annually for the past 57 years, making it a Dividend King. It last raised the payment in March, meaning another one is likely coming soon. Right now, the stock's dividend yield is 2.2%.

2. Walmart

Walmart (WMT 0.08%) has become the world's largest retailer by focusing intently on holding down costs so that it can offer its customers ultra-low prices. It is also moving forward to remain competitive in the retail space by aggressively pushing an omnichannel approach that allows its customers to shop in a variety of ways. Last fall, management launched Walmart+, its subscription service that offers delivery on numerous items, discounts on gasoline, and a faster checkout process at stores.

Seeking to offer the lowest prices is certainly appealing, but especially during turbulent economic times when people have lost their job or fear that they will shortly. Walmart's fiscal third-quarter adjusted revenue was $135.8 billion, 6.7% higher than a year ago, and earnings per share jumped by 16% to $1.34. This covered the period that ended on Oct. 31, 2020.

Growing profitability has translated into increased free cash flow to the tune of $16.4 billion for the first nine months of the year. This was plenty to pay the $4.6 billion of dividends.

Walmart has also racked up an impressive history of dividend raises, enacting one every year since its first payment in 1974. With strong results, the board of directors seems poised to raise April's payment as it has in years past.

Both are strong businesses that have been around for a long time, sell everyday items that people need no matter the economic conditions, and pay increasing dividends each year while others are in danger of cutting their payments.

In short, these add up to good stocks to add to your portfolio in retirement to ensure you can enjoy your days and have restful nights.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$123.72 (0.08%) $0.10
Colgate-Palmolive Company Stock Quote
Colgate-Palmolive Company
CL
$80.38 (1.90%) $1.50

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

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