Retirees should try to ensure that their stock portfolio can outperform inflation. That means picking companies that can afford to make their dividend payments from their free cash flow (FCF). In addition, companies with high free cash flow margins tend to have good upside potential. This article will discuss five of the best retirement stocks that have these qualities and can provide income to investors in their golden years.
First, a word of caution: Retirees should avoid investing in stocks with high dividend yields that have had (and will likely continue to have) lackluster performance. This could easily happen if the company has difficulty generating the necessary free cash flow to not only cover the dividend but also provide for growth. As a result, a retiree's portfolio will struggle to outperform inflation.
