Taking Stock: Bolster a shaky retirement account with these nine stocks

Dear Mr. Berko: We're in our early 50s and are good savers. The house we bought for $127,000 in 1989 is paid for. We didn't take out home equity loans like many of our neighbors did. We have a 6-year-old car and a 9-year-old van, both paid for. We have no credit card debt.

Both of us work for the State of Illinois, and we're afraid that our under-funded retirement accounts will be gone when we retire. Together we make $116,000 and have $278,000, which includes EE and E bonds, six utilities with a reinvestment plan and $65,000 in savings.

We want to put $35,000 in dividend growth stocks for our retirement. We hope we can work at least 15 more years and collect Social Security. Please tell us what to buy for long-term income during our retirement years.

SD, Aurora, Ill.

Dear SD: Holy marbles. Bet you have no kids! You folks need to become better consumers. You're setting a bad example for your contemporaries, and if other Americans imitate your spending habits, our economy's going to be in worse trouble!

Lots of other Illinoisans are, with good reason, also concerned about their state's retirement plan. Illinois has the second most crooked legislatures in the universe. (Recently, a Moline reader grumbled that several of his family members became millionaires while serving in the legislature.) However, the Illinois pension plan reminds me of a clapboard, tarpaper and plywood shack sitting up on cinderblocks and leaning like an elephant with a broken back. And our social security system doesn't look much better.

But if you good folks continue to conserve and invest successfully, the growing value of your assets could reach a dollar amount that may preclude you from collecting full social security benefits. In the coming 15 years, your Congress will certainly apply a ''means test'' that may well exclude you from those monthly checks. It's kinda like a catch-44, which is twice as bad as a catch-22!

Following is a list of some stocks I like. Each has a low payout ratio, each yields better than 4 percent, and I think each is capable of double-digit dividend growth over the coming five years.

*Vodafone Group (VOD-$27.31) provides mobile phone service to 380 million customers. VOD yields 6.9 percent and should grow its dividend 12 percent annually.

*Lockheed Martin (LMT-$75.46) is an important military-defense and aerospace contractor. LMT yields 5.3 percent, and the dividend can grow 13 percent annually.

*Raytheon (RTN-$40.01) is a huge government defense contractor and yields 4 percent. I think its dividend can grow 12 percent a year.

*Intel Corporation (INTC-$22.22) is the largest chip maker in the world. It yields 4 percent, and its dividend should grow by 10 percent annually.

*Molex (MOLX-$21.12) is a $3.6 billion manufacturer and designer of electronic components. MOLX yields 4 percent, and the dividend can grow 14 percent annually.

*Avista (AVA-$24.81) is an electric utility in Washington State. Its current dividend yields 4.5 percent, and 10 percent annual dividend growth is on track.

*Wisconsin Energy (WEC-$30.19) is a fine utility that yields only 3.6 percent but is capable of raising its dividend by 15 percent annually.

*Unilever (UL-$31.51) is a worldwide producer of consumer consumables. The dividend yields 4 percent, and a 10 percent annual dividend growth should be the norm.

*Finally, Sempra Energy (SRE-$52.53) is a diversified utility company out of San Diego. The dividend yields 4 percent, and 10 percent annual increases should be expected.

If you invest $35,000 in these eight issues, your current return will be 4.4 percent - or $1,540 in first-year income. However, if you reinvest the dividends each quarter for 15 years, your annual income should be in the neighborhood of $8,300 a year. And that's a 27 percent dividend return on your $35,000 investment.

Please address your financial to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. COPYRIGHT 2011 CREATORS.COM

Published: Thu, Nov 10, 2011