Friday, 6 March 2015

5 Stocks For Retirement

Whether you are already retired or just starting to save for the future, having good quality investments to provide growth and income is a must for any successful retirement strategy. The quality of your investment decisions can have a huge effect on your quality of life. Companies with healthy balance sheets, dominant market positions, and reliable cash flows should form the core of every investor’s portfolio . While a stock portfolio should contain at least 20 holdings, these five stocks are a good start for your long term portfolio, to be bought and held for the investment gains and income they have to offer.
#1 Google Inc. (NASDAQ:GOOG)
Google, a global information technology leader, specializes in how people access and interact with information. Google provides the leading search engine along with many online services such as Gmail, Adsense, and Chrome. Google operates in over 50 countries with unique domain names for each country. Internet advertising is the fastest growing segment of the advertising market, but still only represents 8% of total U.S. advertising dollars -- suggesting considerable room for further growth. To tap these opportunities, Google has used the profits from its paid search business to support innovative projects such as Google Editions, Google Maps and the Android Market.
Google’s search tools allow users to efficiently search through vast amounts of web-based information, organizing and delivering results based on relevance. It also has a long and growing list of products in many other areas of computer applications. Consumer usage of its products is free, financed through advertising and licensing sales.
#2 Unilever (LSE:ULVR)

The Anglo-Dutch consumer goods group boasts an impressive portfolio of brands across personal care (Lux and Dove), foods (Knorr and Hellmann’s), home care (Cif and Surf), and refreshment (Lipton and Heartbrand). In fact, it has 14 brands that can each boast more than €1 billion in sales a year, and its total annual sales come to €50 billion. Unilever sells its products in 190 countries to 2 billion consumers every day, and over half of those sales are happening in emerging markets (a character­istic that sets Unilever apart from many of its competitors). Unilever’s products tend to be relatively inexpensive and purchased frequently (they’re sometimes referred to as Fast Moving Consumer Goods, or FMCG), and they are sold around the world.

This should mean that, as long as the company’s brand appeal remains intact, its cash flow should be relatively resilient, regardless of economic conditions. People like to eat and shower (though generally not at the same time), even when times are tough. Unilever’s dividend yield isn’t the highest around, but the company’s strong cash flow should help bolster it in times of turmoil and grow it going forward.
 #3: Reckitt Benckiser (LSE:RB)
Say the name “Reckitt Benckiser” to most people and you’ll probably draw a blank expression. Mention Neurofen, Dettol, Strepsils and Durex however, and millions of people around the world will instantly know the products you’re talking about — household names that you’ll find in homes and supermarkets across the globe. Big brands can be a long-term investor’s best friend – unlike most valuable assets, they require little capital expenditure to maintain. Instead of depleting in usefulness each year, the brand becomes more embedded in our lives, and instead can become more valuable. Few things command the same kind of protection for consumer demand as a successful brand — and Reckitt’s product portfolio is up there with the best.
The company also generates roughly 40% of its sales from emerging markets — a proportion that I expect to continue to increase in the coming years. As Reckitt’s brands become more embedded in these markets consumers in these regions should buy more and more of Reckitt’s branded goods.
 #4: Diageo (LSE:DGE)
When building a strong core for your retirement portfolio, big can be beautiful, because large companies should have the geographic and product diversification to weather most storms. And in the spirits business, they don’t come any bigger than Diageo. They appeal because of the relatively defensive nature of its products – people continue to buy alcohol in good times and bad, and often view it as a small luxury, and seem to be willing to spend on brand names.
Speaking of which, Diageo has lots of brand names: Johnnie Walker – the world’s number 1 Scotch whiskey, Smirnoff, Bailey’s, Captain Morgan, and Guinness are some of the headliners. Just as impressive as its brand portfolio is its global reach. Diageo’s products are sold in 180 markets around the world. Although Diageo’s dividend yield is lower than most blue chips, its payout has been growing nicely recently. It’s up an average of 7.5% per year over the last five years.
#5: GlaxoSmithKline (LSE:GSK)
Saving for retirement is all about building up an insurance policy against the uncertainty of the future. If we knew exactly how much our golden years were going to cost us, it would take some of the stress out of our working life. Unfortunately, we can’t see the future with that amount of precision. However, as science helps us live better for longer, it does seem likely we’ll be using more and more pharmaceutical products. As one of the largest pharmaceutical companies in the world, GlaxoSmithKline will benefit from demographic trends in developed economies, like Europe and the US, as well as the rising wealth and demand for modern healthcare in emerging markets.
Over the past four years, GlaxoSmithKline has increased its focus on emerging markets, streamlined operations in its slower growing markets, and refined its all-important research and development (R&D) program. Since 2008, sales to emerging markets have more than doubled, and now account for over a fifth of GlaxoSmith­Kline’s business.
Summary

All five of these stocks offer solid, well diversified product ranges. They are well placed globally to continue their growth and continue to provide good levels of dividend income. However, as always, remember that the prices of investments can go down as well as up and these should be viewed as long term (5yrs +) portfolio holdings.
Have a great day! Andrew Lumley-Holmes

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