In this article, we will study 2 US dividend stocks for retirement which should outperform the US market over the long term and their dividend pay-outs should help you retire in a respectable manner. Retirement is considered as a big problem in America and a recent survey suggests that only ~56% of people believe that they can retire in a comfortable manner and enjoy the life they need in their golden years. One way your financial position can be improved in long run is by generating dividend income. Investors can consider investing in strong businesses which have a track record of paying dividends. Apart from this, investors should spot stocks can increase their dividends in the years ahead.
As we know that dividend means distribution of the company’s earnings to the shareholders. This amount is determined by the company’s Board of Directors. Therefore, it is of utmost importance to ensure that business is profitable and that it has capacity to sustain its profitability position. Apart from this, investors should make sure that business is supported by strong management team. While some investors can be interested in growth stocks, these 2 US dividend stocks for retirement are suitable for investors who have lower risk appetite. Since these US dividend stocks for retirement have strong businesses and track record, they can sustain and tackle short-term challenges.
1. UnitedHealth Group Incorporated
The company has been categorised as one of the largest private health insurers, offering medical benefits to 50 million members globally.
It has released results for 2Q23, with revenues coming at $92.9 billion, exhibiting 16% year-over-year growth. The company’s earnings from operations saw an increase of 13% and cash flows from operations were $11.0 billion. Growth in 2Q was balanced throughout its businesses. Given its 1H performance and durable growth and operating expectations, it strengthened its range of full-year net earnings outlook to $23.45 – $23.75 per share and adjusted net earnings to $24.70 to $25.00 per share.
In 2Q23, its earnings from operations came at $8.1 billion, exhibiting 13% growth, with strong contributions from Optum and UnitedHealthcare. The company has continued its momentum of making investments to support growth. The company’s 2Q23 medical care ratio was 83.2% in comparison to 81.5% last year. This was due to previously noted outpatient care activity, mainly among seniors, and business mix.
Cash flows from operations for 2Q was $11.0 billion or 2-times net income and $10.4 billion or 1.8x net income adjusted for CMS payment timing. UnitedHealth Group Incorporated returned $4.8 billion to shareholders in 2Q in the form of dividends and share repurchases.
Optum 2Q revenues saw a growth of 25% to $56.3 billion and operating earnings went up by 13% to $3.7 billion. Operating margin was 6.6% in comparison to 7.3% in the previous year, exhibiting investments in services offered to patients and customers to help growth.
Axiom Financial Strategies LLC purchased fresh stake in UnitedHealth Group during 1Q worth ~$210,000. McGowan Group Asset Management Inc. increased its stake in the company by 8.9% in the first quarter. McGowan Group Asset Management Inc. now owns 744 shares of the company worth $379,000 post acquiring additional 61 shares during the previous quarter.
The company’s CEO Andrew Witty sold 4,000 shares of the company’s stock in a transaction which took place on July 19th. These shares were sold at average price of $506.19, for the total transaction of $2,024,760. Post this completion of sale, the CEO now owns 78,573 shares of the company’s stock worth ~$39,772,866.87.
Sanford C. Bernstein upgraded the company from “Market perform” rating to an “Outperform” rating. The firm has upped its price objective for the stock from $595.00 to $603.00 in a report dated July 18th.
2. Walmart Inc.
Walmart Inc. is the second stock in our list of “best US dividend stocks for retirement”
The company has been categorised as America’s largest retailer by sales, and it operates more than 10,500 stores under 46 banners at the end of fiscal 2022. The company sells variety of general merchandise and grocery items.
In 2Q, the company saw consolidated revenue of $161.6 billion, exhibiting a rise of 5.7%, or 5.4% in constant currency. Its consolidated gross margin rate was up 50 basis points on lapping elevated markdowns and supply chain costs. This was partially offset by pressures in grocery and health & wellness. It saw strength in its omnichannel model throughout segments with strong comp sales globally, including 6.4% for Walmart U.S. It has raised its guidance for FY24 to exhibit 2Q upside, confidence in continued business momentum and customer response to the company’s value proposition.
The company ended 2Q with cash and cash equivalents of $13.9 billion and total debt of $50.4 billion. Operating cash flow of Walmart Inc. came in at $18.2 billion, exhibiting a rise of $9.0 billion. Free cash flow of the company was $9.0 billion, an increase of $7.2 billion.
For 3Q, the company projects consolidated net sales to see an increase of ~3% in constant currency in comparison to the prior year. Consolidated operating income of the company is expected to rise ~1% in 3Q24. For FY24, the company expects consolidated net sales to increase ~4.0% to 4.5% on the year-over-year basis in constant currency terms. Adjusted EPS for FY24 is expected $to be 6.36 to $6.46, including expected $0.05 impact from LIFO.
Walmart has had its price target increased by KeyCorp from $175.00 to $177.00 in the recent research report. The brokerage house gave an “Overweight” rating on the stock.
Analysts at Robert W. Baird initiated a coverage on Walmart and increased their price objective on the company’s shares from $165.00 to $180.00, giving the stock an “Outperform” rating in a research report dated August 17th. Oppenheimer upped its price objective on the shares from $165.00 to $175.00. The firm gave an “Outperform” rating in a research note dated August 8th.
The company’s EVP John D. Rainey sold 1,000 shares of the company’s stock in a transaction dated August 1st. These shares were sold at an average price of $159.48 and the total transaction value came in at $159,480.00. After the completion of the transaction, the executive vice president now owns 170,735 shares worth $27,228,817.80.