Retirees: How To Generate The Income You Need From A Dividend Portfolio

This article is for investors who are retirees or close to retirement.

Ultimately, most retirees want safe income – cash they can use every day to pay the bills and enjoy life. So, the goal of a retirement stock portfolio is to generate enough income for those uses.

How much income do you need to earn from your dividend portfolio?

You will earn income from your dividend portfolio and other sources. To figure out how much income you need to earn from your dividend portfolio, you first need to know how much income you’ll be earning from other sources such as pensions or perhaps a part-time job.

Dividend Income = Desired Income for Retirement – Income from Other Sources

For example, if you desire $50,000 of retirement income and you earn $10,000 from other sources, then, you’ll need to earn $40,000 of dividend income.

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Celgene: A Growth Stock You Don’t Wanna Miss

Despite having appreciated 20% in a year, Celgene Corporation (NASDAQ:CELG) shares are still a reasonable buy for growth.

What does Celgene do?

Celgene is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies for patients with cancer, immune-inflammatory, and other unmet medical needs. The company operates in more than 60 countries and sells its products in more than 70.

In 2016, Celgene generated sales of $11.2 billion. Its expertise lies in hematology, oncology, and immunology. Here’s an overview of Celgene’s key products:

Product 2016 Sales (million) % of 2015 Sales % of 2016 Sales YOY growth
Revlimid $6,974 63% 62% +20%
Pomalyst/Imnovid $1,311 11% 11.7% +33%
Otezla $1,017 5% 9% +116%
Abraxane $973 10% 8.7% +1%
91.4%

Revlimid remains as Celgene’s core drug from 2015 and its market in the multiple myeloma space is still growing.

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Will Lowe’s Go Lower or Higher From Here?

Lowe’s Companies, Inc. (NYSE:LOW) surprised many investors by spiking nearly 10% higher in a day last week. It is uncommon for a large-cap company to have such a big move in such a short time.

Lowe’s beat earnings and revenues in Q4, its comparable-store sales rose 5.1% in the quarter, and its SG&A expenses and operating margin saw improvements.

The company’s positive results were bolstered by favourable macro fundamentals, which the company expects to continue in 2017.

It sees growth in the home improvement industry, which will be “supported by continued job gains and income growth, debt service ratios near record lows, strong consumer balance sheets, and improved credit usage.” – Slide 8 of Q4 2016 Earnings call slides

2017 guidance

In fiscal 2017, Lowe’s expects its sales to grow about 5%, its comparable sales to grow about 3.5%, and its operating margin to increase by 1.2%.

These are estimated to help its diluted earnings per share (“EPS”) to grow about 33% to $4.64, and its operating cash flow to grow roughly 5% to $5.9 billion.

Similar to what happened in 2016, Lowe’s expects to generate lots of free cash flow to pay dividends and repurchase shares.

Dividend growth and share repurchases

The world’s second-largest home improvement retailer has an impressive track record of hiking its dividend, specifically, for 54 consecutive years!

Lowe’s five-year dividend growth rate is 20%; its 10-year rate is even higher at nearly 23%! If you received $5,000 of annual dividends from it five years ago, this year, you’d receive $12,500! If you received $5,000 from it 10 years ago, this year, you’d receive a little more than $39,300!

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