3 Top Stocks to Own in Retirement

By Markets Fool.com

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Scouring the market for potentially explosive stocks can be exciting and hugely profitable, but those investing for retirement are often best served by a low-risk strategy that offers reliable income generation. The stock market is unpredictable, and the right dividend stocks can provide retirees with stability even when conditions take an unexpected turn. These are investments that can be held for the long haul, or, to steal an old infomercial catch phrase, a good retirement stock should allow investors to set it and forget it.

To help current and prospective retirees weigh some of the best dividend stock choices for their investment portfolios, we asked three Motley Fool contributors to recommend a top consumer-goods company with reliable performance and a strong dividend history and outlook. Read on to learn why Procter & Gamble , Colgate-Palmolive , and PepsiCo made the list.

Andres Cardenal: Colgate-Palmolive has a presence in several consumer-staples categories, including oral care, pet nutrition, home care, and personal care. However, most of the company's sales and profits come from its leadership position in oral care, where Colgate-Palmolive enjoys a massive 45.2% market share in toothpaste, 33.8% in manual toothbrushes, and 40.2% in mouthwash on a global basis.

The company does business in more than 200 countries and territories, and it generates over 80% of its revenue outside the United States. Foreign currency fluctuations have been a drag on performance over the past several quarters. However, its international presence also means Colgate-Palmolive offers attractive room for growth, as the company can benefit from increased income levels and rising consumer demand in emerging markets over the long term.

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Organic sales grew 4% in the last quarter, on the back of a 1.5% increase in pricing and a 2.5% jump in volume. This is quite a healthy performance coming from a market leader in a mature industry. The business is also remarkably profitable: Colgate-Palmolive generates a 32.4% after-tax return on capital, comfortably beating its industry group, with a 17.3% average after-tax return on capital, according to management.

Colgate-Palmolive has translated its rock-solid competitive position and healthy financial performance into an extraordinary track record of dividend growth over the years. The company has paid uninterrupted dividends since 1895, and it has increased dividend payments in each of the past 52 years. The stock's dividend currently yields 2.2%.

Keith Noonan: Food and beverage giant PepsiCo has all the makings of a top retirement stock. The company holds some of the world's most powerful brands and boasts 22 separate brands that each generate more than $1 billion in annual retail sales. These powerful product lines helped propel the company to more than $66.6 billion in net revenue and $8.3 billion free cash flow in the last fiscal year, and unfolding potential in developing markets gives PepsiCo room for continued growth.

The company's dividend yield sits at 2.86%, which is comfortably above the 10-year Treasury Bond yield of roughly 2.2%, and its stock has gained 74% over the past decade, with total returns of roughly 127%.

PepsiCo has never lowered its dividend since first initiating quarterly payouts in 1973, and the company has established a reliable history of roughly annual increases, with more than a 170% payout increase over the past 10 years. Investors concerned that the company is overly dependent on the sale of sugary, carbonated beverages should be comforted to know that the company is well-diversified, with a range of snack foods and healthier, non-carbonated drinks, including Quaker, Tropicana, and bottled Starbucks products, that work to insulate the company from potential headwinds in soda sales. In all, PepsiCo's strong fundamentals and attractive dividend profile make it worthy of consideration for any retirement portfolio.

Bob Ciura: Consumer-products giant Procter & Gamble can be a foundational stock to own in retirement.

When I size up potential investments most fit for a retiree's portfolio, a couple of key criteria come to mind. First, I like to see a defensive business model, which means a company that holds strong brands and offers products that are in demand regardless of how the economy is doing. In that regard, P&G is a perfect fit. It has a number of industry-leading brands, including Tide laundry detergent, Gillette razors, and Crest toothpaste. In fact, P&G has 23 brands that each rake in at least $1 billion in annual sales. P&G does business in more than 180 countries and generated $83 billion in total revenue last year.

The second thing I look for is a dividend. It seems to me that retirees invest, at least in part, to replace the lost income in retirement. To that end, there are few better stocks than P&G. It's paid dividends for 124 consecutive years, dating back to the company's incorporation in 1890, and it has increased its dividend for 58 consecutive years. At its recent stock price, P&G offers a juicy 3.3% dividend yield, which beats the stock market average by about 130 basis points.

To summarize, P&G is a world-class company with a huge portfolio of strong brands. In addition, the company has a very long track record of paying and raising its dividend. These are the qualities that, I believe, make P&G a great fit for a retirement portfolio.

The article 3 Top Stocks to Own in Retirement originally appeared on Fool.com.

Andrs Cardenal owns shares of Apple. Bob Ciura owns shares of Apple and PepsiCo. Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Apple, PepsiCo, Procter & Gamble, and Starbucks. The Motley Fool owns shares of Apple, PepsiCo, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.