3 stocks retirees should absolutely love

Many retirees are investors for good reason: They can’t rely entirely on Social Security to fund their retirement. Investing wisely provides a means to retire comfortably.

Three Motley Fool contributors think they’ve found stocks to buy that retirees should absolutely love. All three offer juicy dividend yields. Here are their cases for AbbVie (ABBV -0.25%), Bristol Myers Squibb (BMY -0.28%)and Gilead Sciences (GILD -2.55%).

Everything pensioners need in a stock from A la Vie

Keith Speights (AbbVie): Reliable income (the more the merrier) and reasonable growth prospects. These are the top items on retirees’ stock-picking wish lists. AbbVie offers both.

The big drugmaker’s forward dividend yield is nearly 3.3%. It was even higher earlier this year, but AbbVie’s share price is up more than 20%. It’s not a bad problem.

Few companies beat AbbVie when it comes to the reliability of their dividends. It is a dividend king with 52 consecutive years of annual dividend increases (including when it was part of Abbott Labs). Over the past five years, the company has increased its dividend payout by nearly 45%.

The strong earnings that AbbVie has delivered year-to-date give you an indication of the company’s growth prospects. That performance might be surprising given that the drugmaker’s revenue and profits have fallen due to the patent expiration of Humira, its blockbuster autoimmune disease therapy.

However, AbbVie did a great job of planning for Humira’s loss of exclusivity. The company already has two worthy successors on the market that together should eclipse Humira’s peak sales in the next few years. AbbVie also invested in research and development and made several strategic acquisitions that improved its growth prospects.

This dividend stock is a good investment with low volatility

David Jagielski (Bristol Myers Squibb): If you’re retired, one stock you’ll probably love is Bristol Myers Squibb. The healthcare company has a tremendous track record of growth and acquisitions over the years, not to mention paying a solid dividend.

Although the stock has struggled this year, losing more than 7% of its value so far, it’s a fairly stable investment with a beta of less than 0.5.

The company has been challenged by exclusivity losses in several top drugs this decade, including Eliquis and Opdivo. But it has accumulated assets over the years to build its portfolio of new growth products.

In its most recent quarter, which ended June 30, revenue from the growth portfolio rose 18% to $5.6 billion. And by 2026, Bristol Myers expects its new products to generate at least $10 billion in sales.

There will always be some risk with biopharmaceutical companies because patents for new drugs don’t last forever. But with Bristol Myers, the business has already prepared for exclusivity losses by consolidating its drug list and improving its pipeline.

And it has paid dividends for more than 90 consecutive years, raising them annually for 15 consecutive years. And with a yield of nearly 5%, investors can collect more than three times what they would on average S&P 500 stock, which pays around 1.3%. The company’s earnings per share in the most recent period were $0.83, which is much higher than the $0.60 dividend it pays each quarter.

For retirees, Bristol Myers is a good and stable investment to buy and hold. While investors may be deterred by the uncertainty they face, it is not as risky as it seems. I think it can be a great source of recurring income for your portfolio.

A reliable dividend payer

Prosper Junior Bakiny (Gilead Sciences): Once investors reach retirement age, they typically stop looking for risky, high-growth stocks. Instead, they want stable, reliable companies that pay regular dividends. Gilead Sciences is an excellent choice in this regard.

The biotech’s drug portfolio includes products in oncology, virology and HIV, where it is a leader. Gilead owns the world’s best-selling HIV drug in Biktarvy. It was the fifth best-selling drug in the industry last year. The company should continue to move in the right direction and gain market share as it has usually done.

However, Gilead will not rely solely on its HIV portfolio. The company has made significant investments in oncology, where it hopes to become a leader. Its sales of oncology treatments have grown faster than the rest of its business in recent quarters, though they still represent a relatively small part of total sales. Biotechnology is working hard to develop new products.

Its pipeline has dozens of programs, with a particular focus on oncology, HIV and inflammatory diseases. Gilead’s ability to innovate, coupled with the fact that patients will not be inclined to stop taking their drugs even when the economy is down, makes it capable of delivering consistent financial results for a long time.

The biotech’s dividend record is also solid. Over the past five years, Gilead Sciences has increased its payout by 22%, while its forward yield currently exceeds 4.15%.

In my view, retirees — and income seekers of all kinds — can’t go wrong with this choice.