Baby Boomers should be looking to play things a bit more cautiously as stock valuations begin to climb across the board. Undoubtedly, if the “AI bubble” headlines have Boomers losing sleep, it’s worth the while to start rotating into some of the more defensive dividend payers out there.
There’s comfort involved with investing in a name that pays you every quarter (or month) in cash, regardless of what the share price ends up doing. And while pursuing higher yields via the likes of covered call ETFs can be a smart way to go for those who believe prospective market returns will be lower, I do think that sticking with the oversold higher-yielders can be a great way to land a magnificent dividend without capping one’s upside.
In this piece, we’ll look at three stocks that might be safer to “rotate” into for Baby Boomers who are retired (or are close to being) and seek less volatility with more yield than the S&P 500 can currently provide.
Pfizer
Pfizer (NYSE:PFE) is a blue-chip biopharmaceutical firm that’s been forgotten about by many investors who may have bailed on the name after COVID shot sales fell off a cliff. The stock goes for just 13.0 times trailing price-to-earnings (P/E), with a 7% dividend yield now that the initial wave of optimism surrounding the TrumpRX deal has faded away.
Though it’s really hard to tell how Pfizer’s fortunes will change, I do think the oncology pipeline is worth watching. Indeed, if some late-stage candidates graduate to become big revenue drivers, the high-yield dividend heavyweight might finally have what it takes to bottom out and bounce back.
Until then, there’s too much uncertainty involved with the name, as is the case with many biotechs seeking to reinvigorate growth after navigating a patent cliff. If you’re a fan of the promising candidates in the drug pipeline and are willing to be patient as you collect the hefty dividend payout, shares might be worth picking up at less than $25 per share. In short, there’s value and yield to be had in the name if you can handle the uncertainty. With a 0.46 beta, shares might be less moved if the S&P were to finally take a dive.
Verizon
Verizon (NYSE:VZ | VZ Price Prediction) is another hard-hit dividend stock (6.81% yield) that looks risky, but might actually be safer now that the price of admission is depressed. Shares trade at 9.4 times trailing P/E while boasting a 0.37 beta, making the name less likely to take an outsized hit on the big down days for stocks.
Though shares have fallen under pressure in recent quarters, sinking 6% in the past month alone, I think it’d be a mistake to dismiss shares on the way down as the firm readies for what it calls the “next phase” of growth. Indeed, the 5G expansion, new device upgrades, and the eventual 6G uprising remain longer-term tailwinds that could help fuel a multi-year comeback in the stock. Also, let’s not forget about Verizon’s satellite connectivity ambitions following a recent deal inked with AST SpaceMobile (NASDAQ:ASTS)
Until then, investors should brace for volatility as some of its more aggressive promotions nibble away at margins. Despite the potential margin-eroding effect of such promos, I do think that such strategic moves could help the telecom titan give its wireless subscriber growth a shot in the arm. Either way, expectations seem quite low right here, and that makes the name one of the more intriguing dividend value plays in the market.
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