If you're a retiree, now can be an understandably scary time to be holding onto stocks. With the S&P 500 plunging 24% so far this year and no end in sight to the turmoil in the markets, there aren't many safe havens out there.
However, less-risky options to consider are blue-chip stocks that have strong fundamentals and also pay dividends. Two such examples are UnitedHealth Group (UNH 1.35%) and Coca-Cola (KO 0.31%). For retirees, these could be among the best places to park your money right now.
1. UnitedHealth Group
UnitedHealth is a top healthcare specialist that balances both growth and recurring income. The company is always aiming to get bigger and more diverse than it already is. Its core business involves providing health insurance, but it also has its Optum segment, which focuses on offering services. This includes delivering medication through OptumRx. Earlier this month, UnitedHealth closed on an $8 billion acquisition of Change Healthcare, which is a health tech analytics company that will help the healthcare giant trim costs and become more efficient in its operations.
Year to date, UnitedHealth's stock has been flat, but that's still enough for it to be a market-beating investment. Plus, that doesn't factor in the company's dividend yield of 1.3%, which helps pad those returns. And although its yield looks modest (the S&P 500 averages a payout of 1.8%), it's deceptively low, as UnitedHealth has more than doubled its dividend payment in the past five years.
UnitedHealth's business generates a tremendous amount of money, with free cash flow over the trailing 12 months totaling more than $20.4 billion -- easily enough to cover its dividend payments of $5.6 billion during that period while also giving it the room to pursue acquisitions. The company has also netted a profit of $18.3 billion on revenue of $304.6 billion over the past four quarters.
Retirees are not only collecting a growing dividend with UnitedHealth, but they're also getting a stable business that should remain a safe buy, regardless of what happens in the markets. With the healthcare industry getting back to normal, the company's results could be even stronger over the course of the next year.
2. Coca-Cola
Soft-drink giant Coca-Cola may be best known for its Coke products, but the consumer goods company offers much more than simply soda. With hundreds of brands in its portfolio, Coca-Cola's business includes hard seltzers, vitamin water, tea, and coffee products.
Retirees will like the stock for its stability. Although it's isn't in healthcare like UnitedHealth is, Coca-Cola's products are still essential and are staples at restaurants. Millions of households in the U.S. and around the world consume the products. The company says that it is in over 200 countries and territories.
Its financials are also rock-solid, with Coca-Cola reporting profits of $9.6 billion over the trailing 12 months on revenue of $41.3 billion for a net margin of 23%. Those types of margins can give the company plenty of flexibility to expand into more product lines while continuing to pay and grow its dividend, which today yields 3.2%. Coca-Cola is a Dividend King and it's likely that investors will see their payouts rise over time.
Down 7% year to date, Coca-Cola's stock is in the red but it has outperformed the broader market. And in the long run, the stock is likely to bounce back because a stronger economy and more spending at restaurants could strengthen its numbers. Coca-Cola is a safe investment option (and a favorite of Warren Buffett's) for retirees to park their money in amid the current economic conditions.
