Shoring-up a nest egg or padding-out a pension plan? With these 3 long-term stocks, worrying about the future could become a thing of the past.
With the markets fluctuating during the COVID-19 pandemic and unemployment rising, the future seems a scary thought right now. Plans of creating a nest-egg might not be the most exciting idea, but investing in long-term, stable stocks which you can hold onto forever could be a sure-fire way to provide for your much grumpier older self in the years to come. Just think of that deckchair on a porch somewhere with an ice-tea in hand, watching the world pass by.
COVID-19 has pulled at the seams of many long-standing businesses such as Disney (NYSE: DIS), Hertz (NYSE: HTZ), and Macy’s (NYSE: M). For others — Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) for example — it has been an opportunity to shine. For a retirement plan however, plain, boring stocks that will remain steady and stable are best; stocks that will pay investors enough to cover yearly expenses for a good number of years. With this in mind here are 3 (kind of) boring dividend-paying stocks that could make retirement exciting.
1. Microsoft
Starting off with the most exciting of the three, Microsoft (NASDAQ: MSFT) has a long history of tech expertise. During the pandemic, Microsoft has cited minimal impact as revenue increased 15% with a 25% jump in Office 365 revenue and the EPS increasing by 23% YOY.
Since 2014, Microsoft has been on an upward trajectory and many analysts predict its market cap to reach $2 trillion within the next 2 years. This is in part due to the forward-thinking that has been exhibited by the company, adopting and developing new tech such as AI or cloud computing. In fact, its cloud business generated $39 billion in 2019, or 31% of its revenue.
With a current dividend payment of 1% — which is impressive during this pandemic — Microsoft is a good buy and hold stock as the dividend will likely increase as things get back to normal. This is the perfect, innovative company to include in a pension portfolio as it will continue to make money as the world becomes more and more digitized.
2. Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) is a good long-term stock to bet on as it has shown itself to be great at navigating this downturn. Though not as sexy as a cloud stock, several of its subsidiaries include producers of pharmaceuticals, skincare products, orthopaedic resources and more, meaning that it is an all-round essential medical service, no matter the weather.
Its financials are excellent for anyone thinking long-term. With an AAA debt rating, a trailing annual dividend of 2.7% and an average EPS of $2.22 for the past 4 quarters, an investor in Johnson & Johnson could be very happy allowing this stock to grow nicely in their portfolio. In addition, there is the potential to see profits increase in the future as the company is currently working on a coronavirus vaccine.
Despite a recent high-profile case involving its baby powder product, this is a company that will be around for many years to come — perfect for a nest-egg.
3. Ennis
Though what it does could not be more boring — even a stationary enthusiast would find it hard to get excited about these products — Ennis’s (NYSE: EBF) financials are anything but. It has proven that folders, labels and envelopes are clearly a cash cow when in the right hands. Ennis has been around for over 110 years — it has seen both World Wars come and go and now it is weathering the pandemic magnificently with a free cash flow of $43 million.
Ennis allows companies to order custom products online and it serves around 40,000 distributors. It has maintained such a level of diversification that no single client represents more than 5% of its revenue, thus is not reliant on any individual business to bring in the majority of revenue — an issue that Facebook (NASDAQ: FB) is currently facing as more and more ad clients boycott the social media giant.
However boring this stock may be it has the potential to become a retirement favorite as it pays an impressive dividend currently at 4.96%. Ennis has the perfect business model for long-term and stable profit, perfect for a retirement portfolio.
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