I am trying to build a retirement portfolio for my father who would be retiring in a couple of months having no debt, living in own house and also having two years worth of expenses as emergency fund.
The goal of this portfolio would be to invest in stable, companies which can’t be easily disrupted and having a relatively higher dividend payout. My target is to generate around 3-4% dividend which can cover annual expenses and would possibly grow to cover inflation. All in all, these stocks are to be held as long as they are paying out decent dividend which they are increasing year after year.
These are some stocks which I have shortlisted:
- Bajaj Auto/Hero Moto Corp: Both of them are having huge amounts of cash on their balance sheet. Although two wheelers are considered cyclical, they are not as cyclical as they look. With a dividend yield around 3-4% at CMP, these look attractive bets which can increase their dividends going forward.
- Infosys/TCS: These also have huge cash on their books along with a highly stable business model. Dividend yield around 2-3% at CMP. With a cash generating business, these continuously raised their dividends consistently.
- ITC: Powerful cash generating cigarette business. With the new dividend policy, the current dividend yield stands at more than 5%. This evergreen business will continue to throw cash and additional profitability from FMCG business is a bonus.
- Colgate Palmolive India: Strong brand with around 55% market share, this is another stable business with dividend yield of 2-3%. Although it might not grow much, but a stable 8-10% growth is fine.
- Marico: Market leader in hair and cooking oil. Along with this, the company is trying to invest in new venture which can drive further growth. Dividend yield around 2-3%
- Power Grid: Virtual monopoly business. Continuous revenue from their grids. Very unlikely that a private player will enter, due to very high investments. Dividend yield is more than 5%.
- Mahanagar Gas: Another utility business. A monopoly in the areas which it caters to. Dividend yield around 3-4%
Inputs from fellow boarders would be appreciated.