Some companies grow so large that they actually pay back some of their earnings to their investors (owners) over time. You may have heard of what is known as a stock dividend. This is a payment that some public companies make to their shareholders for their loyalty in holding the shares. These payments can be used to re-invest in more of the stock, or stockholders may choose to use those payments as a source of income. This is one of the reasons why they are ideal for retirees. We look at three dividend producing stocks that retirees should own today.
Safety Insurance Group
This company may be worthwhile for retirees simply because it actually costs less than the average S&P 500 stock as of the time of this writing. Looking at current numbers, the stock trades at roughly 17 times its earnings rate. This is known as the P/E ratio, and the ratio of 17 that this stock boasts is far better than the 22 P/E ratio of the average S&P stock.
Not only is the stock trading at a lower valuation than average, but it also has a dividend yield of 3.5 percent at current prices. That is a nice little piece of change to be paid just for holding the stock.
The millennial generation is coming! The largest generation in American history is coming of an age when they are seriously thinking about purchasing homes and getting on with the business of life that is expected of young adults. The homes that they buy will inevitably need a little help from the products that Home Depot specializes in.
It might be easy to purchase a lot of things online from outlets like Amazon these days, but it is difficult for most to part with their money on home improvement items without seeing and touching them firsthand. That is why Home Depot continues to thrive even in a competitive environment with online retailers.
We all think of a fizzy soft drink when we think of PepsiCo, but that is really the image of the company from years gone by. They now specialize in a number of other food and beverage related products that have helped them continue to expand their profitability.
The market for soft drinks in the United States has begun to contract some as consumers are more health-conscious and concerned about the harmful impact of plastic waste. However, the market for sodas is still very strong in other parts of the world. Besides that, PepsiCo has a number of other food offerings that are doing just fine. Popular brands like Frito-Lay are now securely under the PepsiCo umbrella.
The company currently offers a dividend yield of roughly 3 percent at current prices, so you are being paid a nice little bonus on your money just for holding the stock year after year. Considering this, it is quite obvious that PepsiCo is the kind of play that savvy investors should make.