Financial independence is an important goal — and it’s much more so for retirees. A retiree’s investment portfolio should ideally be geared towards higher, more consistent income through dividends. This helps offset their lack of employment income and helps cover the costs of necessities, especially in the face of rising housing and healthcare costs. However, unfavorable market conditions like low interest rates and record-high stock prices have contributed to companies’ decisions to lower their dividend yields.
Fortunately, there are still a few companies that offer favorable yields, from ones offering monthly payouts to others that regularly give out higher-than-average dividends. These 15 choice companies have proven track records of enduring recessions, increasing dividend payouts, and generally outperforming the average S&P 500 yields — all of which make them attractive investments for retirees and pensioners.
Retirement Stock #1: Chevron Corporation (CVX)
Retirement Stock #1: Chevron Corporation (CVX)
Chevron is a well-known dividend growth stock and is a part of the prestigious Dividend Aristocrats list.
The company has increased its dividend for over 36 years in a row. Chevron is an integrated super-major with large upstream (exploration and production) and downstream (refining and marketing) segments.
In the 2023 first quarter, Chevron shrunk its production by 2.56% over the prior year’s quarter. Even with the lower production, the company reported a profit of $3.55 per share, which is higher by 5.65% over the prior year’s quarter.
Shares currently yield 3.83%.
Retirement Stock #2: Altria Group (MO)
Altria Group is a legendary dividend stock. It has increased its dividend for over 53 years, making the stock a Dividend King. It currently offers an 8.25% dividend yield, which is rare for companies of its size.
The company manufactures tobacco products, including the Marlboro cigarette brand in the U.S. and chewing tobacco and cigars.
With the continued transition of consumers to vaping as an alternative to cigarettes, Altria has acquired NJOY, the e-cigarette startup, for $2.75 billion. Earlier this year, the company was rumored that it was planning to merge with NJOY. This merger makes Altria’s market share in the cigarette market even bigger.
Retirement Stock #3: Exxon Mobil (XOM)
Like Chevron, Exxon Mobil is also a Dividend Aristocrat and is a global energy super-major.
Exonn announced its first-quarter 2023 earnings of $11.4 billion, an EPS of $2.79 (assuming dilution). This grew by 36.71% but had unfavorable items that amounted to $200 million due to additional European taxes on the energy sector. The company is on track to meet its full-year guidance on capital expenditure of $23 billion to $25 billion, as its 1st quarter expenditure is around $6.4 billion.
Exxon Mobil stock yields 3.48%.
Retirement Stock #4: AT&T Inc. (T)
AT&T is a telecom giant with a 7.34% dividend yield. AT&T is a telecommunications giant, as its core Communications segment provides mobile, broadband, and video to 100 million U.S. consumers and 3 million businesses.
During the first quarter of 2023, AT&T shrunk by -20.91% and a lower reported earnings-per-share by -12.31%. Much of these are attributed to the pace of mobility growth from the aggressive campaign of competitors and fiber slow down. However, the company still has a solid free cash flow generation from its operations and is expected to generate $16 billion or more this year.
With AT&T trading at discounted levels, we believe that once the company starts with its aggressive campaign to regain market share, it may bounce back faster. In addition, continuously building its fiber locations and subscriber base for IP-fiber broadband can push for future growth.
Retirement Stock #5: Procter & Gamble (PG)
Procter & Gamble is a consumer staples giant with a large portfolio of leading brands. Some of its notable brands include Pampers, Tide, Bounty, Charmin, Gillette, Old Spice, Febreze, Crest, Oral-B, Olay, and many more. The company generated $80 billion in sales in fiscal 2022.
Procter & Gamble has paid a dividend for 133 years and increased it for 67 consecutive years. This is largely due to the company’s ability to withstand recessions.
In the most recent quarter, P&G grew sales by 3.54% year-over-year. Earnings-per-share increased by 3.01% year-over-year. Procter & Gamble also anticipates market growth to return 3%-4%. P&G is a Dividend King.
Retirement Stock #6: McDonald’s Corporation (MCD)
McDonald’s is the world’s largest publicly traded fast-food company, with about 38,000 locations in over 100 countries. Approximately 93% of the stores are independently owned and operated. Over the past few years, its accelerated franchising activity has helped boost McDonald’s profit margins and overall earnings-per-share.
McDonald’s competitive advantage is its global scale, immense network of restaurants, well-known brand, and real estate assets. Further, McDonald’s is one of the world’s most universally recognized and valuable brands.
McDonald’s has raised its dividend yearly since paying its first dividend in 1976, qualifying the stock as a Dividend Aristocrat. Shares currently yield 2.06%.
Retirement Stock #7: Verizon Communications (VZ)
Verizon Communications is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S. as it continues its rollout of 5G.
One of Verizon’s key competitive advantages is that it is often considered the best wireless carrier in the U.S. This is evidenced by its wireless net additions and meager churn rate.
In the 2023 first quarter, Verizon’s revenue grew 3.54% to $ 20 billion, beating analyst expectations by 3.58%. Earnings-per-share was reported for $1.37, beating analyst estimates by 3.62%. Verizon stock offers a high yield of 2.53%.
Retirement Stock #8: 3M Company (MMM)
3M is a diversified global industrial manufacturer. Its most popular consumer brands are Post-It and Scotch tape. Overall, 3M manufactures more than 50,000 products used daily in homes, hospitals, office buildings, and schools worldwide.
3M reported first-quarter earnings results where revenue declined by -12.95% year-on-year but was able to beat analyst expectations by 2.66%. Earnings-per-share was reported at $1.97, a decline of -25.66% year-on-year but still beat expectations by 24.37%. Organic sales growth declined by -4.9% for the quarter due to divestiture and foreign currency headwinds.
