After losing huge portions of their life savings in the stock market meltdown, many investors are scared to death of stocks. And among investors, no one has more at stake than those who've already retired and are now in a position where they have to make sure their savings last the rest of their lives.

Because of how much retirees have to lose, investing conservatively makes a lot of sense. But that doesn't mean you can afford to stay out of stocks entirely. Fortunately, with the right type of stocks in your portfolio, you can meet many of your financial needs without taking on more risk than you're comfortable with.

What you need
When you think about it, retirees have a much tougher task in investing than people who are still working. During your career, the only thing most people ask from their investments is to grow. Whether that growth comes from rising prices or big dividends isn't important; what's important is getting that account balance as high as it can possibly be on your last day of work.

But once you retire, you need things from your investments that you've never needed before. With a fixed income from Social Security and perhaps a company pension, you need your investments to provide you with regular cash flow to meet living expenses. You also need at least moderate growth from the money you don't need right away, because 20 or 30 years down the road, your expenses are likely to be a lot higher, and if your assets don't keep pace, you run the risk of running out of money before you die.

Perhaps most importantly, you don't have the luxury of waiting out major downturns in your stocks. While younger investors can simply stay the course and expect returns to revert to long-term averages, you need your money now -- and you might not be able to cut back on your expenses during bad markets in the hopes of making back your money.

These stocks have what you need
So with those three goals -- income, growth potential, and stability -- in mind, I set out to find stocks that could deliver on each of those fronts. For income, I only considered stocks with a dividend yield of at least 2.5%, and also weeded out any stock that hadn't grown its dividend payout by at least 10% per year over the past five years.

For growth potential, I was a little bit sneaky. I didn't look to revenue or earnings growth, because those measures can move dramatically from year to year and tend to highlight riskier stocks. Instead, I looked for stocks at attractive valuations that give investors both a margin of safety against future declines as well as the potential for rising share prices if multiples return to higher levels.

And finally, for stability, I looked for low-volatility stocks that accomplished one important thing: limiting losses during the terrible 2008 bear market year to no more than 20%. A 20% decline may be more than a retiree would like to endure, but it's a lot better than the 37% loss the S&P 500 suffered.

Here are the five stocks that passed all these tests:

Stock

Dividend Yield

Dividend Growth

Beta

2008 Return

P/E

Johnson & Johnson (NYSE: JNJ) 3.5% 10.9% 0.58 (7.7%) 12.9
Raytheon (NYSE: RTN) 2.9% 10.8% 0.66 (14.2%) 11.2
Chevron (NYSE: CVX) 3.1% 10.5% 0.75 (18.3%) 11.2
Hudson City Bancorp (Nasdaq: HCBK) 5.3% 17.5% 0.63 9% 10.3
Chubb (NYSE: CB) 2.6% 11.7% 0.48 (4.1%) 8.5

Source: Capital IQ, a division of Standard and Poor's.

As it turns out, the stocks that pass these demanding tests make up a reasonable portfolio. It's well-diversified, with stocks in a variety of industries that you can expect to react differently in a variety of economic conditions. Chubb and J&J both have decades-long streaks of annually raising their dividends, having earned the esteemed status of Dividend Aristocrats. Even those that fall short of the cut still have decent streaks, with two decades for Chevron, over a decade for Hudson City, and six years for Raytheon.

Other good companies just barely missed the list. McDonald's (NYSE: MCD) and Procter & Gamble (NYSE: PG), for example, have the first four factors covered, but their shares are just a little pricier than the five you see here. To round out a portfolio, they're worth keeping on your watchlist in case they get more affordable in the future.

Never give up
Retirees may feel like the stock market is too dangerous for them. But for most retirees, current market conditions make it too dangerous not to own stocks. If you want income and growth potential, you need stocks -- and if you want stability, being picky with these stocks is the best way to keep your portfolio under control.

Retirees love high-yielding dividend stocks, but you have to be careful with them. Find the right ones in the Fool's free special report, "13 High-Yielding Stocks to Buy Today."

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance.

When it comes to thinking about retirement, Fool contributor Dan Caplinger is old beyond his years. He doesn't own shares of the companies mentioned in this article. Chevron, Johnson & Johnson, and Procter & Gamble are Motley Fool Income Investor choices. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Inside Value pick. The Fool owns shares of Johnson & Johnson and Raytheon. Motley Fool Alpha owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy works hard so you won't have to.