10 Dividend Stocks That Will Let You Retire (Update2)
BOSTON ( TheStreet) -- A cornerstone of any investment portfolio is low-volatility stocks, that is, those that don't react sharply to market swings and, as a result, have more reliable returns over time.
Those types of investments have proven to lose less in down markets or periods of faster inflation, helped by dividends.
"Over the past 50 years, the least-volatile stocks have performed about as well as the market, but with far less risk," Morningstar analyst Samuel Lee writes. "Low-volatility stocks have outperformed in most international stock markets studied, too."
They can be your best friends if you are risk-averse, only a few years away from retirement or in the early years of retirement and want to maintain stock-market exposure, so stuff some into your 401(k).
But investors should be cautioned that these stocks underperform in bull markets, as is evident in returns this year. The S&P 500's index is up about 8% for the year, but most of the top 25 stocks summarized below are showing losses.
Therefore, investors should buy these stocks and tuck them away for perhaps as long as a decade or through several market cycles to gain the most benefit. In that time, their hefty dividends also come into play and help offset their periodic sluggish performances.
We reviewed the stock holdings of the exchange traded fund PowerShares S&P 500 Low Volatility (SPLV) , which consists of the 100 stocks from the S&P 500 with the lowest volatility over the past 12 months.
What follows are the top 10 stocks in the PowerShares S&P 500 Low Volatility ETF by portfolio weighting, and following that, a list of the next 15 holdings of the fund, to give investors additional ideas for potential buys:
10. H.J. Heinz (HNZ)
Company profile: H.J. Heinz, with a $17 billion market value, is an international maker of packaged foods, including ketchup, condiments, sauces, frozen food, soups, beans, pasta meals, and infant nutrition items. International sales account for 60% of its revenue.
Heinz reported last Friday that in its fiscal third quarter just ended, sales grew 7% to $2.92 billion and earnings to 88 cents per share, up from 84 cents per share a year ago. The company also said it expects fiscal 2012 earnings of $3.32 to $3.34 per share from continuing operations, excluding special items.
Investor takeaway: Its shares are down 0.8% this year, but have a three-year annualized return of 21%. Over 10 years, its annual average return is 6%. The stock has a dividend yield of 3.58%.
S&P has it rated "strong buy" with a $60 price target, a 12% premium to the current price. Analysts give its shares seven "buy" ratings, three "buy/holds," nine "holds," one "weak hold," and one "sell," according to an S&P survey.