20 Blue-Chip Bargains For A 7% Yielding Retirement Portfolio

seekingalpha02-24

It's essential to recognize your goals and not get sucked into market manias.For high-yield investors looking to retire comfortably, stock price is vanity, cash flow is sanity, and dividends are ...

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Or what if you don't want continuous growth but want to spend down your income but are uncomfortable with the speculative nature of spending capital gains as the 60/40s 4% rule requires?Being able to live off low-risk dividends from the world's most dependable companies is my definition of financial freedom. If you agree, then this is the article for you. How To Build A Max Yield Retirement Let me show you how I use the Zen Research Terminal to find all investing ideas and recommendations and manage my family's charity hedge fund.           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Even with the market at record highs and some stocks in crazy bubbles, blue-chip bargains perfect for your needs are always available if you know where to look.courtneyk In recent weeks, I've shown how to build prudently risk-managed high-yield income growth portfolios designed for maximum long-term income by combining the power of high-yield blue-chips with hyper-growth companies.  My Favorite 20 Blue-Chip Bargains For 2024 10 Blue-Chip Bargains Yielding 7.7% And So Much More  Combining yield plus growth is important because it maximizes long-term returns. Ritholtz Wealth management But long-term total returns also closely track income growth if you're reinvesting dividends. That's why total returns are still important for anyone with a time horizon of more than 10 or 15 years. Because over the long term, the power of compounding means a potentially life-changing difference in standard of living. But what if you're older and don't have 10 or 15 years? Say you're 75 and expect to live 5 or 10 years. Or what if you don't want continuous growth but want to spend down your income but are uncomfortable with the speculative nature of spending capital gains as the 60/40s 4% rule requires? What if you want to buy something safe, maximize immediate income, live off very low-risk dividends, and be 100% untouched by the volatility of markets? Being able to live off low-risk dividends from the world's most dependable companies is my definition of financial freedom. If you agree, then this is the article for you. How To Build A Max Yield Retirement Let me show you how I use the Zen Research Terminal to find all investing ideas and recommendations and manage my family's charity hedge fund.           Screening Criteria Companies Remaining % Of Master List   1 BHS Rating \"reasonable buy, good buy, strong buy, very strong buy, ultra value buy\" 313 61.98%   2 Non-Speculative 271 53.66%   3 Blue-Chip Quality Or Better(10+ Quality) 267 52.87%   4 Credit Rating Investment Grade (BBB- or better) 216 42.77%   5 Sort by Yield   0.00%   6 Top 20 Yielding Blue-Chips 20 3.96%   Total Time 1 minute       Click to enlarge The bottom line is that these 20 blue-chip bargains represent eight out of 11 sectors and are the highest, very low-risk group of non-speculative, investment-grade stocks that can help you sleep well at night. Why? These are some of the world's most dependable dividend stocks, with strong balance sheets and track records of raising dividends even in the two worst economic catastrophes of the last 75 years. They yield 6.8% on average, with a 1% to 2% risk of a dividend cut even in another Great Recession or Pandemic level recession and just a 0.5% risk of a cut in a normal economy. Based on our safety and quality model that factors in more than 1,000 metrics, including payout ratios, dividend track record, debt ratios, accounting fraud risk, long and short-term bankruptcy risk, long-term risk management ratings from S&P, and credit ratings Their average credit rating is BBB+ stable with a 5.63% 30-year bankruptcy risk. Their long-term risk management percentile, per S&P, is 74th, meaning long-term risk management based on over 1,000 metrics, in the top 26% of all companies worldwide. They're 25% undervalued compared to the S&P's 3% premium. They are growing at 4% to 5%, according to the median FactSet consensus, which is also their long-term dividend growth forecast, which is much higher than inflation. Long-term 11% to 12% long term returns are expected, and for anyone reinvesting the dividends instead of spending them (as retirees do), that's also the long-term income growth forecast. Bottom line? These 20 high-yield blue-chip bargains are expected to beat the market long term or at least keep up with it, minimizing FOMO while generating the lowest risk maximum yield from non-speculative