Unfortunately, as we all witnessed in 2008, the market can take even the safest-seeming portfolio and drastically reshape it in a matter of days.

But the worst part about the recent recession is that it's causing investors to do the exact opposite of what they should be doing, and it could end up costing you the comfortable retirement you've always dreamed of.

The unfortunate reality
According to a 2009 survey, about 50% of retirees feel less financially secure than they did when they entered retirement. Among other things, they're worried about the economy, inflation, a change in housing prices, and their ability to recover from the economic downturn.

So what has the response been from baby boomers who are entering retirement now? They're flocking to safety, which usually means shifting assets from stocks to bonds, or keeping equity positions relatively conservative.

But even though investors in or close to retirement should shift some of their assets to more conservative positions, that doesn't mean they should eschew the better returns they could get elsewhere in the market.

A small caveat
Now, I'm not talking about going out and buying shares of biotech companies like Dendreon (Nasdaq: DNDN) or Keryx Biopharmaceuticals (Nasdaq: KERX), both of which operate in uncertain industries.

Don't get me wrong: Dendreon recently received some good news on its first-of-a-kind drug Provenge that helps the body fight prostate cancer. However, there are some lingering concerns about the effect that Medicare may have on the cost of the drug, so I wouldn't be rushing in to buy this type of stock if I were close to retirement.

And Keryx happens to be a fan favorite at the Fool -- it's got some promising drugs in Phase 3 trials for refractory advanced colorectal cancer and multiple myeloma. But with all biotech firms, shares can swing downward as fast as they can upward, and that's just not a roller coaster I want to be on if I'm trying to retire.

The best stocks for you
If you're close to retirement, your investing philosophy should revolve around the following features:

  • Hefty dividends: If you're like most people, you probably need incoming revenue to help pay for day-to-day expenses. Fortunately, even after 2008, there are still plenty of stocks that pay you nicely to hold shares of their companies. The best ones grow their dividends regularly -- giving you a hedge against inflation.
  • Attractive valuations: You never want to pay more for a stock than you have to, and that's even more true with a shorter time horizon. Stocks with lower valuations give you a larger margin of safety and help ensure you're getting the best deal possible.
  • Earnings growth: Many investors think that if you buy dividend stocks, you have to sacrifice your shot at gaining capital appreciation as well. However, that's definitely not true -- you should always buy companies that can provide growth as well as income.
  • Low volatility: Stocks that swing up and down like a seesaw can give us motion sickness. With less time to play around with, buying stocks with low volatility, or beta, will let you sleep better at night.

So what are the top five stocks to buy today, that encompass the above criteria? Let's take a look:




10-Year Growth


FirstEnergy (NYSE: FE)





AmeriGas Partners (NYSE: APU)





Southern Co. (NYSE: SO)





ConAgra Foods (NYSE: CAG)





Abbott Labs (NYSE: ABT)





*Compound annual growth rate.

Each of these companies trade for reasonable valuations, will pay you to hold them over the long haul, and won't gyrate wildly -- so you can rest assured your portfolio won't be turned upside down. Even better, they've proven that they can offer capital appreciation as well.

The Foolish bottom line
You should always have some of your capital allocated to fixed income and cash; but having all your money in near risk-free investments just won't cut it, especially as we experience some of the lowest interest rates in years. The combination above of current income, potential dividend increases, growth, and low volatility is one that should weather any storm.

That's why at Million Dollar Portfolio, our analysts scour the investing universe to find the best dividend stocks possible. Our team knows that there are plenty of stocks that combine the best of both worlds -- both income and growth -- and that it only takes patience, due diligence, and some hard work to find them. If you'd like to learn more, enter your email address in the box below for more information.