Three Stocks for Retirement Paychecks

01/25/2018 5:00 am EST

Focus: STOCKS

Robert Carlson

Editor, Retirement Watch

We added three high-yielding stocks last month to the Retirement Paycheck portfolio, and they already are adding to the bottom line, explains Bob Carlson, editor of Retirement Watch.

This is the portfolio we created for investors who primarily want income from their investments but know that they won’t earn much income from traditional retirement income investments.

We invest in assets such as master limited partnerships (MLPs), closed-end funds, preferred stock, high-yield stock, dividend-paying stocks and more.

These investments can be as volatile as the stock indexes, so we don’t buy and hold. We buy or increase a position when it is out of favor and sell or reduce a position when prices are pushed too high.

The three high-yielding stocks we added to the portfolio are AT&T (T), Verizon (VZ) and IBM (IBM). One reason these stocks rose at the end of 2017 was the new tax law. The new law is supposed to benefit these companies more than the average company to provide an immediate increase to earnings and cash flow.


Advertisement


AT&T yields 5.04% and has increased the dividend every year for some time. Its price is up 3.97% in the last four weeks, but is down 10.90% for the last 12 months. It recently traded around $38.00.

Verizon was as high as $53.53 in late December, but more recently was around $52.60. The yield is 4.39%. It returned 3.30% in the last four weeks but lost 3.73% in the last 12 months.

IBM recovered from a late-December slide and began 2018 with a surge. The stock is up 4.09% in the last four weeks but still is down 4.15% for the last 12 months. IBM’s yield is 3.85%. It sells around $161.70.

As you can see from the 12-month losses, each of these stocks underperformed the market indexes for at least the last year. I believe the markets are undervaluing them.

They’ll continue to pay high yields, and their cash payouts will increase over time. In addition, at today’s prices, I think they offer margins of safety and the potential for capital gains.

Subscribe to Bob Carlson's Retirement Watch here…

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on STOCKS