That moment when your shoulder muscles tighten, your head begins to pound, and your fingers begin to ache is growing all too near. Yes, tax time is right around the corner.

In less than two weeks -- barring filing for an extension -- you will need to file your 2012 taxes. Luckily, there's still time to make a contribution to your future and possibly even lower your upcoming tax liability by opening or contributing to an Individual Retirement Account, or IRA.

IRAs come in two forms -- Traditional IRAs and Roth IRAs - with each offering its own unique benefits. Traditional IRAs allow you to deduct up to a maximum of $5,000 for your 2012 taxes, but you'll pay taxes on your gains when you do eventually begin withdrawing from the account. A Roth IRA, on the other hand, won't offer you any up-front tax benefits, but the long-term gains you earn in the account will be completely free from taxation as long as you don't make an early withdrawal. However, it should be noted that early withdrawal penalties (withdrawal before age 59 1/2) exist for both Traditional and Roth IRAs.


Regardless of which IRA type better fits your situation, you'd be foolish (with a small "f") not to consider maximizing your contribution each and every year. Today and tomorrow I'm going to look at a handful of IRA suggestions for more conservative and riskier investors. As always, keep in mind that these aren't recommendations, but are instead a jumping-off point for you to do your own homework and help jump-start your retirement.

Today, we'll look at five companies that could be a perfect fit for the conservative investor who's looking for dividend income and capital preservation.

1. Aflac : There's absolutely no ducking around the fact that supplemental insurance giant Aflac is the real deal. Conservative investors might be concerned by its hiccup during the recession, or its exposure to Japan, which hampered Aflac's share price in 2011 when the tragic earthquake and tsunami hit, but they shouldn't be.

To begin with, the insurance industry is a profit-making business that rarely stays in the red for any length of time. Unprofitable policies due to a catastrophe payout are merely justifiable reasons for an insurer to boost its premiums. Aflac delivered new annualized premium sales growth of 1.5% in Japan and 31% in the U.S. in 2012 and won't have any trouble raising its premiums moving forward.

Aflac is also keen on returning value to its shareholders. As my Foolish colleague Chuck Saletta pointed out recently when selecting Aflac as his one stock to buy in April, the company has boosted its dividend in an impressive 30 consecutive years. Aflac is yielding 2.7% and has increased its underlying book value by an average of 10.2% over the past decade. 

2. Johnson & Johnson : I'm well aware that I've practically beaten down the door on J&J in years past, but there simply isn't a better play in the health care sector -- even with the stock trading at an all-time high.

J&J's business is showing signs of growth and consistency in all three segments. In its pharmaceuticals segment, the approval of Invokana to treat type 2 diabetes will add another blockbuster to its already impressive portfolio of drugs. In medical devices, its purchase of Synthes last year will give it a bigger presence in faster-growing emerging markets. Finally, its personal care products offer stability in sales and cash flow thanks to immense price inelasticity.

J&J offers the conservative investor a dividend that's risen in each of the past 50 years and yields a handsome and sustainable 3%.

3. Chevron : Unless you have a remarkable distaste of the oil industry, then owning a piece of the second-largest integrated oil and gas company in the U.S. could be a smart move. Chevron's portfolio of assets is unmatched by few, with huge natural gas assets being discovered in domestic shale reserves and overseas gas and oil field finds becoming the norm. The result is a company that's poised to outperform and produce incredible cash flow.

Chevron offers investors broad asset diversity and the ability to take advantage of the rising demand for energy, both domestically and abroad. Best of all, Chevron has averaged $11.4 billion in free cash flow generation in each of the past three years and recently entered Dividend Aristocrat territory by bumping its dividend higher for a 25th straight year. At a current yield of 3% and with a single-digit P/E, Chevron is a great investment for those seeking to minimize their risk.

4. Microsoft : Microsoft CEO Steve Ballmer won't win any sympathy from investors who believe the company has languished behind many of its peers over the past decade. However, I'd contend that Microsoft's core operating-system business is as strong as it's ever been, with a barrier to entry that's practically insurmountable.

Over just the past three years Microsoft has generated a jaw-dropping $76.1 billion in free cash flow, which it's used for acquisitions, share buybacks, its increasing quarterly payout, and continued research and development into the latest technological gadgets. Microsoft is a cash-generating machine that few in the tech sector can contend with, given its nearly $54 billion in net cash and a payout that's risen by 188% in the past decade. Even if Microsoft throws its operations into cruise control, conservative investors would get more than an ample return on their shares through dividends and share repurchases.

5. Coca-Cola : Finally, there's little way that conservative investors can go wrong by investing in the most recognizable -- and most valuable, according to Interbrand -- brand name in the world.


Source: Ben Franske. 

According to Business Insider, of the 33 nonalcoholic drink brands that command $1 billion in annual sales, Coke owns 15 of them! This gives Coca-Cola a dominant brand presence, and its results allow it one of the most robust advertising budgets in consumer goods. Having not reported a loss since 2002, Coke, like Microsoft, is a cash flow juggernaut that has enormous pricing power. 

Investors of Coca-Cola won't get staggering growth rates, since domestic markets are predominantly saturated, but they will get a company that's raised its dividend for 50 straight years, is currently yielding 2.8%, and has a presence in all but two countries around the globe.

Stay tuned, because tomorrow, for you more growth-oriented investors, I'll offer up five suggestions that could help supercharge your IRA.

Is Microsoft the best value in tech, or its most dangerous value trap?
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

The article 5 Great IRA Ideas for the Conservative Investor originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Johnson & Johnson and Microsoft. The Motley Fool recommends Aflac, Chevron, Coca-Cola, and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. 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 Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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