When it comes to investing, you might think of retirement as “the end of the road.” After all, through your working years, retirement was often thought of as the end point — a destination you were working toward. The reality, though, is that retirement is just the beginning of your next phase of life. With good health, good genes and good luck, your retirement might even last as long as your career — maybe even longer. With that type of time horizon, you’ll want at least a portion of your portfolio to remain in stocks to keep your nest egg growing even while you start spending it.
But just how should you be investing to build a portfolio that’s taking advantage of the high growth offered by stocks without putting your nest egg at risk? One that provides a steady income to cover your expenses without whittling away your savings to nothing? It’s the sort of question that’s been thrust into the front of a lot of people’s minds this year as the coronavirus pandemic has sent many stocks plummeting. For anyone who is retired or close to it, it’s made the necessity of finding stocks that will provide returns without posing excessive risks in trying times all the more clear.
One option is to own stocks that pay regular, consistent dividends. Better yet, find companies that consistently raise their dividends — what are known as “dividend aristocrats.” Not only will these products generate a steady or even increasing cash flow, but because dividends are typically only offered by companies with a long track record and a stable balance sheet, your investments will be skewed toward solid, reliable companies that are more likely to hold up in hard times and recover healthily when things turn around.
So here’s a look at 25 stocks that just might fit that bill. Note that there’s no such thing as “a perfect stock” or “a perfect portfolio” that applies to all investors, and there’s no guarantee these companies won’t befall their own calamities that force the price down or necessitate cuts to their dividend. However, when it comes to a stock portfolio that can provide for a retiree, stable dividend stocks are one tried-and-true strategy that has paid off for many generations past.
- Share price: $144.01
- Dividend yield: N/A
Not many companies scream “blue chip” more than the Walt Disney Company. In addition to the company’s world-famous theme parks, the company is the owner and producer of some of the most iconic films and characters in history, from Mickey Mouse to Elsa. Recently, the company launched its own streaming service to compete with industry heavyweights Netflix and Amazon, leveraging the strength of its powerful content library.
Disney announced in early May that it would be suspending its dividend payment for the first half of 2020 while the company grapples with the effects of the coronavirus pandemic, and there’s no guarantee regarding the second payment in 2020 either. However, while it’s uncertain just how long it might take for Disney’s business model to return to a state of normalcy, Disney’s considerable size and resources do mean there’s a lot of reason.
- Share price: $76.89
- Dividend yield: 3.15%
In terms of market capitalization (a fancy term for a stock’s current share price times the number of outstanding shares), Merck is the largest pharmaceutical company in the world. Although the company has six blockbuster drugs, according to Investor’s Business Daily, its long-term success could hinge on its biggest cancer treatment, Keytruda.
After gaining 34% in 2018 and 19% in 2019, Merck came into 2020 in a very strong position. The company is a well-known name and investors have plenty of reasons to believe its good fortune should continue, making that dividend yield approaching 3% plenty appealing to retirees looking for income stocks.
Home Depot (HD)
- Share price: $238.19
- Dividend yield: 2.34%
Home Depot dominates the home improvement market, along with competitor Lowe’s. While both have performed well over the past 10 years, Home Depot has taken the crown, returning 755% to shareholders versus the 431% earned by Lowe’s. Home Depot shareholders have also been rewarded with a string of dividend increases, typically annually. Home Depot’s current quarterly dividend sits at $5.58, translating to a current yield of 2.34%. This represents a monster gain from the company’s first dividend paid on May 27, 1987, which was just $0.000439 per share on a split-adjusted basis.
- Share price: $136.03
- Dividend yield: 2.73%
Honeywell is primarily known as an aerospace and defense contractor, but it’s an industrial conglomerate with its hand in everything from chemicals and materials to manufacturing, safety and supply chain divisions, among others. Honeywell doesn’t raise its dividend every single year, but over time, its dividend history shows a consistent trend upward. Since 1995, for example, the company’s quarterly dividend has risen by nearly a factor of 10, from $0.093 to its current $0.90.
