If your aim as an investor is to build a solid income stream for your golden years, you should be looking for stocks to hold over the long run, with a focus on their income-generating capabilities.
One way to achieve this goal is to buy dividend-growth stocks with a history of raising their payouts each year. Such companies usually run mature businesses that could provide stability and growth for your portfolio.
Keeping these benefits in mind, we've picked the following two stocks which could offer both growth and regular income for any portfolio.
1. Pfizer
The global pharma giant, Pfizer (NYSE:PFE), is in a great position to build on its vaccine success and create a permanent revenue stream from its vaccines and any potential boosters, all of which would help fuel growth in its dividend.
New York City-based Pfizer currently pays $0.39 a share quarterly dividend. That's grown over 6% each year during the past five years. But that escalation rate could improve drastically if the company’s COVID-19 vaccine becomes a regular feature with booster doses and future additional types of inoculations.
Company officials, led by Chief Executive Albert Bourla, have said that Pfizer’s mRNA vaccine looks capable of taking on new COVID-19 variants as well. Thus the revenue generated by inoculating global populations against COVID-19 is likely to linger well after the pandemic subsides.
Pfizer now expects its COVID-19 vaccine to bring in $33.5 billion in revenue this year, as several countries authorize booster shots and its vaccine proves safe for children under 12, according to their initial findings.
The drug maker had previously projected vaccine sales for the year of $26 billion. The upward revision is a sign demand for the shots, which Pfizer sells with German partner BioNTech (NASDAQ:BNTX), is surging as countries battle new outbreaks fueled by the Delta virus variant.
The two companies, which have delivered 1 billion doses of the two-shot regimen, had contracts for 2.1 billion doses through mid-July, and will produce 3 billion shots by the end of the year.
If Pfizer’s sales projections are met, the vaccine would climb into the highest rank of blockbuster medicines, outpacing bellwethers such as AbbVie's (NYSE:ABBV) Humira immunosuppressive therapy and Merck's (NYSE:MRK) cancer fighter Keytruda, according to Bloomberg estimates.
Shares of Pfizer have gained almost 17% this year, yielding 3.55% on an annual basis.
2. Lowe’s
Home-improvement giant, Lowe’s (NYSE:LOW) is another solid bet to consider for income-seeking investors. The No. 2 home retailer has outperformed the broader market this year, benefiting from the stay-at-home environment that prompted many Americans to put more money into their homes.
Analysts expect this trend to continue as more people move out of big cities and head to the less-crowded suburbs as work from home becomes more of a norm after the pandemic.
This de-urbanization, along with lingering low interest rates and the massive savings that Americans have accumulated during the pandemic point to continued gains for home-improvement stocks.
In August, Lowe’s reported better-than-expected earnings and raised its sales forecast, as it garnered more business from home contractors. The North Carolina-based retailer said it anticipates $92 billion in revenue this year, up from a prior forecast of $86 billion.
With sales booming, Lowe’s has also rewarded investors with a monster dividend hike this year. It raised its quarterly payout by 33% in May to $0.80 a share. With an annual dividend yield of 1.52%, Lowe’s remains in a strong position to further boost its payout, helped by continued business momentum, its growth trajectory, and strong cash flow generation.
Bottom Line
Buying dividend-growth stocks should be an important component of your investing strategy for retirement. Steadily increasing pay-outs will help expand wealth, while providing a hedge against economic uncertainty.