All of these stocks can provide steady income to retired investors.
Many retirees are investors for a good reason: They can’t rely entirely on Social Security to fund their retirement. Investing wisely provides a means to retire comfortably.
Three Motley Fool contributors think they have found stocks to buy that retirees should absolutely love. All three offer juicy dividend yields. Here are their cases for AbbVie (ABBV -0.25%), Bristol Myers Squibb (BMY -0.28%), and Gilead Sciences (GILD -2.55%).
Everything retirees need in a stock from A to Vie
Keith Speights (AbbVie): Reliable income (the more the better) and reasonable growth prospects. Those are the main items on retirees’ wish lists in picking stocks. AbbVie provides both.
The big drugmaker’s forward dividend yield stands at nearly 3.3%. It was even higher earlier this year, but AbbVie’s share price has jumped over 20%. That isn’t a bad problem to have.
Few companies beat AbbVie when it comes to the reliability of their dividends. It is a Dividend King with 52 consecutive years of annual dividend increases (including when it was part of Abbott Labs). Over the last five years, the company has boosted its dividend payout by nearly 45%.
The strong year-to-date gains AbbVie has delivered give you a hint of the company’s growth prospects. This performance might be surprising considering that the drugmaker’s revenue and profits have declined due to the patent expiration for Humira, its blockbuster autoimmune disease therapy.
However, AbbVie did a great job planning for Humira’s loss of exclusivity. The company has two worthy successors already on the market that together should eclipse Humira’s peak sales within the next few years. AbbVie has also invested in research and development and made several strategic acquisitions that have improved its growth prospects.
This dividend stock makes for a good low-volatility investment
David Jagielski (Bristol Myers Squibb): If you’re a retiree, one stock that you’ll probably love is Bristol Myers Squibb. The healthcare company has a tremendous track record for growth and acquisitions over the years, not to mention paying a solid dividend.
Although the stock has been struggling this year, losing more than 7% of its value thus far, it’s a fairly stable investment with a beta value of less than 0.5.
The company faces challenges due to losses in exclusivity in multiple top drugs this decade, including Eliquis and Opdivo. But it has been accumulating assets over the years to build up its portfolio of new growth products.
In its most recent quarter, which ended on June 30, revenue from the growth portfolio rose by 18% to $5.6 billion. And by 2026, Bristol Myers expects its new products to generate at least $10 billion in sales.
There is always going to be some risk with biopharma companies because patents for new drugs don’t last forever. But with Bristol Myers, the business has already been preparing for losses in exclusivity by bolstering its roster of drugs and enhancing its pipeline.
And it has been paying dividends for more than 90 consecutive years, raising it annually for 15 straight years. And with a yield of nearly 5%, investors can collect more than three times what they would with the average S&P 500 stock, which pays around 1.3%. The company’s per-share profit in its most recent period was $0.83, which is comfortably higher than the $0.60 dividend it pays every quarter.
For retirees, Bristol Myers is a good, stable investment to buy and hold. Although investors might be put off by the uncertainty it faces, it’s not as risky as it appears to be. I think it can be an excellent source of recurring income for your portfolio.
A reliable dividend payer
Prosper Junior Bakiny (Gilead Sciences): Once investors reach retirement age, they are typically no longer looking for risky, high-growth stocks. Instead, they want steady, reliable companies that pay regular dividends. Gilead Sciences is an excellent choice along those lines.
The biotech’s portfolio of medicines features products across oncology, virology, and HIV, where it is the leader. Gilead holds the world’s best-selling HIV medicine in Biktarvy. It was the fifth best-selling drug in the industry last year. The company should continue moving in the right direction and gaining market share, as it has usually done.
Gilead won’t rely solely on its HIV portfolio, though. The company has been making significant investments in oncology, where it hopes to become a leader. Its oncology treatment sales have been growing faster than the rest of its business in recent quarters, although they still account for a relatively small portion of its total sales. The biotech is working hard to develop new products.
Its pipeline has dozens of programs, with a particular focus on oncology, HIV, and inflammatory diseases. Gilead’s ability to innovate, coupled with the fact that patients won’t be inclined to stop taking its medicines even when the economy is down, makes it capable of delivering steady financial results for a long time.
The biotech’s dividend record is solid, too. In the past five years, Gilead Sciences has increased its payout by 22%, while its forward yield currently tops 4.15%.
Retirees — and income seekers of all types — can’t go wrong with this pick, in my view.