It’s finally here.
Retirement has arrived, and it’s time to look forward to traveling, spending time with the grandkids, and all the things you have been dreaming of doing.
You have worked, scrimped, saved, and invested for a long time to get to this day.
Now you need to set your portfolio up to provide a steady, consistent stream of income.
In years past, you might have been talking to your banker about certificates of deposit or visiting with a local broker to discuss tax-free bonds, but in today’s zero interest rate world, that’s no longer an option.
You need income to fund your dreams, and your best option is the stock market. Fortunately, high-yield dividend stocks are out there, even in this pandemic-ravaged economy.
The strategy here is to find high dividend-paying stocks in companies you can depend on to make the payments regularly and increase that payment over time. You do not want to lose so much as a minute’s sleep worrying about having income coming into your account, which is exactly why you don’t want to buy just any old stock with a high yield.
And I’m going to show you exactly how to find these reliable dividends.
Let’s look at a few of the best retirement dividend stocks.
Phillip Morris Can Be a Retirement Staple
Dividend Yield: 6%
Phillip Morris International Inc. (NYSE: PM) is an excellent choice for your steady income portfolio. When Altria Group Inc. (NYSE: MO) split off Phillip Morris in 2008, it kept the domestic tobacco business, and Phillip Morris International got the international part of the tobacco business.
While smoking rates have declined worldwide, Phillip Morris has been able to grow its share of the global marketplace. Smokers tend to be fiercely brand loyal, which has helped them slow the decline in tobacco sales.
More importantly, they have been adopters of what they call reduced-risk strategies using next-generation nicotine products, including combustibles, heated tobacco, and vaping.
Phillip Morris management thinks that heated tobacco products will be the choice of most adults to get their nicotine fix, and they have been the first company to market with their IQOS heated tobacco system.
The heated tobacco product was recently approved by the FDA to be marketed in the United States. Altria will be selling the product under a license from Phillip Morris International. That should help drive profits and dividends higher for Phillip Morris for a long time.
The stock is currently yielding about 6%, and investors can anticipate higher payout over time. Since the separation in 2008, Phillip Morris International has increased the dividend by about 8% annually.
AT&T Inc. Is Your Dividend Aristocrat
Dividend Yield: 7%
You are also going to want to add AT&T Inc. (NYSE: T) to your retirement portfolio. It may not be the most exciting stock, but the shares not only yield almost 7%, but AT&T is also a Dividend Aristocrat that’s raised its payout for 36 consecutive years. You can sleep tight knowing that the dividend is safe and will probably be raised a little every year you own it.
Far from being a sleep utility company, AT&T continues to make dynamic innovations that give it nice upside potential. AT&T will see growth from the rollout of 5G service around the United States over the next couple of years. Its entertainment division also has offerings, including HBO Max, that can help profits increase over time.
AT&T is probably the ultimate set it and forget it dividend stock.
The High-Dividend Stock to Retire On
Dividend Yield: 8%
Exxon Mobil Corp. (NYSE: XOM) is also a good candidate for your consistent income portfolio. This stock will probably be more volatile than the other companies due to its correlation to oil prices, but the 8% yield is too attractive to ignore. Exxon has done an excellent job of increasing that payout over the years. Its dividend is raised an average of over 6% a year for the past 37 years.
Oil and plastics are the two products everyone says they hate but use daily. Exxon is dominant in both markets and should be for a very long time to come. Although there is always discussion about using less oil, gas, and plastic, demand for both products remains pretty high, and it will be decades before demand decreases meaningfully.
Oil prices have made some bizarre swings this year, and we remain well below the highs of the past several years. It will take some time (and a vaccine) for oil demand to get back to pre-pandemic levels, but we will get there. Exxon shares may bounce around in the interim, but we are more concerned with the cash flows into our accounts than the short-term direction of the stock price.
Management is very proud of its dividend aristocrat status and will do whatever is necessary to keep the dividend flowing.
— Garrett Baldwin
Source: Money Morning