Investing

Over 60? These 2 Dividend Stocks are a Better Bet Than T-Bills

Joey Frenette

Published: November 20, 2024 10:34 am

The appetite for high-risk investments really increased following Donald Trump’s presidential victory. Indeed, gold — a risk-off asset — took a hit while risk assets (most notably stocks and crypto) began heating up. Some high-growth tech stocks have been melting up lately, and hopes could stay high as investors hope for a Santa rally to come to town to help close off what’s been an outstanding year for markets.

If you’re over 60 and gearing up for retirement, chasing the risk-on assets may not be the best of ideas, especially as some notable figures on Wall Street take a slight step back. Notably, Warren Buffett has not shied away from taking some profits from his firm’s winning bets.

Key Points About This Article

• T-Bills are great to hold, but there is such a thing as being too conservatively positioned.
• Solid, low-cost dividend plays like PFE and MCD are worth watching on the recent dip.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Timing stock markets isn’t a good idea, no matter your age.

While Buffett believes that timing the market is “impossible” and even “stupid,” it’s hard to ignore the Oracle of Omaha when he backs up the truck on risk-free assets. Though I don’t view Buffett as a market timer, I do think his share sales speak to the lack of bargains out there today. With the Trump stock rally gaining speed, valuations have only gotten heftier in recent weeks.

Now, that’s not to say a steep market correction is around the corner. Remember that modest overvaluation or (over-) extended rallies do not necessarily mean it’s time to be an aggressive seller of stocks.

Instead, being cautious with cheaper, more defensive dividend payers can prove wise, especially if you’re a retiree (or are almost one) who can’t withstand extreme volatility the way a younger investor can.

T-Bills are great in this environment. But dividend stocks may still be better for the long haul.

While Buffett’s Berkshire Hathaway (NYSE:BRK-B) has been a heavy holder of U.S. Treasury Bills (T-Bills), I’d not be surprised if he’s looking to put some of it to work on value stocks after his latest stock sales.

Here are three intriguing dividend stocks that may be a better bet than T-Bills over the long term. Of course, no stock, no matter how steady, will be a T-Bill on the safety front.

Undoubtedly, T-Bills are risk-free assets, and while they may not be the most bountiful of passive income investments, they are still worth holding in the most defensive parts of one’s portfolio in case the market weather worsens.

Pfizer

Pfizer (NYSE:PFE) stock got slammed after President-elect Donald Trump picked Robert F. Kennedy Jr. for the job of secretary of the Department of Health and Human Services (HHS). Undoubtedly, the man we know as RFK Jr. is known by some to be a vaccine skeptic. For the major vaccine plays, like Pfizer, that’s a heavy blow to the gut for a firm that’s already in a really tough spot.

The stock is now down more than 58% from its late 2021 all-time high. And the dividend yield, currently at 6.77%, could exceed the 7% mark as the shares plunge to new multi-year depths. Indeed, Pfizer is a falling knife, but it does have levers it can pull to turn the tide.

While shares look to be entering the danger zone as they tank below $25 per share, I view them as more of a deep-value play at 8.3 times forward price-to-earnings (P/E). Though I wouldn’t be too aggressive of a buyer here, I would certainly add the name to a watchlist on this latest dip.

McDonald’s

McDonald’s (NYSE:MCD) isn’t risk-free; that much is clear following the recent E.Coli scare, which, I believe, has already run its course on the stock. The company reportedly invested $100 million to get back on its feet after the E.Coli outbreak. As the company shifts gears from crisis mode and back to winning the value menu wars, I do view MCD stock as a fantastic place to park (and grow) one’s wealth.

The stock is still down just over 8% from its all-time highs, thanks to an E.Coli outbreak that I think is now well behind the firm. At 25.6 times trailing P/E, with a nice 2.42% dividend yield, investors over 60 may wish to watch the name very closely as it flirts with a correction (10% drop).

At the end of the day, McDonald’s is one of the best defensive dividend plays to hold if you have any doubts about the economy.