Therefore, I think an excellent strategy for investors looking for quality retirement stocks is to look for these countries — some of which include India, China, Indonesia, Turkey, and Brazil — and find companies that earn strong and steady cash flows from these populations. Telecommunication companies, utilities, consumer product companies, and even some retailers are ideal choices. Find those that have depressed share prices but which are still generating strong cash flow figures, and provided there aren’t any geopolitical or regulatory red flags, you have a large selection of excellent investments for the next couple of decades.
2. Avoid “story” stocks
We all know that there is a lot of money to be made in small drug companies that are trying to cure cancer or technology companies that are going to change the world through something like additive manufacturing. But companies such as Peregrine Pharmaceuticals (NASDAQ:PPHM) or 3D Systems (NYSE:DDD) are not good fits for your retirement portfolio. The value here comes from innovations that haven’t been made yet and that nobody understands. Therefore you may want to make these sorts of investments, but you have to keep them separate from your retirement portfolio.
3. Buy dividend growth, not dividend income
One of the most common mistakes people make in their retirement accounts is buying companies that are already paying large dividends. These may be quality companies, but they are also taking capital that they could be investing into their businesses and paying it out to shareholders. As a future retiree, you want to buy shares in companies that are growing their dividends. Some companies that pay small dividends but which are growing them rapidly include: