3 Safe Stocks for Retirees to Buy This Fall

The Federal Reserve has announced consecutive rate hikes in an effort to curb reckless inflation. Moreover, the Fed is expected to launch another outsized rate hike next month as inflation shows no signs of slowing down. This has led to widespread bearish market sentiment, and volatility is rife, as is evident from the CBOE Volatility Index’s 78.2% year-to-date gains.

According to the third-quarter CNBC All-America Economic Survey, 68% of Americans think the United States will soon be in a recession, including 9% who believe we are already in a recession. However, a decent start to the earnings season has lifted investors’ optimism, boosting the stocks. Also, according to Oppenheimer’s head technical analyst Ari Wald, markets are nearing a new bottom, and stocks could be poised for a fresh rally.

Therefore, we think fundamentally sound stocks Merck & Co., Inc. (MRK), Cisco Systems, Inc. (CSCO), and Ryerson Holding Corporation (RYI), which pay a reliable dividend, could be safe stocks for retirees to buy this fall.

Merck & Co., Inc. (MRK)

Healthcare company MRK operates through two segments- Pharmaceutical and Animal Health. The company serves drug wholesalers and retailers, hospitals, government agencies, managed health care providers, physicians and physician distributors, veterinarians, and animal producers. 

On October 18, 2022, MRK Animal Health announced the launch of Animo® GPS, an activity and behavior monitor for dogs with GPS-tracking capabilities. This product addition is expected to diversify the company’s portfolio.

On September 22, 2022, MRK Animal Health announced its definitive agreement to acquire virtual fencing innovator Vence. Rick DeLuca, president of MRK Animal Health, said, “Vence is a natural fit with Merck Animal Health’s growing portfolio of animal intelligence products that include identification, traceability, and monitoring products.”

MRK has paid dividends for 11 consecutive years. Over the last three years, MRK’s dividend payouts have grown at a 9.6% CAGR. While MRK’s four-year average dividend yield is 2.95%, its current dividend translates to a 2.96% yield.

MRK’s total sales came in at $14.59 billion for the 2022 second quarter, up 28% year-over-year. Its net income came in at $3.94 billion, up 155.3% year-over-year, while its EPS came in at $1.55, up 154.1% year-over-year.

Analysts expect MRK’s revenue to increase 20.3% year-over-year to $58.57 billion in 2022. Its EPS is estimated to grow 21.9% year-over-year to $7.34 in 2022. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 17.3% to close the last trading session at $93.26.

MRK has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has a B grade for Value, Growth, Sentiment, and Quality. MRK is ranked first among 161 stocks in the Medical – Pharmaceuticals industry. 

Click here for the additional POWR Ratings for MRK (Momentum and Stability).

Cisco Systems, Inc. (CSCO)

CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. 

On October 12, 2022, CSCO and Microsoft Corporation (MSFT) announced their partnership at Microsoft’s annual Ignite conference. Under this agreement, MSFT Teams will run natively on CSCO Room and Desk devices Certified for MSFT Teams. Also, CSCO will become a partner in the Certified for MSFT Teams program for the first time. This should be strategically beneficial for the company.

CSCO has paid dividends for 11 consecutive years. Over the last three years, CSCO’s dividend payouts have grown at a 3.1% CAGR. While CSCO’s four-year average dividend yield is 2.96%, its current dividend translates to a 3.63% yield.

CSCO’s service revenue increased marginally year-over-year to $3.41 billion for the fourth quarter that ended July 30, 2022. Revenue from its EMEA segment came in at $3.58 billion, up 8% year-over-year. Moreover, revenue from end-to-end security products came in at $984 million, up 20% year-over-year.    

Analysts expect CSCO’s revenue to increase 5% year-over-year to $54.13 billion in 2023. Its EPS is estimated to grow 5.1% year-over-year to $3.53 in 2023. It has surpassed EPS estimates in all four trailing quarters. CSCO’s shares have gained marginally intraday to close the last trading session at $41.88.

CSCO’s overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Quality. It is ranked #5 out of 50 stocks in the Technology - Communication/Networking industry. 

Click here to see the additional POWR Ratings for Growth, Momentum, Stability, Sentiment, and Value for CSCO. 

Ryerson Holding Corporation (RYI)

RYI and its subsidiaries process and distribute industrial metals in the United States, Canada, Mexico, and China.

On September 1, 2022, RYI announced its acquisition of Howard Precision Metals, Inc., one of the largest aluminum distributors in the Midwest. With this acquisition, RYI is expected to expand and strengthen its business in the Midwest region.

RYI’s $0.46 annual dividend yields 1.47% at the current share price.

RYI’s net sales came in at $1.74 billion for the second quarter that ended June 30, 2022, up 22.9% year-over-year. Its net income increased by 66.9% year-over-year to $194.9 million, while its EPS increased by 75.3% year-over-year to $5.10.

RYI’s revenue is estimated to increase 9.6% year-over-year to $6.22 billion in 2022, while its EPS is estimated to increase 74.4% year-over-year to $13.01 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 30.5% to close the last trading session at $30.12.

RYI’s overall A rating equates to a Strong Buy in our POWR Ratings system. Also, the stock has an A grade for Value and a B for Growth and Quality. It is ranked #3 out of 35 stocks in the Industrial - Metals industry. 

Click here to access the additional POWR Ratings for RYI (Stability, Momentum, and Sentiment).

MRK shares were trading at $93.07 per share on Thursday afternoon, down $0.19 (-0.20%). Year-to-date, MRK has gained 24.52%, versus a -21.75% rise in the benchmark S&P 500 index during the same period.

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.

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