3 Stocks for Retirees to Grow Their Nest Eggs

A big worry for retirees isn’t necessarily the size of their nest eggs, but whether they’ll keep up with inflation. While conventional wisdom suggests pulling money out of stocks and putting it into bonds once you’re retired, that may not prevent erosion of principal.

One great strategy to keep your nest egg growing in your golden years is to invest in top dividend stocks that also have a growth component. We asked three of our Motley Fool investors to recommend stocks in this “sweet spot” for retirees. They picked Nike (NYSE:NKE), XPO Logistics (NYSE:XPO), and Waste Management (NYSE:WM).

A proven leader

Jeremy Bowman (Nike): Retirees seeking growth should look for two things from their investments: a growing dividend and a growing stock price. Nike, the global leader in sports footwear and apparel, is in a position to supply both.

Nike has reigned supreme over the sports world for more than a generation, since the ascendance of Michael Jordan in the 1980s, and the company has consistently delivered for investors. It has a number of competitive advantages including its brand name, and sponsorships with icons like Lebron James, Cristiano Ronaldo, and Serena Williams. It has few rivals in the sportswear arena, and while it has lost ground to Adidas in recent quarters, Under Armour is faltering, eliminating what many thought would be the company’s biggest threat.

The Swoosh is in the middle of a transition as it reacts to an upheaval in traditional retail channels at home, and it’s shifting to a new strategy called the Consumer Direct Offense; this promises to double speed, innovation, and distribution, and the early results have been promising. Nike expects to return to growth in North America, its biggest market, later this year, and it continues to put up strong numbers abroad.

As a dividend payer, the company offers a modest yield of 1.2%, but it has raised its dividend payout every year since it initiated it in 2004, and it’s increased it by 10% or more annually since the Great Recession. Nike has a modest payout ratio of 34.6%, giving the company plenty of room to continue raising its dividend, and it will likely be a Dividend Aristocrat in another decade.

For retirees, Nike offers the security, the income, and the brand strength to help grow their nest eggs over the coming years.

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