Retirees should favor companies that operate in stable industries and offer their shareholders a predictable stream of income. So which stocks in particular can fulfill their needs? We asked a team of Motley Fool contributors to weigh in, and they picked the following stocks.
Top 10 Gold Stocks To Own For 2019: Enbridge Inc(ENB)
Enbridge’s dividend yield has soared to a hefty 6.9%, thanks to a steep 20% drop in its share price so far this year. For the kind of growth potential that the Canadian energy infrastructure giant appears to possess, the stock has started to look like a bargain at current prices.
Enbridge is targeting 10% compound growth in dividends through 2020, backed by higher cash flows driven by restructuring and growth initiatives. Some of these include a potential divestment of non-core assets worth $10 billion Canadian dollars and development projects valued at nearly CA$48 billion in the foreseeable future.
If there’s one chink in the armor for Enbridge that has spooked investors, it’s the company’s heavy debt load that ran into almost CA$61 billion as of Dec. 31, 2017, the bulk of which was acquired with Spectra Energy. In the past couple of years, Enbridge also resorted to stock issues to raise capital that has diluted shareholders’ wealth, but that may soon be a thing of the past as management now is focused on monetizing non-core assets to fund its growth projects.
Enbridge’s cash flow from operations (CFO) hit multi-year highs last year, and although stock issues hit its CFO per share, the stock still is trading well below its five-year average price-to-CFO at 9.5 times. Given Enbridge’s dividend growth history of 23 consecutive years of dividend increases, it would need a heavy blow to the company’s business to break its dividend streak and disappoint income investors. That’s unlikely, given that almost 96% of Enbridge’s cash flows come from take-or-pay or regulated contracts.
Top 10 Gold Stocks To Own For 2019: PulteGroup, Inc.(PHM)
The technical chart of this $8 billion market cap builder mirrors that of Toll Brothers.
While the stock is off 12% this year, new orders have jumped, the backlog is soaring, and sales have grown double digits annually for the last four years.
Strong fundamentals make this stock a buy in the $29.00 per share zone with a target price of $41.00 per share and stops suggested at $26.93 per share.
Top 10 Gold Stocks To Own For 2019: Walker & Dunlop, Inc.(WD)
Walker & Dunlop claims a forward earnings multiple below 11. Like Micron, Walker & Dunlop operates in a cyclical industry — in this case, commercial real estate services and finance.
The company primarily focuses on financing owners and operators of multifamily properties across the U.S. A serious slowdown in the economy would likely hurt Walker & Dunlop in several ways, including higher rates of defaults, fewer financing transactions, and lower price tags on deals made resulting from declining property values.
But the U.S. economy still appears to be healthy. Walker & Dunlop’s business is doing better than ever before. Last year, the company reported its biggest jump in revenue, earnings, and total transaction volume since its initial public offering in 2011. Walker & Dunlop has increased its market share of the multifamily loan market from 2.8% seven years ago to 7.3% in 2017.
Walker & Dunlop’s goal is to increase revenue by roughly 40% to $1 billion by 2020. That might seem overly ambitious, but I think the company can achieve its objective. Investors will also be paid as they wait for Walker & Dunlop’s growth: The company recently initiated a quarterly dividend.
Top 10 Gold Stocks To Own For 2019: Microchip Technology Incorporated(MCHP)
This company is a huge Internet of Things benefactor. Microchip Technology Inc. (NASDAQ: MCHP) is a leading provider of microcontroller, mixed-signal, analog and flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide.
The company recently received a receipt of antitrust clearance in the United States for the proposed acquisition of Microsemi. The company now expects to complete the acquisition of the company in June of this year.
Microchip investors are paid a 1.71% dividend. Merrill Lynch has set its price target at $110. The consensus price objective was last seen at $111.56, and the stock ended last week at $85.68 a share.
Top 10 Gold Stocks To Own For 2019: Berkshire Hathaway Inc. (BRK-B)
I’ve said many times before that if I could only own one stock in my portfolio, Berkshire Hathaway would be it.
Berkshire is actually a conglomerate of more than 60 businesses, with massive operations in insurance (GEICO, General Re), railroads (BNSF), real estate (Berkshire Hathaway Home Service), consumer goods (Duracell), and more. The company also has a closely followed stock portfolio worth nearly $200 billion that includes large positions in Apple, Bank of America, Coca-Cola, American Express, and dozens of other stocks.
Berkshire’s business model is simple yet effective. Its businesses and stock investments generate capital, which can then be used to acquire additional businesses and to make more investments. And who is picking those investments? Legendary investors Warren Buffett, Charlie Munger, and Berkshire’s two other investment managers who will eventually take their place.
While Berkshire is an excellent stock to buy anytime, now could be an especially smart time to consider Berkshire. After ending 2017 with more than $116 million in cash, and Buffett and Munger visibly frustrated over the lack of attractive ways to deploy its capital, the company’s cash balance went down during the first quarter for the first time in a while. In short, it looks like Berkshire is starting to have some success with deploying its capital, so it could be a smart time to get in before Berkshire figures out how to put even more of its cash to work and boosts its profit potential by billions.