Retirees looking for dividend growth stocks at a reasonable price have ample reasons to look outside of America, especially with the S&P 500 skyrocketing to new all-time highs and, with that, a somewhat rich valuation. If you’re an investor who’s primarily invested in U.S. names, it can be a bit tricky to discover the world of international stocks out there. And while it’s important to “invest in what you know,” something Warren Buffett was an advocate for, I do think that wandering into uncharted waters could help you get a better bang for your buck, especially with various international names out there trading at valuations well below some of their closest U.S. comparables.
Indeed, a U.S. firm may deserve every bit of its relative premium. But if you’re not diversified internationally and were left in a bad spot back in April, when the S&P 500 plunged 19% while other global indices held their own, perhaps now is a good time to rotate into some high-quality international names while their price of admission is still modest. Here are a pair of names that I view as a perfect fit for retirees:
Nestle
Nestle (NSRGY) is a well-established Swiss-based food and beverage company that most Americans are already familiar with. The company has one of the deepest brand portfolios on the planet, with brands that your kitchen pantry may already be well stocked with.
From getting your morning fix (Nespresso and Nescafé) to treating your sweet tooth (Kit Kat, Smarties) and even feeding your infant (Gerber), Nestle’s legendary brands have been household staples for decades. And while there are comparable packaged-goods companies in the U.S. to go after, none of them, I think, offers as much brand strength for such a reasonable price of admission. At the time of writing, shares go for 18.4 times forward price-to-earnings (P/E) to go alongside a 3.71% dividend yield.
With the company running into quarterly earnings in a few weeks, one big-name HSBC analyst, Jeremy Fialko, thinks it’s time to buy ahead of the number. He views the firm as “well-positioned to navigate a weak consumer environment” because of its “strong portfolio of brands” and “exposure to defensive categories.” Nothing really too shocking here. Nestle’s a durable staple that may very well be in for relief after earnings as the stock attempts to climb back from its bearish rut. For retirees seeking a good mix of income and upside, perhaps it’s time to think about loading up on what could be the best consumer packaged goods play in all of Europe.
Novo Nordisk
Novo Nordisk (NYSE:NVO) is a Danish pharmaceutical firm that’s perhaps best known for kicking off the GLP-1 drug boom with such brands as Ozempic, Rybelsus, and Wegovy. The stock crashed nearly 60% before partially bouncing back. Today, shares are down just over 51% from their peak, opening up a potential window of opportunity for investors to get into the GLP-1 juggernaut on the cheap. The dividend yield has swollen to 2.4% and is actually a nice income and growth play rolled into one. Of course, there’s growing competition in the weight-loss drug space, and it’s unclear if Ozempic can stay close to the front of the pack.
In any case, Novo is hard at work on its next generation of obesity drugs. And with a mere 18.9 times trailing P/E multiple, I find it hard to ignore the name any longer, especially now that the stock is fresh off one of its worst sell-offs in years. I think the damage is overdone and would look to be a net buyer on the dip. For a retiree, though, I do think the name carries more risk than the likes of a Nestle. For growth-oriented retirees who wouldn’t mind a swollen yield, though, I wouldn’t sleep on the name while it’s down and out.
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