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If You're Retired, Consider Buying These 3 Stocks

You have a different perspective in your retirement years. For much of your career, you probably worked hard to build a nice nest egg for retirement. Now, your focus is on making that nest egg last throughout your retirement.

While there are thousands of stocks available on the market, not all of them are well suited to help you preserve your retirement savings. But there are also some stocks that are great picks for retirees. If you're retired, three stocks you should consider buying are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Brookfield Infrastructure Partners (NYSE: BIP), and Welltower (NYSE: WELL).

Image source: Getty Images.

1. Alphabet

You might be a little surprised for Alphabet to make the list. Most retirees prefer dividend stocks, but Google's parent doesn't currently pay out a dividend. However, Alphabet is a great stock for retirees to own for a couple of key reasons.

First, the company's business is exceptionally strong. Alphabet owns eight products that are used by at least 1 billion people across the world every month, including Google Search and YouTube. Chances are that you use some of these products yourself. This huge user base means that customers flock to Alphabet to advertise their products on its apps and websites. The company's dominance also makes it difficult for rivals to take away market share.

The stability resulting from Alphabet's business model translates to steady cash flow generation. Alphabet puts this cash flow to good use. Although it doesn't pay a dividend, it still rewards shareholders through share repurchases. The company bought back over $6.4 billion of its shares in the first three quarters of 2018.

Alphabet's use of its cash flow leads to the second key reason why it's a solid pick for retirees: its investment in growth opportunities. The most impressive example of this kind of investment is the company's Waymo self-driving car technology subsidiary. One analyst thinks that Waymo could deliver $114 billion in annual revenue by 2030, nearly as much as Alphabet's total revenue in 2018.

2. Brookfield Infrastructure Partners

Brookfield Infrastructure Partners probably fits your mental picture of an ideal retirement stock. It pays a great dividend that currently yields more than 5%. And you won't worry about Brookfield Infrastructure's ability to keep those dividends flowing.

The company, as its middle name indicates, focuses on infrastructure. Brookfield Infrastructure owns communications towers, energy transmission lines, ports, railroads, toll roads, and other infrastructure assets across the world. These are assets that generate solid cash flow for the company year in and year out.

Thanks to its strong cash flow, Brookfield Infrastructure has increased its dividend payout by 47% over the last five years. Even better, the company's management thinks it will be able to boost its dividend distribution by at least 5% annually well into the future.

As an added bonus, Brookfield Infrastructure should deliver growth for investors, too. The company sold lower-performing assets over the last year to invest in other infrastructure assets that have higher growth potential. Expect Brookfield Infrastructure to continue making similar changes to its portfolio to generate even more growth.

3. Welltower

I view Welltower as a retiree's dream stock. Like Brookfield Infrastructure, Welltower provides an attractive dividend plus long-term growth opportunities.

Welltower is the largest publicly traded healthcare-focused real estate investment trust in the U.S. As a REIT, the company must distribute at least 90% of its taxable income to shareholders in the form of dividends. Welltower's dividend yield currently stands at 4.9%.

The company owns and leases properties to healthcare providers including senior housing operators, post-acute care communities, and outpatient medical facilities. Welltower's primary focus is on senior housing in major high-growth urban markets.

As you might imagine, the demographic trends in the U.S. and in other countries should benefit Welltower tremendously over the long run. The number of Americans age 65 and over should increase by 36% through 2025, while the number of Americans age 85 and older is expected to double in the next couple of decades. These demographic trends provide Welltower significant growth opportunities.

Common denominator

Alphabet, Brookfield Infrastructure Partners, and Welltower are very different companies that operate in very different industries. But all three stocks share a common denominator that retirees should look for in any stock that they buy. That common denominator is a strong business model that is built for the long term.

Businesses that share this trait are more likely to be able to pay out dividends regularly and increase those dividends over time. Even if they don't pay dividends, they will be in a better position to reward shareholders in other ways.

These kinds of stocks will help you stretch your nest egg out throughout your retirement years. And they just might make that nest egg even bigger.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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