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Buying stocks for a retirement portfolio has its challenges. On the other hand, you want a decent level of income. On the other hand, you want a low level of risk (most high yield dividend stocks are very risky).
The good news is that there are many options in this game London Stock Exchange which are low on the risk spectrum but also offer attractive dividend yields. Here are two that you can consider buying today.
Stock up for a good night’s sleep
First, we have it National Grid (LSE: NG.), an electricity and gas company operating in the UK and US.
Utility stocks are often seen as ‘defensive’ funds. That’s because demand for electricity and gas tends to be stable throughout the economic cycle. They can therefore be a good fit for retirement portfolios. With this type of stock, investors don’t have to worry about income suddenly falling off a cliff.
As for the earnings potential here, the deal’s profit forecast for the year ending 31 March 2025 is 46.8p per share. At today’s share price, that translates into a yield of about 4.5%. That’s higher than most savings accounts currently offer. Today, interest rates on savings accounts are falling because interest rates are falling.
It is worth noting that the National Grid plans to spend a lot of money on renewable energy infrastructure in the coming years. This construction may have a negative impact on its profits and dividends. So as always, there is no guarantee that a stock will be a good long-term investment.
I think the stock is worth a look at its current price and value though. Currently, the forward price-to-earnings (P/E) ratio here is 14.6. That’s not a bargain, but I think it’s a reasonable estimate.
Profits here are growing fast
Another stock I want to highlight is Coca Cola HBC (LSE: CCH), a major bottling partner for energy soft drinks Coca Cola.
I am a big fan of this stock. If I didn’t have shares in big brother Coca Cola, I would get my own portfolio.
One thing I like about this business is that it is profitable CokeProduct strength. Coke is still one of the most popular brands in the world today and I don’t see its demand diminishing anytime soon.
Another thing I like is that the dividends go up quickly. Over the past five years, the group has increased its annual payout from 57 cents per share to 93 cents per year (63% growth). If the company were to continue to raise its payout, investors could be looking at a cash cow in the future. Already, the yield is healthy at around 3%.
Yes, it is possible that Coke may lose its appeal in the future. After all, consumer preferences and preferences are constantly evolving. But with the stock trading at a very reasonable P/E ratio of 15, I like the risk/reward here. I think this dividend stock will do well over time.
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