Dividend Stocks

7 Long-Term Stocks to Buy for a Robust Retirement

  • Pfizer (NYSE:PFE): A leading drug manufacturer whose balance sheet received a COVID-19 vaccine boost.
  • Toronto-Dominion Bank (NYSE:TD): Strong dividend and earnings growth profile built in a highly regulated jurisdiction.
  • Kimberly-Clark Corp. (NYSE:KMB): Supplies everyday essentials that the global population will need even a century from now.
  • Lockheed Martin (NYSE:LMT): A defense stock that may give retirement portfolio defensiveness a new meaning.
  • Brookfield Infrastructure Partners LP (NYSE:BIP): Earns contracted cash flows from real assets with strong entry barriers.
  • American Electric Power (NASDAQ:AEP): A utility growing its dividends while turning environmentally green.
  • Crown Castle International (NYSE:CCI): A REIT with growing distributable funds to support long-term retirement income growth.

Investors seeking shelter from extreme market volatility and searching for inflation protection may still find resilient dividend-paying stocks to fortify retirement portfolios during tough times, and we have seven long-term stocks to buy for a robust retirement portfolio up for consideration.

Rising inflation rates, geopolitical risks and the threat of a global recession are causes for concern for any retirement-focused investment portfolios.

Honestly, the realities of inflation’s impact on retirement plans can be somewhat sad. A recent Bloomberg report that about two-thirds of surveyed people starting retirement in 2022 in the U.K. expect to continue working (at least part-time) as living costs surge.

Although some cited boredom as a plausible reason to continue working, only 25% of survey respondents felt very confident that they have saved enough to fund their retirement.

A deep thought on retirement investing has never been more important.

Investing in companies with defensive, tried and tested business models with decent growth prospects, strong management teams, shareholder-friendly capital return policies and dedication to dividend growth could help create a formidable and robust retirement portfolio that can survive bouts of inflation and the usually short-lived recessions.

Retirement can be a very long time; hence some level of growth will be necessary to maintain the size of that nest egg. Dividend growth will be important for recurring and regular inflation-adjusted cash flows during retirement.

Here are seven retirement stocks to consider as long-term holdings in a robust retirement portfolio.

PFE Pfizer $50.18
TD Toronto-Dominion Bank $74.88
KMB Kimberly-Clark Corp. $126.87
LMT Lockheed Martin $459.90
BIP Brookfield Infrastructure Partners LP. $66.18
AEP American Electric Power $102.43
CCI Crown Castle International $193.87

Long-Term Stocks to Buy: Pfizer (PFE)

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Pfizer is one of the largest drug manufacturers in the world. COVID-19 vaccine sales aside, the company retains a multibillion critical drugs sales portfolio with huge cash flow generating capacity.

They can’t be counted upon to stay, but COVID-19 vaccine sales boosted PFE’s revenues by 95% in 2021. Net income surged 140% while cash, cash equivalents, and short-term investments shot up 154% to restore liquidity levels last seen back in 2014. Pfizer has more capital to deploy in drug research and development activity after the COVID-19 boost to cash flow.

That said, PFE stock has risen by only 29% over the past year, and shares look cheap compared to industry peers. A price to earnings (PE) multiple of 13.2 is far lower than the industry average PE of 21.7. PFE’s price-to-cash flow (P/CF) multiple of 9.9 makes it cheaper when compared to the industry average multiple of 18.4.

Pfizer stock pays a 3.1% yielding well-covered dividend that has increased by an average of 4.6% over the past five years. Wall Street analysts project a 5.7% earnings growth rate over the next five years.

An economic recession or not, the world will still need drugs to maintain its population’s health. PFE stock could play a key defensive role in any retirement portfolio. $10,000 invested in PFE stock 10 years ago could be worth $35,600 today, with dividends fully reinvested.

Toronto Dominion Bank (TD)

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Financial stocks make very good value investments and reliable dividend payers that add robustness and fortification to a retirement income portfolio.

Tight regulation makes banks better risk-takers, and one of the best, most stable, and highly regulated financial jurisdictions could be Canada – home to the Toronto Dominion Bank (TD Bank)

It’s Canada’s second-largest chartered bank which has built strong retail and wholesale banking footprints in the United States.

TD stock beats most peers in earning margins and returns metrics to attract premium valuation, but its forward PE of 10.5 doesn’t look that expensive right now. The bank’s return on equity of 14.3% trounces its industry average of 11.6% by a wide margin.

Wall Street analysts expect TD Bank to grow its revenues by 11.7% next year and improve its earnings by nearly 9% year-over-year in 2023. They attach a five-year earnings growth rate of 7.5% which could strongly support TD’s religiously growing dividend payout.

TD stock pays a quarterly dividend that yields 3.8% annually and has increased the payout by an average of 8.2% every year over the past five years. The bank stock could be one of the long-term stocks to buy for a robust retirement portfolio.

A $10,000 investment in TD stock 10 years ago could have grown to more than $25,700 today.

Long-Term Stocks to Buy: Kimberly-Clark Corporation (KMB)

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Kimberly-Clark Corp. supplies hygienic products to 175 countries of the world. Its most popular brands include Huggies, Scott, and Kleenex.

User demand for the company’s tissue, diapers, and hygiene products could be recession-proof. The company claims that a quarter of the world’s population uses one of its products every day, and such high demand may not go away even during crisis times.