- Share price: $193.86
- Dividend yield: 0.63%
How often do you swipe your Visa card to make a purchase? Do you use your cards more often than you did 10 years ago? 20 years ago? If the answers to these questions are “often,” “yes” and “yes,” then you can understand why Visa is a growth stock. As Visa expands globally and continues to roll out new partnerships with card issuers, usage of its network is likely to grow. Beyond that, however, the company is branching out into new, noncard payment types in its bid to dominate the global payments market.
That trends toward cashless payments were already running strong and steady prior to the coronavirus pandemic, but the events of recent months should only stand to benefit companies like Visa all the more. If the world’s sudden lurch toward shopping and paying online means accelerating the trend in a lasting way, Visa could be well-positioned to take advantage.
- Share price: $125.45
- Dividend yield: 1.73%
If you were thinking that the coronavirus concerns pushing a huge portion of shopping online would also mean an exodus of customers from traditional retailers like Walmart to Amazon, you might have underestimated Walmart. The company’s first-quarter earnings report revealed that the company saw a 74% jump in e-commerce sales over the year prior, showing that Walmart might have ramped up its remote shopping options just in time. If Walmart can keep growing its online presence, it might mean the long-term threat posed to the massive retailer by Amazon and others is less severe than some might have previously thought.
- Share price: $29.59
- Dividend yield: 7.18%
AT&T traces its history all the way back to Alexander Graham Bell, so the company is nothing if not an example of corporate resilience. As the telecommunications industry has changed, AT&T has been forced to adapt. In addition to its wireless business, the company is also the world’s largest pay-TV provider. The company is a “dividend aristocrat,” having raised its dividend for 34 consecutive years as of Jan. 31, 2019. AT&T currently pays one of the highest dividends you can find at a major company, yielding over 7% at its current price.
- Share price: $91.19
- Dividend yield: 5.18%
AbbVie is a pharmaceutical company that might be a bit riskier for retirees. Sales of one of its major drugs, Humira, have slowed, and the stock has recently underperformed the S&P 500 index. However, strictly from an income perspective, AbbVie has been an admirable performer. The stock currently yields over 5% with a dividend that has increased by 168% since 2013 alone.
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- Share price: $227.87
- Dividend yield: 2.81%
Amgen has not only raised its dividend every year for nine years in a row, but it has also boosted its payout over that short time period by an astonishing 471%. Although all biotech companies have to deal with the ups and downs of patent expirations and drug trials, Amgen has a deep pipeline that should help it ride out any short-term problems.
UnitedHealth Group (UNH)
- Share price: $287.99
- Dividend yield: 1.49%
UnitedHealth is the largest U.S. health insurance company and the industry bellwether. As a retiree, if you’re going to own stocks, the most conservative options are often the biggest companies in a thriving industry. Although UnitedHealth sports a modest dividend yield, analysts currently have a consensus “buy” rating on the stock with an average price target of $340. Since 2010, when the company first began paying its dividends on a quarterly basis, UnitedHealth has raised its dividend every year.
- Share price: $121.38
- Dividend yield: 5.42%
“Big Blue” has been the epitome of the blue-chip stock for much of its existence. It still resides in the venerable Dow Jones Industrial Average, but its stock price has fallen on hard times in recent years. Since peaking at $215.80 on March 14, 2013, the stock has been in a marked downtrend.
However, for dividend investors, the stock is a dream, and not just because it’s currently yielding over 5%. IBM has paid quarterly dividends for an astonishing 103 consecutive years, and in 2020, it might become a dividend aristocrat, meaning it will have raised its dividend for at least 25 consecutive years.
Public Storage (PSA)
- Share price: $183.92
- Dividend yield: 4.36%
The idea behind investing in Public Storage is simple. As Americans continue to accumulate things, they need a place to store all of it. As a retiree, if you subscribe to the belief that the most solid companies in a particular industry are the industry leaders, then Public Storage is worth considering. Unlike many of its competitors, PSA operates with an extremely low amount of leverage (debt). The company also has a policy of consistently raising its dividend, which it has at an annualized rate of 9.8% since 2002. Currently, that translates to a dividend yield north of 4%.
