3 Best Dividend Stocks for Retirement

Pactive income is perhaps the most attractive benefit a stock can offer a retiree. When this is the primary objective, the higher the dividend yield, the better. But that comes with a caveat: only as long as the stock is supported by an established and reliable company.

There are extremely high dividends that carry risks, such as Annaly Capital Management, a mortgage real estate investment trust (mREIT) that yields more than 13%. Since it deals with mortgages, it is very sensitive to changes in interest rates. This makes it potentially inconsistent, which might suit a young investor, but wouldn’t work as well for a retiree dependent on consistent income.

Also, the best portfolio is a diversified portfolio, so you would want to spread your confidence across different industries and not just invest in REITs, for example. Considering these factors, I recommend Real estate income (NYSE:O), Prudential Financial (NYSE: PRU)and Procter & Gamble (NYSE:PG).

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1. Real Estate Income: A Leading REIT

Realty Income is a growing, high-yielding REIT that’s about as reliable as REITs get. A REIT owns and leases properties and is structured to pay out 90% of its income as dividends, which is why REITs are generally sought after passive income streams.

There are several reasons why Realty Income is a top REIT. One is the sheer number of properties it operates – more than 11,000 (after acquiring fellow REIT VEREIT last year), making it one of the largest REITs in the world. It also typically works with large, secure chain stores in essential industries.

These strong tenants proved themselves at the start of the pandemic when they were allowed to stay open and pay their rent as non-essential stores had to close, with some of them delaying rent payments or shutting up shop altogether. . Its top five tenants (as a percentage of the portfolio) are Walgreens7 eleven, General dollar, dollar treeand fedex.

However, Realty Income works with over 1,000 tenants in 70 areas. It maintains an occupancy rate of nearly 99% and the weighted average duration of the remaining leases for its tenants is nearly nine years, which gives it a solid long-term position.

In the first quarter, net earnings per share fell from $0.26 to $0.34, and adjusted operating funds, a standard measure for assessing REIT performance, were up 47% year over year. the other to reach $1.02. As for its dividend, it pays a monthly dividend and has done so for 621 consecutive months, including 98 quarterly increases.

Its dividend yields 4.5% and retirees need look no further for a stable and consistent dividend.

2. Prudential Financial: a financial powerhouse

Prudential is a financial services company that provides insurance policies, pension plans and general investment services for individuals. It’s one of the oldest companies in the United States, dating back to 1875, and it prides itself on its stability – so much so that its logo is the rock of Gibraltar, although many people recognize it as the prudential rock. . The company has over $1.6 trillion in assets under management, with its largest presence in the United States, although it operates globally.

As a financial services company, Prudential is very sensitive to changes in interest rates. This was evident in the first quarter, when it recorded a loss of $31 million, after net profit of more than $2 billion last year. However, this cash-rich company maintains a steady load on its balance sheet, with more than $16 billion at the end of the first quarter and nearly $520 billion in stocks and bonds.

It is not a growth company and investors should not expect high gains from its shares. This is why it is incredibly cheap, trading at less than 6 times last 12 months earnings. What they can expect is an extremely reliable dividend yielding 4.6% at the current price, has been increased over the past 14 years and should provide years of passive income.

3. Procter & Gamble: all your household essentials

Procter & Gamble markets household products under many of your favorite brands, such as Tide laundry detergent, Bounty paper towels and Oral-B dental hygiene. It’s even older than Prudential — since 1837. The company had $79 billion in 12-month sales, and sales in the third fiscal quarter (ended March 31) were up 7% year-over-year. other. So, despite being an established giant of the essentials, it still manages to increase its presence and capture market share.

Like most businesses, Procter & Gamble has faced rising costs due to inflation and supply chain safeguards. However, he managed to overcome these difficulties with price increases and cost reductions. One of the benefits of being a large, stable company is the ability to leverage relationships and processes to manage challenges, which is why Procter & Gamble is an attractive stock to own.

The other reason is the dividend. Not only is Procter & Gamble a dividend king, but it has one of the longest streaks of annual dividend increases in the market at 66.

Its stock yields 2.3% at the current price, the lowest on this list. This declined as the price per share rose.

PG Dividend Yield Chart

PG Dividend Yield Data by YCharts

Procter & Gamble’s dividend is the kind you can rely on without thinking about it, making it a great choice for retirees.

10 stocks we like better than Realty Income
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Jennifer Saibil has no position in the stocks mentioned. The Motley Fool has posts and recommends FedEx. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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