Is Syngenta the Right Stock to Retire With?

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Now more than ever, a comfortable retirement depends on secure, stable investments. Unfortunately, the right stocks for retirement won't just fall into your lap. Let's figure out what makes a great retirement-oriented stock, then examine whether Syngenta (NYS: SYT) has what we're looking for.

The right stocks for retirees
With decades to go before you need to tap your investments, you can take greater risks, weighing the chance of big losses against the potential for mind-blowing returns. But as retirement approaches, you no longer have the luxury of waiting out a downturn.

Sure, you still want good returns, but you also need to manage your risk and protect yourself against bear markets, which can maul your finances at the worst possible time. The right stocks combine both of these elements in a single investment.

When scrutinizing a stock, retirees should look for:

With those factors in mind, let's take a closer look at Syngenta.

Factor

What We Want to See

Actual

Pass or Fail?

SizeMarket cap > $10 billion$28.2 billionPass
ConsistencyRevenue growth > 0% in at least four of five past years5 yearsPass
 Free cash flow growth > 0% in at least four of past five years4 yearsPass
Stock stabilityBeta < 0.90.33Pass
 Worst loss in past five years no greater than 20%(24.9%)Fail
ValuationNormalized P/E < 1819.65Fail
DividendsCurrent yield > 2%3.1%Pass
 5-year dividend growth > 10%22.8%Pass
 Streak of dividend increases >= 10 years1 yearFail
 Payout ratio < 75%44.8%Pass
    
 Total score 7 out of 10

Source: Capital IQ, a division of Standard & Poor's. Total score = number of passes.

With seven points, Syngenta gives conservative investors much of what they like to see. A strong market for agricultural products has helped the company make impressive dividend payouts recently, and steady growth has kept long-term shareholders happy.

Syngenta makes a number of products that the farming industry depends on. Its seed division competes against DuPont (NYS: DD) and Monsanto (NYS: MON) , and it also produces chemical pesticides to help improve crop yields.

Recent trends have helped Syngenta immensely. High prices of food and other crops have given farmers more disposable income, thereby boosting their ability to invest more to enhance their productivity. Especially given the increased demand for fertilizer and its direct impact on farmland efficiency, Mosaic (NYS: MOS) and PotashCorp (NYS: POT) have shared in the spoils of higher food prices. But Syngenta definitely isn't getting left out.

What may take retirees and other conservative investors by surprise, though, is Syngenta's variable dividend policy. From year to year, dividends can differ greatly . That's different from DuPont and Dow Chemical (NYS: DOW) , which have stable, regular quarterly payments, but you can't argue with the huge payout growth over the past five years. Unless you think the trend toward higher food demand is set to reverse itself, Syngenta would make a smart addition to a retirement portfolio.

Keep searching
Finding exactly the right stock to retire with is a tough task, but it's not impossible. Searching for the best candidates will help improve your investing skills, and teach you how to separate the right stocks from the risky ones.

Add Syngenta to My Watchlist, which will aggregate our Foolish analysis on it and all your other stocks.

If you want to retire rich, you need to be confident that you've got the basics of your investment strategy down pat. See if you're on track by following the "13 Steps to Investing Foolishly."

At the time this article was published Fool contributorDan Caplingerdoesn't own shares of the companies mentioned in this article. You can follow him on Twitterhere.Motley Fool newsletter serviceshave recommended buying shares of Syngenta and creating a synthetic long position in Monsanto. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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