As the golden years draw near, retirement portfolios anchored by bonds demand a fresh perspective. The tides of financial fortune are shifting, leaving a longer life expectancy, declining investment values, and a hunger for income growth in their wake. Traditional retirement planning, once a sturdy vessel, now appears unsteady against the tempest of modern financial uncertainty. In this new era, investors are turning to equities – staking their hopes on stocks that can outperform bonds.
However, the quest for income cannot come at the cost of financial security. Capital preservation remains a top priority for retirees who seek to unlock the wealth of their hard-earned savings.
While the allure of bonds is far from dim, certain stocks are poised to profit just as handsomely. Among them stand three mighty titans, each offering high dividends and stability. These stalwarts are worth a closer look, especially in the face of market corrections.
Diamondback Energy: A Glistening Prospect (FANG)
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Diamondback Energy (FANG) shines with a low price-earnings ratio that mirrors the energy industry’s struggle with waning oil prices. While modest improvements have been made, Diamondback Energy’s valuation still languishes behind many of its Nasdaq 100 counterparts. Analysts, however, speak with a single voice, with a consensus target price of $181 and an endorsement of an overweight or buy status for the stock.
The future appears even brighter for FANG stock, with a possible surge toward the upper end of analysts’ estimated price range at $240. As the company continues to flourish and extend its growth to shareholders through dividends, the demand for FANG stock is expected to mount over time. Positive Q3 production results, coupled with anticipated Q4 growth figures, further bolster the stock’s prospects for the medium term.
The recently inked merger between Diamondback Energy and Endeavor Energy Resources – culminating in the largest producer in the Permian Basin – has laid the groundwork for transformation and long-term success. This seismic move has reverberated throughout the industry, leaving even industry giants like Shell, Exxon, and Pioneer turning their gaze towards Diamondback.
Crown Castle: Ruling the Kingdom of Connectivity (CCI)
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With the curtain raised on 5G and a burgeoning mobile data demand, carriers are funneling hefty investments into expanding their networks. Crown Castle (CCI) stands tall with a vast web of fiber and cell towers, strategically positioned to capitalize on the long-term secular growth trends driving its business.
Continuing to bolster its investments in fiber and small-cell technology, Crown Castle is eyeing the addition of 16,000 new nodes by 2024, refining its 5G strategy while maintaining a robust balance sheet and ample liquidity.
Exiting Q4 2023 with $105 million in cash and equivalents, a net debt to last quarter’s EBITDA standing at 5.3 times, and an average term to maturity of eight years, Crown Castle shoulders investment-grade credit ratings from S&P, Fitch, and Moody’s. This financial fortitude bodes well for the company, especially in its highly capital-intensive line of business, ensuring a stable dividend trajectory for the days ahead.
3M: Stocking Up on Solid Income (MMM)
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3M (MMM) stands tall with its illustrious value and a 6.5% dividend yield, despite concerns surrounding the company’s slowing growth. Spanning a wide array of industries, 3M continues to command unwavering demand, ensuring long-term investors bask in the glow of its generous dividends, even during periods of stagnation in MMM stock.
Amidst the challenges, 3M’s operational performance in 2023 shone brightly, with a robust 11% uptick in adjusted earnings per share and cash flow surpassing the $6.3 billion threshold. Slashing its net debt by $2 billion (17%) and returning $3.3 billion to shareholders through dividends, the company’s imminent healthcare business spin-off is poised to fortify its balance sheet. With steadfast cash flow, 3M stands tall against adversities, promising a beacon of consistent dividends and their growth over time.
Now trading around $93 per share, not far from a 52-week low, MMM stock beckons to those with an eye for sustained dividends and their growth over time, cementing its status as a compelling buy.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
