This is another chapter in the series of how to not wake up broke in your 80s.
One of the best ways to not end up broke is to align yourself with great companies and stay there. That means a long-term investment horizon. If you don’t already have a long-term investment outlook, get one.
The names to own aren’t brain surgery or front-page news by any means: GE (NYSE: GE), Lockheed Martin (NYSE: LMT), Coca-Cola (NYSE: KO), you know the drill.
They aren’t the fast-track headliners either, but over time, these have proven to be the best and most reliable payers on the Street and the best for an income-oriented, safe retirement portfolio.
Take Coke for example. A $40 investment in 1919 is worth over $5 million today.
But I hate comparisons like that. Virtually no one has owned a stock since 1919. But how about since1970? That’s a lot more realistic.
An $82 investment in Coke in 1970 is worth $12,000 today.
GE is another good story. Despite the huge hit the stock took in 2008 to both the stock price and the dividend, it has a total annual return for the past 20 years of 7.9%. That’s better than the broad market return.
And even when you consider the slaughter we saw in the stock in 2008 and 2009, GE’s dividend has grown from $0.22 in 1993 to $0.76 today. That’s $15,914 in dividends, twice what the broad index paid.
There are plenty of names like these to choose from, but because these companies are so popular, the challenging part of this kind of strategy is to not pay too much for them.
Learn to let the bargains come to you. Don’t chase the prices. Once these stocks are in our portfolio we will own them for a long, long time. So time is definitely on our side. But paying too much for them in a rush to get your money invested will make this a much tougher road to haul.
Shift to long-term thinking, align yourself with high quality companies, stay there and learn to wait for your price. It is how you don’t wake up broke in your 80s.