3M has increased its dividend for over 64 consecutive years, making it a Dividend King. Shares currently yield 5.83%.
Retirement Stock #9: Johnson & Johnson (JNJ)
Johnson & Johnson is a diversified healthcare company and a mega-cap stock with a market cap above $410 billion. J&J is a market leader in the area of pharmaceuticals (~54% of sales), medical devices (~30% of sales), and consumer products (~16% of sales). Johnson & Johnson generates annual sales of over $94 billion.
The company has built a dominant business model that has increased shareholder value with its growth and dividends. Its first-quarter revenue grew by 5.63%, beating analyst estimates by 4.56%, and earnings-per-share grew by 0.37% but also beat analyst estimates by 7.01%.
Johnson & Johnson has increased its dividend for 62 consecutive years, making it a part of the exclusive list of Dividend Kings. Shares currently yield 3%.
Retirement Stock #10: The Coca-Cola Company (KO)
Coca-Cola is a global beverage giant. It is the world’s largest beverage company, owning or licensing over 500 unique non-alcoholic brands. Since the company’s founding in 1886, it has spread to more than 200 countries worldwide. Its brands account for about 2 billion servings of beverages worldwide daily, producing roughly $43 billion in annual revenue.
Acquisitions are a key component of Coca-Cola’s future growth strategy. For example, Coca-Cola is set to acquire a 49% stake in Endian LLC for $22.3 million, which gave it additional exposure in Japan’s high-growth market.
Coca-Cola stock yields 3.02%, and the company has increased its dividend for over 61 years in a row, making it a part of the dividend kings list.
Retirement Stock #11: PepsiCo (PEP)
PepsiCo is a global food and beverage company. It has a diversified business model that is roughly evenly split between food and beverages. The company’s major brands include Pepsi, Mountain Dew, Frito-Lay, Gatorade, Tropicana, and Quaker. PepsiCo has 23 brands that generate at least $1 billion in annual sales.
In the second quarter of 2023, PepsiCo’s revenue grew 10.37% year-on-year to $22.32 billion, which was $593 million above expectations. Earnings-per-share was reported as $2.09, a 12.37% improvement year-over-year and $0.13 ahead of estimates, and an organic sales growth of 13%.
PepsiCo has increased its dividend for over 51 years in a row and currently yields 2.69%.
Retirement Stock #12: Consolidated Edison (ED)
Consolidated Edison is a major U.S. utility that delivers electricity, natural gas, and steam to New York City and Westchester County customers. It has annual revenues of about $15.67 billion.
In the first quarter of 2023, revenue improved 8.45% to $4.4 billion, beating expectations by $110 million. Its net income of $1.43 billion was more than doubled in growth based on the same quarter, or $4.05 per share, which was 139.39% above expectations.
Utility stocks are widely purchased for their stable business models and reliable dividends, and ConEd is no exception. It has increased its dividend for over 46 consecutive years, making it a Dividend Aristocrat. Shares currently yield 3.48%.
Retirement Stock #13: Kimberly-Clark Corporation (KMB)
The Kimberly-Clark Corporation is a global consumer products company that makes disposable consumer products, including paper towels, diapers, and tissues. It manufactures many popular brands including Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott, Cottonelle, and Viva.
Kimberly-Clark reported its first earnings with total sales up 2% year-over-year to $5.2 billion, with organic sales growth at 5%. Kimberly-Clark expects its 2023 adjusted eps growth to be 6-10%.
Kimberly-Clark has increased its dividend for 52 consecutive years and has recently joined the list of Dividend Kings. Shares currently have a dividend yield of 3.49%.
Retirement Stock #14: American Electric Power (AEP)
American Electric Power was founded in 1906 and has evolved its business model and changing technologies to offer customers safe, reliable, and affordable energy. It is one of the largest regulated utilities in the United States and offers electricity generation, transmission, and distribution services in 11 states. Its energy sources are coal, natural gas, renewables, and nuclear.
The company serves 5.6 million customers and has over $94.52 billion in assets, with 40,000 miles of transmission. The company has paid a cash dividend on its common stock every quarter since July 1910 and has consecutively increased its dividend payments for 14 years. Shares currently have a dividend yield of 3.81%.
Retirement Stock #15: AbbVie Inc. (ABBV)
AbbVie is a biotechnology company focused on developing and commercializing drugs for immunology, oncology, and virology. AbbVie was spun off by Abbott Laboratories (ABT) in 2013. Since then, AbbVie has become one of the largest biotechnology companies, especially following the closing of its acquisition of Allergan.
Since the spin-off, AbbVie has more than quadrupled its earnings per share, from $3.14 in 2013 to $13.77 in 2022. The company has steadily worked on maintaining its revenue. In the most recent quarter, revenue of $12.26 billion decreased by -9.7% from the previous year’s quarter and a decline of -24.07% in earnings year-on-year based on its prior quarter as it earned $2.46 per share during the first quarter. The decline is attributed to the company’s U.S. release of Humira Biosimilars (tumor necrosis factor blockers), but the company is expected to rebound from it now as its release and alongside its other solid games from key hematology, immunology, neurology products, and other acquisitions.
AbbVie stock has a high dividend yield of 4.35%.
Retirement investors typically have more investment income. Many retirees are less concerned with capital appreciation, capital preservation, and income generation.
Many retirement investors prefer to buy high dividend stocks with 5%+ yields, giving them more income than the typical stock. The broader S&P 500 Index yields just 1.52% on average right now.
All stocks have risks, and high-dividend stocks are no different. Specifically, investors must be confident that the underlying business can sustain the high dividend payout with sufficient profits and cash flow.