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American Tower (AMT)
- Share price: $230.14
- Dividend yield: 1.72%
American Tower is the industry leader in wireless tower development, with more than 40,000 towers located across all 50 states. Since bottoming out in the low single digits in 2002, American Tower’s stock has been in a relatively steady uptrend, paralleling growth in mobile phone usage. The stock currently yields 1.72% at this share price, and analysts have a consensus “buy” rating.
- Share price: $87.12
- Dividend yield: 2.74%
Prologis is the world’s largest logistics real estate investment trust. While this may not sound like the most exciting investment, Prologis is poised to benefit from the tremendous boom in e-commerce and the need for additional warehouse and distribution space. After a disastrous 2008-09, the company’s stock has turned around dramatically, rallying from a low of about $10 to its current price in the mid-$90s. And, of course, Prologis would also appear to be in an unusually good position to take advantage of the economic shocks caused by the coronavirus. With so many more people using e-commerce to meet their needs, demand for the sort of buildings in Prologis’ portfolio is at an all-time high.
- Share price: $70.47
- Dividend yield: 2.54%
Colgate-Palmolive is one of the best known and loved brand names in the U.S. The firm has been showered with global accolades; Fortune magazine recognizes it as one of the world’s most admired companies, while Ethisphere has dubbed Colgate-Palmolive “the world’s most ethical company.” The company currently yields 2.54% and is one of the top dividend aristocrats, having raised its dividend for an astonishing 56 consecutive years, through Jan. 31, 2019.
Waste Management (WM)
- Share price: $99.45
- Dividend yield: 2.22%
There’s one theory to investing that companies in the most unsavory lines of work can offer some of the greatest values. After all, no one wants to regale friends at a cocktail party about how they made a fortune on trash. However, while it might not be as “sexy” as a hot new tech stock, there will always, always be trash and, therefore, a need for someone to take care of it. Waste Management is an industry leader that operates in a wide variety of verticals within its industry, making this the sort of defensive stock that’s more likely to hold up better through bear markets.
Archer-Daniels Midland (ADM)
- Share price: $35.35
- Dividend yield: 4.14%
Even though it’s one of the largest agricultural companies in the world, Archer Daniels Midland may not be a name familiar to many stock investors. However, for those in the know, the company has been a solid investment. The company is one of the kings of the dividend aristocrat world, raising its dividend an amazing 44 years in a row, putting the yield at over 4% after the stock tumbled with the rest of the market in March.
Union Pacific (UNP)
- Share price: $166.03
- Dividend yield: 2.44%
Even with the rise of other shipping options, rail remains an important transportation source in the U.S., and a recent shift could help boost the bottom line of railway companies like Union Pacific. Recently, UNP adopted the “precision scheduled railway” system, which helps railroad companies operate more efficiently. With a current dividend yield of nearly 2.5%, retirees could find a friendly income stock in UNP.
- Share price: $149.68
- Dividend yield: 3.96%
If you want to own a premium dividend aristocrat, look no further than 3M. This massive conglomerate is one of the companies in an eight-way tie for the longest consecutive streak of dividend increases, at 56 years as of Jan. 31, 2019. The company is also one of the elite 30 companies comprising the Dow Jones Industrial Average. Currently, the maker of everything from Scotch tape to Post-It notes yields nearly 4%.
Bristol-Myers Squibb (BMY)
- Share price: $61.68
- Dividend yield: 2.87%
The pharmaceutical industry has always been a sound source of dividend payments for investors, and Bristol-Myers Squibb is no exception. Currently yielding 2.87%, BMY’s stock has had its ups and downs but returned an average of 12.51% annually to investors over the last 10 years. The global pharmaceutical giant reported quarterly revenue of $6 billion in the third quarter of 2019 alone.
