People in their 60s should generally favor relatively low-risk investments that provide a mix of income and growth potential. As you're approaching or at the end of your work life, it's not the time to take undue risk by investing in volatile stocks that lack solid track records. However, playing it too safe with your investments such as shunning stocks -- can also backfire. Many people in their 60s can expect to live up to 20 or more years, so some growth potential will help ensure that your money will last throughout your lifetime.
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If you're in your 60s, you'll likely find at least one of the following three stocks a good fit for your needs: WelltowerInc.(NYSE: HCN),American Water WorksCo.(NYSE: AWK), and NextEra Energy Inc.(NYSE: NEE).Here's a general overview of these three stocks, including two metrics -- dividend yield and beta -- that are particularly important to many folks in their 60s.
Data sources: Yahoo! Finance and YCharts; data as of Aug. 31.
Beta is a measure of stock-price volatility relative to the overall market, so the three stocks range from just 20% to 34% as volatile as the market.
Welltower is our income juggernaut, yielding a fat 4.5% dividend. However, its total return has slightly underperformed the broader market over the five-year period. It has, however, outperformed the market over the one- and 10-year periods.
A senior-housing-focused healthcare REIT
Image source: Welltower.
Welltoweris a real estate investment trust (REIT) that's diversified across several types of heathcare real estate. It's increasingly focusing on senior housing properties, as this segment has been driving results.
In 2015, the company changed its name from Heath Care REIT to Welltower as part of its business transformation. It's been selling non-core properties to generate capital to better position its portfolio. Welltower fully exited the inpatient hospital business in the United States in 2015, and has been focusing onsenior housing. Its particular focus is on premium properties in top metro markets with high barriers to entry. Demographics are in favor of this focus, given the aging of the huge baby boom generation, now in the age range of 52 through 69.
In the second quarter, Welltower posted normalized funds from operations (FFO) growth of 8% and normalized FFO per-share growth of 6%. (FFO is a better indicator of performance than earnings for REITs; it's the primary driver of payouts to shareholders, and adds such items as depreciation and amortization back to net income.)This solid growth was driven by a 4% increase in same-store net operating income in its senior housing properties, thanks, in part, to a 100-basis-point increase in occupancy, to 90.3%. Welltower continues to reposition its portfolio, announcing during the quarter the acquisition of 19 senior housing communities in California.
Welltower's payout ratio, based on FFO, is 75%. While this would be high for most companies, it's within range for a REIT, suggesting that the dividend is safe. Wall Street analysts project the company's normalized FFO per share will increase at a modest average annual rate of 4% over the next five years, though the company's acquisition strategy could prove this estimate conservative.
The U.S.'s water-utility behemoth
Image source: Getty Images.
American Water Works is the largest investor-owned water and wastewater utility in the U.S., providing services to about 15 million people in 47 states and Ontario, Canada. It operates its core regulated business in 16 states, making it by far the most geographically diverse water utility in the country.
American Water uses the predictable cash flow generated from its regulated business to acquire smaller utilities, and to fund its dividend. The company has increased its dividend, currently yielding 1.9%, every year since it went public in 2008.While this isn't a high yield compared to select other classes of business, the dividend is quite dependable and secure. Moreover, American Water offers a solid amount of growth potential, with analysts projecting the company will grow earnings per share at an average annual rate of 7.6% over the next five years.
The bulk of American Water Works' growth potential stems from the maintenance and upgrades it will need to continue to perform on its growing regulated systems. Its market-based business also provides it with a dose of growth potential.
The electric-utility giant with a huge alternative-energy portfolio
lmage source: Getty Images.
NextEra Energy has two principal subsidiaries: Florida Power & Light Company, or FPL, and NextEra Energy Resources. FPL is the third-largest electric utility in the U.S., serving more than 4.8 million accounts, or more than 10 million people across nearly half of the state of Florida. NextEra Energy Resources, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun. NextEra Energy also has non-controlling interests in NextEra Energy Partners LP, a growth-oriented limited partnership that owns interests in wind and solar projects in North America, as well as natural gas infrastructure assets in Texas.
NextEra has a reputation for being progressive and very well run. Itwas an early investor in wind and solar power, and continues to make substantial investments in its industry-leading alternative-energy portfolio. Its foresightedness could pay off big in the future, as the U.S. government begins enacting more stringent emissions standards for electric utilities. Moreover, NextEra's massive alternative-energy portfolio could provide it with an advantage over competitors, as the cost to provide alternative energy declines.
NextEra sports a solid dividend yield of 2.9%. The company's payout ratio based on net income is less than 59%, and its payout ratio based on free cash flow is 75%, suggesting the dividend is quite secure. Moreover, the stock offers nice growth potential, with analysts projecting that NextEra will grow earnings at an average annual rate of 7.2% over the next five years.
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Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends Welltower. 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.