blue-chips. Historical Returns Since 1999 While historical returns don't predict future returns, they can provide context about whether analysts' forecasts are reasonable about the future. After all, blue chips are stable companies, and let's take a look at the returns and income growth of these 20 high-yield blue chips over the last quarter century. A period of time in which 91% of the total return was from fundamentals, not luck Portfolio Visualizer Premium Beating a 60/40 and even the S&P by a wide margin and with lower volatility than the market, even with a high REIT concentration, which suffered during the Great Recession. Portfolio Visualizer Premium 11% to 12% long-term returns are consistent with the 12% to 14% rolling returns these companies delivered in the past quarter century. 12% Annual Income Growth For 25 Years Portfolio Visualizer Premium Remember how total returns forecast long-term income growth? Well, here it is, with these 20 blue chips. Note that the 2009 decline in income was from MO's spin-off of three companies, not dividend cuts. So, What are these companies? Dividend Kings Zen Research Terminal Dividend Kings Zen Research Terminal And while the goal of this portfolio and these 20 companies is maximum low-risk income today, that doesn't mean their combination of quality, valuation, yield, and growth doesn't offer highly attractive total return potential in the short term. Consensus Total Return Potential Through 2025  If and only if each company grows as analysts expect And returns to historical market-determined fair value This is what you will make.  British American Tobacco (BTI) FAST Graphs, FactSet Altria (MO) FAST Graphs, FactSet MPLX (MPLX) - K1 Tax Form FAST Graphs, FactSet Enbridge (ENB) FAST Graphs, FactSet Enterprise Products Partners (EPD) - K1 Tax Form FAST Graphs, FactSet TC Energy (TRP) FAST Graphs, FactSet Scotiabank (BNS) FAST Graphs, FactSet Verizon (VZ) FAST Graphs, FactSet Main Street Capital (MAIN) FAST Graphs, FactSet Whirlpool (WHR) FAST Graphs, FactSet Pfizer (PFE) FAST Graphs, FactSet Keyera (OTCPK:KEYUF) FAST Graphs, FactSet Four Corners Properties (FCPT) FAST Graphs, FactSet Realty Income (O) FAST Graphs, FactSet Brookfield Renewable Corp (BEPC) FAST Graphs, FactSet Philip Morris International (PM) FAST Graphs, FactSet Canadian Imperial Bank of Commerce (CM) FAST Graphs, FactSet VICI Properties (VICI) FAST Graphs, FactSet NNN REIT (NNN) FAST Graphs, FactSet And now compare that to the S&P 500. 2-Year Total Return Potential Summary   51% average total return consensus through 2025 vs 10% S&P  23% annualized total return potential vs 5% S&P  These 20 high-yield blue chips literally have Buffett-like return potential over the next two years, according to the FactSet consensus. FAST Graphs, FactSet Risks to Consider The most important thing to remember about investing is that it has always been, and always will be, a game of probabilities. Many people think of Wall Street like a casino, and it is. In the short term, anything can happen. Can someone win 20 hands of blackjack in a row? Sure. But long term, the house always wins. And the same is true of investing. Risk management, valuation, asset allocation, and portfolio construction for your goals are what drive 97% of investing outcomes over 30+ years.       Time Frame (Years) Total Returns Explained By Fundamentals/Valuations   1 Day 0.02%   1 month 0.33%   3 month 1.0%   6 months 2.0%   1 5%   2 10%   3 15%   4 28%   5 36%   6 47%   7 58%   8 68%   9 79%   10+ 90%   20+ 91%   30+ 97%   Click to enlarge (Source: Dividend Kings S&P Valuation Tool, JPMorgan, Fidelity, Bank of America, Princeton, RIA) In any given year, sentiment, momentum, and luck dominate 95% of the stock market's returns. In other words, in the short term, luck is 20X more important than fundamentals. But in the long-term? Fundamentals are 33X as powerful as luck, and that's why 100% of my recommendations and investments are based on the best available facts, courtesy of FactSet, Morningstar, and various other reliable data sources. But guess what? According to John Templeton and Howard Marks, even if 100% of the data at any given time says a company is a \"sure thing,\" you can only be 80% confident in that investment. That's because, over time, fundamentals will shift because the only constant in business is change. Brent Beshore Consider Walgreens (WBA), which was on track to deliver for dividend investors in 2026 with a 50-year dividend growth streak. It recently slashed its dividend, and Leggett & Platt (LEG), a 51-year streak dividend payor, has seen its dividend safety score plunge to 19%.  