Inflation is taking a chunk out of retirees' income this year. Although investing in the stock market can be a solution, it hasn't exactly been a safe option of late, with many stocks falling hard over the past several months. But that doesn't mean retirees or risk-averse investors are out of luck. There are some solid investments you can consider today that won't put your hard-earned savings in danger.
Three stocks that are safe investments and can provide some valuable, recurring dividend income include Patterson Companies (PDCO 0.57%), Village Super Market (VLGEA 0.13%), and Campbell Soup (CPB -3.85%).
1. Patterson Companies
Patterson Companies is involved in selling and distributing products for the dental and animal health markets. Those are two promising areas for retirees to have exposure to right now. Dental care could be a promising place to invest in as the economy returns to normal and people get back to making regular visits to their dentists. And a survey from Forbes found that 78% of pet owners acquired a pet in the midst of the pandemic.
Both trends are what could make Patterson a potentially strong stock to invest in right now. Year to date, investors have been buying up shares of the company as it is up more than 12% and has outperformed the S&P 500, which is down by 10% over the same time frame. Another area where it outperforms the broader market is on its dividend yield. Patterson's stock yields 3.1%, which is more than double the S&P 500 average of less than 1.4%.
The company reported its third-quarter earnings in March, and sales of $1.6 billion for the period ended Jan. 29 rose 2.9% year over year. Patterson also raised its guidance for earnings in fiscal 2022 (ending in April), projecting a diluted per-share profit of at least $1.86. That would put its payout ratio at just 56%.
Between a high dividend yield and a promising business, Patterson is a healthcare stock that retirees would likely love holding in their portfolios right now.
2. Village Super Market
One of my favorite dividend stocks is Village Super Market. At a market cap of around $340 million, it's not a terribly large business, but it is profitable and its operations are concentrated on the East Coast. It has grocery stores in New Jersey, New York, Maryland, and Pennsylvania.
Although its net margins are lean and normally not even 2% of revenue, that hasn't prevented the company from consistently posting a profit in each of the past four quarters. And the business today looks solid, with Village Super Market reporting revenue of $537.4 million for the period ended Jan. 29, or up 2.8% year over year. Same-store sales growth during the quarter was a solid 4.4%.
The stock's return in 2022 has been modest, up just 1%, but that's still better than the S&P's losses. Plus, Village Super Market also pays a yield of 4.1% -- highest on this list -- that will pad those gains further. Its payout ratio is very sustainable at just under 50%, making this a fairly safe income stock to own.
While you likely won't make a huge profit from owning the stock, you're also unlikely to incur a sizable loss. This is a low-volatility investment that retirees can count on for stability and dividend income.
3. Campbell Soup
Another generous yield that retirees should consider comes from Campbell Soup. The packaged goods company has many popular food and snack brands in its portfolio, including V8, Goldfish, Prego, Campbell's Chunky, and many others. Although inflation may drive costs up, the company is taking steps through pricing, cost-savings initiatives, and improvements in supply-chain productivity to protect its bottom line.
When it released its second-quarter numbers in March, the company reaffirmed its full-year guidance for fiscal 2022 (which ends in July), projecting that net sales will decline by no more than 2% while adjusted per-share earnings could drop by 4%. That's despite a 16% drop in adjusted earnings for the most recent period, which ended on Jan. 30.
Shares of Campbell Soup have risen more than 7% in 2022 as investors have taken note of the stability that the business offers at a tumultuous time. For retirees, it's an ideal stock because while Campbell does expect a slip in profitability this year, its payout ratio remains at around 50%. It could afford to incur a drop in the bottom line and still pay its dividend, which yields close to 3.2%.