What do Extra Space Storage (NYSE:EXR), General Electric (NYSE:GE), and Lowe’s (NYSE:LOW) all share in common? They’re all top-notch stocks that retirees could add to their portfolios right now for generous returns on their investment.
According to three top Motley Fool contributors, each of these companies is offering a discount to investors, but has unique catalysts that could help their share prices climb and their dividends grow. Read on to learn more.
A REIT built for retirement
Travis Hoium (Extra Space Storage): Senior citizens who are staying in the stock market rather than bonds may want to look for companies that can generate consistent cash flow to pay dividends. Extra Space Storage is both a great cash flow company that pays a regular dividend and an tax-efficient investment because it’s a real estate investment trust (REIT).
Extra Space Storage is simply a storage company that builds structures that customers rent a section of for a monthly fee. It’s really as simple as that. And you can see below that the company has shown tremendous growth since the recession, and the dividend has risen sharply as a result.
As a REIT, the company has to pay most of its cash flow as a dividend, avoiding paying corporate taxes as a result. And while a recession or another driver of declining demand could lead to a drop in results (and the dividend), the company has its real estate assets to fall back on in a worst-case scenario. That kind of tangible real estate underlying an investment is a great asset for senior citizens, and the 4% dividend yield is a nice payout annually as well.
A new look for an old company
Tyler Crowe (General Electric): Shares of General Electric haven’t been lighting the world on fire lately. Over the past three years, the company’s stock has only gained a paltry 6% while the S&P 500 has gained 26% over the same time frame. Some of that underperformance can be attributed to headwinds in its oil and gas division, but at the same time, the company is in the middle of a major transformation that will set the stage for what could be decades.
CEO Jeff Immelt has his sights on transforming General Electric from a diversified conglomerate into a focused industrial manufacturer specializing in remote sensing and big data analytics. The combination of the two will not only improve manufacturing and productivity for General Electric but will also provide customers with new unique services like operation optimization and predictive maintenance.
One example management gave in its December outlook presentation was the oil and gas business. It estimates that after the GE/Baker Hughes merger is finalized, the combined company has an opportunity to improve oil and gas productivity by $200 billion by 2020. For GE, getting customers on board with this product and…