When retirement approaches you do not want to have your investments in vehicles that crash like the stock and real estate markets did in 2008. But what are secure retirement investments in today’s world and what sort of returns can you expect. Phy.org discusses the current lack of secure investments and how it is hindering global growth.
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Unless you’ve been following the subject closely, you may not have heard of one of the biggest barriers slowing the revival of global economic growth over the last decade. That would be the “safety trap,” a problem arising from a lack of low-risk investments around the world.
To see the problem, recall that after the financial-sector crisis in 2007 and 2008, a large portion of investments people had considered safe-mortgage-backed securities come to mind-were suddenly understood to be risky. And yet, the ensuing flight to safe assets, such as U.S. debt, has come with its own cost. The increased demand for these safer investments keeps interest rates at low levels, to the point where central bankers cannot spur additional economic output by further lowering those rates. This is the “trap” part of the safety trap.
It turns out that the number of safe assets for investors has fallen by about a half in the last ten years. U.S. debt (treasury bills) were and still the safest of the safe but interest rates fall farther and farther as demand for U.S. and other government debt increases. It is certainly wise to put some of your retirement assets in U.S. treasuries in order to preserve capital but what about something that generates a little income along the way. After all people are living longer and longer so you don’t want to run out of money when you still have twenty or thirty years of life ahead of you!
How Safe a Bet is Coca Cola or Proctor & Gamble or Colgate Palmolive?
You can make more money with dividends from a strong dividend stock than from U.S treasuries these days. But how do you know that a company is a safe bet? Warren Buffet has been quoted as saying that he does not know what a tech stock will be worth in ten years but that he can easily guess what a Snickers bar will sell for. Add toothpaste, paint, glass, soft drinks and makers of batteries or heating and cooling controls to the “snickers” list. There are companies that have paid dividends for more than 100 years and will probably be paying dividends for a hundred more. Take a look at Dividend.com for their comments about 15 such stocks and their predictions as to which will or will not still be paying dividends a century from now.
As a dividend investor, you might have trained yourself to look for fantastic yields when placing your money. While 10% yields are attractive, they’re worthless if the company can’t sustain the payments.
These 15 companies have paid out dividends for at least 100 years-and are hoping to continue for a hundred more. Will any of these companies still be paying a dividend when we ring in the 22nd century?
The stocks that have paid dividends for more than 100 years and who the authors believe will still be doing so in the 22th century are these.
General Mills, GIS
Johnson Controls Inc., JCI
Church & Dwight Co., Inc., CHD
Stanley Black & Decker, Inc., SWK
Eli Lilly and Co, LLY
UGI Corp, UGI
Proctor & Gamble Co., PG
The Coca Cola Co, KO
Colgate Palmolive Company, CL
PPG Industries, Inc., PPG
The ones that have paid for more than 100 years and might not make the next century are these.
E I Du Pont De Nemours and Co, DD
Edison International, EIX
Exxon Mobile Corporation, XOM
Consolidated Edison, Inc., ED
Chubb Corp, CB