There are certain things you should look for in stocks you buy for your retirement portfolio. For example, steady and consistent profitability must be a priority, as should the ability to make it through tough economic times relatively unscathed. With that in mind, here are two excellent stocks you can use to build retirement wealth.
The monthly dividend company
Net-lease retail real estate investment trust Realty Income Corporation (NYSE:O) is a stock that works great before and after retirement. With a fantastic track record that includes 16.9% annualized total returns since its 1994 IPO and average dividend growth of 4.7% per year, Realty Income can certainly help you build retirement wealth.
As you can see from the chart below, Realty Income has generated roughly five times the total return of the S&P 500. And with consistent monthly dividend payments (561 in a row), Realty Income can provide a steady income stream after you retire.
Realty Income’s primary property type is freestanding net-lease retail. Think of retail companies that tend to operate as the only tenants in their building — Walgreens, Dollar General, and Wal-Mart are some good examples that are among Realty Income’s top tenants. No tenant represents more than 7% of the company’s rental revenue, and the properties are spread out across 49 states and Puerto Rico, reducing location-specific risks.
While many retailers are struggling, Realty Income’s tenants aren’t. Many are immune to e-commerce competition, and others are recession-resistant or even tend to do better in tough times. These tenants are also on long-term “net” leases, which means that they are responsible for property taxes, building maintenance, and insurance expenses.
In a nutshell, Realty Income just needs to put a tenant in place and enjoy years of consistent, predictably growing income, which is then passed along to shareholders. And with occupancy of 98.3%, which has never dropped below 96%, the company has been quite successful in doing just that.
You may have heard the phrase “slow and steady wins the race,” and Realty Income is a great example of this concept…