After 150 years in the business, KMB stock investors trust the company’s accumulated management, marketing, and production experience to propel the business for decades to come.

Most noteworthy, KMB stock has paid and increased its annual dividends for 50 consecutive years. Kimberly-Clark’s strong dividend growth streak isn’t about to be broken any time soon. The company’s current quarterly dividend yields a respectable 3.7% annually.

Wall Street analysts expect KMB stock to grow its earnings per share by 19% next year and by about 7.5% annually over the next five years. Growing earnings could support growing free cash flows and dividend raises into the future.

KMB stock could play a defensive and income generation role in a retirement portfolio.

Long-Term Stocks: Lockheed Martin (LMT)

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It’s working on a huge $135 billion backlog already, but defense contractor Lockheed Martin and peers could enjoy more than a decade of higher client orders as the United States and its allies increase defense budgets as a result of Russia’s invasion of Ukraine in 2022.

The Russian-Ukraine conflict is likely a long-term catalyst to trigger the dawn of a new global arms race. Russia’s deployment of hypersonic missiles already puts several European Cities in harm’s way.

Current missile defense systems can’t stand hypersonic threats which can change course mid-flight. New, high-tech missile launch and missile defense systems are critically needed to counter hypersonic missiles, and Lockheed Martin is already developing them.

Lockheed Martin is a specialist contractor in missile defense systems, and satellite systems and produces combat aircraft. The U.S. and its NATO allies are compelled to significantly expand their defense budgets to introduce cutting-edge tech to their military weapon capabilities.

Investing in LMT stock could fortify portfolio performance, even during recessions and inflation bouts.

A shareholder-friendly capital budgeting policy saw Lockheed increase its dividend every year for nearly 20 years now. The current dividend yields 2.4% annually. Coupled with billions in share repurchases, investors in LMT could enjoy above-average returns for longer.

$10,000 invested in LMT stock 10 years ago could have grown to more than $70,000 today, with full dividend reinvestments.

Brookfield Infrastructure Partners LP. (BIP)

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Brookfield Infrastructure Partners has billions invested in long-life hard assets that generate stable, contracted cash flows protected by high barriers to competitors’ entry.

The company operates globally and its Utilities, Transport, Midstream, and Data segments and about 90% of its adjusted earnings before interest, taxes, depreciation, and amortization expenses (Adjusted EBITDA) is comprised of cash flows from regulated or long term contracted revenue.

BIP’s high sought-after units have returned a strong 103% in capital gains over the past three years, including an 8% year-to-date gain that beats the S&P 500’s negative return so far this year.

Brookfield’s low maintenance physical infrastructure appreciates over time, more so with inflation. Management is committed to a 5% to 9% annual dividend growth policy. The current quarterly payout yields a respectable 3.3% annually.

$10,000 invested in BIP stock 10 years ago would be worth more than $51,400 today, with all dividends reinvested.

Long-Term Stocks to Buy: American Electric Power (AEP)

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One of the largest regulated utilities in the United States, American Electric Power provides electricity generation, transmission, and distribution services to millions of retail customers in 11 states.

AEP’s ongoing upgrades to its aging transmission lines and wide opportunities to connect remotely located green energy projects like solar fields and wind farms to the American main grid opens up new growth potential for an old, tried, and tested business model.

Most noteworthy is an opportunity to move away from environmentally dirty coal-powered power plants as the business invests in renewables and improves its environmental, social, and governance (ESG) profile.

AEP plans to add 16,000 megawatts of renewables to its regulated power by 2030. It owns one of the largest single wind farms in America, the Traverse, which went online this year.

AEP stock pays a 3.1% yielding dividend that has been on an uninterrupted 12-year growth streak so far. The utility has grown its dividend by an average of 5.7% per annum over the past five years.

Management raised AEP’s long-term earnings growth rate to 6% to 7% in February. Sustained earnings growth will support further dividend growth into the future.

A $10,000 investment in AEP stock 10 years ago could have grown to $38,600 today, with full dividend reinvestment.

Long-Term Stocks to Buy: Crown Castle International (CCI)

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Crown Castle International is a real estate investment trust (REIT) that owns and leases cell tower and fiber network properties.

The REIT leases space on its towers to wireless services providers who install their equipment. Riding on a 5G growth wave, demand for small cell towers is surging, and CCI could reap growing annual cash flows as a result.

CCI was one of my best REITs to buy for March, and it remains a long-term retirement play today. The trust pays a dividend that yields 3% currently. Management increased the payout by an average of 9.1% annually over the most recent five years.

An 8% rent revenue growth to $5.72 billion in 2021 powered a strong 14% increase in adjusted funds from operations (AFFO), and management announced an 11% dividend increase on CCI stock in 2021. Wall Street analysts expect an 8.6% revenue growth in 2022 that could power further dividend increases.

A $10,000 investment in CCI stock 10 years ago could have grown to nearly $47,000 today. Although past performance may not predict future returns, Crown Castle International’s business outlook remains stellar, and the REIT could be a reliable income-generating machine in a robust retirement portfolio.

On the date of publication, Brian Paradza did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brian Paradza is an investing enthusiast who was awarded the CFA Charter in 2019. A strong believer in fundamentals-based long-term investing, Brian learns from gurus like Warren Buffett but acknowledges human behavioral tendencies that drive short-term “madness”. You may find him inquisitive as he examines tech investing opportunities, cannabis, blockchains, and the new cryptocurrencies asset class.