6 Dividend Stocks Retirees Are Quietly Buying for Steady Income

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For retirees, dividend stocks can offer the best of both worlds. The most obvious is a steady income stream, one that often increases over time. The other is the potential for capital appreciation, which is important to fight off the effects of inflation during retirement.

But picking dividend stocks isn’t as easy as buying the ones that pay the highest yields. In fact, stocks with extremely high yields are often in financial distress, with dividend cuts right around the corner. The key is to invest in stable, well-managed companies with consistent and predictable cash flows.

Here’s a look at six options that are popular with retirees looking for steady income. 

Coca-Cola (KO)

• Annual dividend: $2.04
• Dividend yield: 2.89%
• Market capitalization: $308.04 billion

When it comes to dividend stocks, Coca-Cola is at the top of the list for many investors. The company has one of the most powerful name brands in the entire world, and it uses this global reach to leverage pricing and maximize profits.

While no longer a fast grower, Coke has something even better for dividend investors: steady and predictable cash flow in nearly any economic environment. This revenue stream has allowed the company to raise its dividend for 64 consecutive years, an incredible record of dividend growth.

Verizon Communications (VZ)

• Annual dividend: $2.76
• Dividend yield: 6.93%
• Market capitalization: $171.61 billion

Telecom stocks like Verizon may be “boring,” slow-growth stocks, but for dividend investors, they fit the bill. With subscriber revenue tumbling in every month in a predictable manner, Verizon has plenty of cash flow to cover its hefty dividend. Currently at 6.93%, Verizon’s dividend pays more than nearly any bond you can find, while the stock itself potentially offers the chance for modest capital appreciation.

AT&T (T)

• Annual dividend: $1.11
• Dividend yield: 4.47%
• Market capitalization: $178.51 billion

Much like Verizon, AT&T is a stalwart of the retiree dividend universe. While the company that invented the telephone has had its ups and downs over the years, it’s now squarely focused on wireless and broadband operations. This has helped stabilize the company’s cash flow and provided ample revenue to cover its hefty yield.

Texas Instruments (TXN)

• Annual dividend: $5.68 
• Dividend yield: 3.54%
• Market capitalization: $145.13 billion

If you’re looking for a little more risk in your dividend portfolio, Texas Instruments could be an option. The chipmaker has a beta of 0.99, meaning its stock fluctuates more or less in line with the overall stock market. For many dividend investors, this is a bit too much volatility, but for those hoping to capitalize on both a solid income and the chance to participate in the upside of technology, Texas Instruments offers a compelling blend of growth and income.

Unlike most of its tech peers, Texas Instruments has raised its dividend an impressive 22 years in a row.

Amgen (AMGN)

• Annual dividend: $9.52
• Dividend yield: 2.94%
• Market capitalization: $182.25 billion

Amgen offers a lot that may be attractive to retirees: the defensive stability of a healthcare giant, long-term growth potential and a significant dividend. As a mature biotech, Amgen is sustained by consistent revenue and large cash reserves. This combination has allowed the company to raise its dividend for 14 years in a row, according to Dividend.com.

Chevron (CVX)

• Annual dividend: $6.84
• Dividend yield: 4.60%
• Market capitalization: $311.20 billion

Energy stocks like Chevron are cyclical in nature, meaning they tend to trade up during economic boom periods and down during recessions. But through it all, Chevron has maintained tight financial discipline, raising its dividend for 38 years in a row through a wide variety of economic conditions. Its current yield of 4.6% is nearly four times that of the S&P 500 index.

The Bottom Line

This list is just a sample of the type of dividend opportunities that retired investors have. But it shows how with just a few names, investors can earn an above-average yield in large, defensive companies across a range of industries, from healthcare and consumer staples to energy, telecommunications and technology.

The key is to assemble a diversified portfolio that matches your investment objectives and risk tolerance. These stocks may not be the most exciting in the market, but for retired investors, that’s often the right prescription.

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