CVS Health (CVS)
- Share price: $63.22
- Dividend yield: 3.14%
Depending on your investment philosophy, the stock of pharmacy giant CVS could be one to avoid, or it could be on the brink of a major turnaround. While the stock market, in general, has enjoyed a prosperous half-decade, shares of CVS are down over 20% over the past five or so years. Earnings estimates are looking up, however, after turning negative during the company’s acquisition of insurance giant Aetna in 2018-19. That might be part of why a survey of 25 analysts has a “strong buy” rating on the stock with an average price target of $85.31. Dividends remain strong, with the company currently paying out over 3% of its share price.
Hormel Foods (HRL)
- Share price: $47.99
- Dividend yield: 1.94%
Hormel is a staple for most American cupboards — a status that has only increased in value since the coronavirus pandemic has pushed so much of people’s eating back to home. In times of uncertainty, stocks in what are considered “defensive” sectors where demand isn’t as big of a variable are strong options. Consumer staples like what Hormel provides are a perfect example, and the company’s long history of boosting dividends likely speaks to that.
- Share price: $45.89
- Dividend yield: 3.57%
Coca-Cola’s status as one of the gems of Warren Buffett’s portfolio has become famous over time, but it’s another example of how defensive stocks have real lasting power. Coca-Cola has a huge portfolio of consumer beverages that it sells across its global footprint, giving it a relatively strong position in an industry that tends to withstand economic downturns relatively well.
- Share price: $116.99
- Dividend yield: 1.88%
Lowe’s might not be the sole leader in its category — not with Home Depot out there — but it’s still a successful brand operating in the consumer staple sector with a long history of increasing dividends. It’s been nearly a half-century since Lowe’s went a full year without boosting its payout, showing remarkable consistency in its business over time.
- Share price: $130.07
- Dividend yield: 3.12%
While Pepsi is often thought of as the clear also-ran to Coca-Cola, there’s more to that story than meets the eye. In fact, Pepsi’s ownership of Lays means that they’re operating a vast brand portfolio across the beverage and snack food categories, giving them a number of verticals in which they’re active. The company continues to pay a dividend and has boosted it in each of the last 46 years.
Procter & Gamble (PG)
- Share price: $113.28
- Dividend yield: 2.79%
Many of the dividend aristocrats come from a similar vein: consumer staple companies with a very diverse offering across many categories. And it makes sense. Not only are these companies serving basic needs that people can’t go without, but they boast a range of brands that mean they won’t rise and fall with any one product. Procter & Gamble might be as quintessential a consumer goods conglomerate as they come, and it’s increased its dividend every year for over 50 years.
Johnson & Johnson (JNJ)
- Share price: $147.68
- Dividend yield: 2.71%
Johnson & Johnson is a consumer goods conglomerate — boasting personal hygiene products and brands across multiple categories — as well as being a pharmaceutical company with a number of interesting potential treatments in its pipeline. The company’s been a household name for decades for a reason, and it’s also served its shareholders well with regular dividend increases dating back to the 1980s.
Consolidated Edison (ED)
- Share price: $70.74
- Dividend yield: 4.33%
There are few sectors as quintessentially defensive as utilities, which has long had a reputation for strong dividends and stand up to the odd recession. After all, few services are as essential as the basics like power and water, meaning that companies like Consolidated Edison can count on very steady revenue streams in good times and bad. And with Consolidated Edison finding a way to increase dividends in each of the last 44 years, it would seem they’ve figured out a business plan that keeps chugging along through it all.
- Share price: $204.24
- Dividend yield: 2.08%
To be clear, Clorox was a pretty attractive stock before the coronavirus pandemic catapulted its sales to a new level and made the importance of its products all the more clear to the American public. It’s long had steady sales and has boosted dividends in over 40 straight years. So, even if the current boost is merely temporary, this stock still has the potential to be a valuable part of your portfolio for years to come.
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Joel Anderson contributed to the reporting for this article.
Market data is accurate as of market close on May 20, 2020.
About the Author
After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.