Two years ago 0.5% risk of a dividend cut now 16% risk (and 64% in a severe recession)  Or how about CenturyLink (LUMN), a former aristocrat that cut its dividend twice before suspending it entirely and has incinerated investor wealth at an impressive rate for years? YCharts Or how about former aristocrats GE, AT&T, or even K-Mart and Winn-Dixie? K-Mart and Winn-Dixie are former aristocrats that went bankrupt. In fact, K-Mart holds the infamy of being the only aristocrat ever to go bankrupt twice. Went bankrupt, bought by Sears, which then went bankrupt The point is that fundamentals are constantly changing, and even \"I'll die on this hill\" confidence about any given stock means \"80% confidence based on the best available data. And even if fundamentals don't weaken over time, let's not forget that sleeping well at night has nothing to do with volatility. Portfolio Visualizer Premium And keep in mind that this portfolio will be volatile over time. The goal of this portfolio is simple - low risk, growing income in all economic and market conditions. That's what it's designed to do. Is it designed to go up in a bear market? No. It has no hedges; it was not built looking at anything other than max low-risk yield. Full stop, nothing else. Sleeping well at night during retirement is important because your standard of living is 100% dependent on the fundamentals of the companies, not in any way on what their stocks do. But if you can't stomach a 15% decline in any given year? Well, then, you shouldn't own a portfolio like this. There are no stock alternatives to bonds. If you need bonds to minimize volatility, you need to own bonds. JPMorgan And finally, let's not forget that this portfolio isn't balanced for yield and growth. It cares about maximizing low-risk income today and growing that income faster than inflation in the future. NVDA could triple next year, and this portfolio won't care. It's playing a completely different game. YCharts Fear of missing out, or FOMO, aka \"market envy,\" is a real risk that many investors get sucked into. YCharts How would you like to own value stocks that fell 50% during the last years of the tech bubble? How would you feel watching the Nasdaq more than double and some stocks like Cisco (CSCO) quadruple while you owned something like Berkshire that was cut in half? YCharts Realty Income is low risk with a 10% yield, and EPD as high as 13%. But do you think investors were excited to buy them? Lock in low-risk income that is the stuff of rich retirement dreams? Nope. Had Seeking Alpha existed in 2000, the comments would have been full of \"this crap is down in the greatest rally of all time! To heck with value. Long live tech forever!\" Wide Moat Research The Nasdaq then suffered a loss for 18 years and the S&P a loss for 13 years, while value stocks delivered a decade of Buffett-like returns and 20 years of market-smashing returns. This is why investing discipline is so important. Investing is like making love. Easy to do, but takes a lifetime to master.\" - Paraphrase of Family guy If you truly have the discipline to follow an investing plan, then the world's best companies will work hard for you so you won't have to one day. If you let your emotions run away with you, then even God's own investing plan won't do you any good. Bottom Line: These 20 Blue-Chip Bargains Create A 7% Yielding Retirement Dream Portfolio I don't give personalized investment advice. I teach fundamental investing, the kind that made the greatest investors in history legends, and that's 97% likely to help anyone who follows these time-tested and battle-proven tenants a success in whatever their dreams are. I don't care about the market's daily gyrations. I don't try to time anything because consistently timing the market is impossible. Since fundamentals are 33X as important as luck in the long term, I focus purely on the fundamentals. The short-term noise gets washed out when you focus on safety and quality first, and prudent valuation and sound risk management. Ultimately, we're not just clicking buttons on a computer or trading tickers on a screen. This isn't about moving money around and earning a quick buck. These are real stakes in real companies, some of the world's best-run and most dependable income providers. Companies with millions of employees are run by some of the brightest and most skilled risk managers on earth. That's the glory and genius of the stock market. The ability for anyone to put their savings to work so one day they won't have to. To harness the brilliance of the world's best asset allocators on their behalf. And that's why these are the 20 best non-speculative blue chips for anyone seeking the maximum very low-risk yield on a retirement portfolio right now.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.25.1","shortVersion":"4.25.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2413774779"}