Retirees have a different set of needs than other investors. And, retirees, or anyone who is financially independent for that matter, commonly want an income from their investments. This helps offset some of the income retirees are no longer receiving from employment. With rising costs of housing and health care, among other necessities, income is especially important.
But investing for income is no easy task nowadays, due to persistently low-interest rates, and a stock market near record highs which has resulted in fairly low dividend yields.
Fortunately, there are still many suitable high dividend stocks, or monthly dividend stocks that provide attractive levels of income for retirees. These 15 stocks have above-average dividend yields that beat the S&P 500 average, safe dividends that are nearly recession-proof, and also have the ability to raise their dividends over time.
Retirement Stock #1: Chevron Corporation (CVX)
Chevron is a well-known dividend growth stock, as it is on the prestigious Dividend Aristocrats list.
The company has increased its dividend for over 30 years in a row. Chevron is an integrated super-major, with large upstream (exploration and production) and downstream (refining and marketing) segments.
In the 2021 second quarter, Chevron grew its production 4.6% over the prior year’s quarter. The average realized price of oil of Chevron essentially tripled over last year’s quarter and thus Chevron switched from an adjusted loss of -$1.56 per share to an adjusted profit of $1.71 per share.
Shares currently yield 5.1%.
Retirement Stock #2: Altria Group (MO)
Altria Group is a legendary dividend stock. It has increased its dividend for over 50 years, making the stock a Dividend King.
The company manufactures tobacco products including the Marlboro cigarette brand in the U.S., as well as chewing tobacco and cigars.
In response to the long-running trend of declining smoking rates in the U.S., Altria has invested heavily in adjacent categories for growth. Altria purchased a 55% equity stake in Canadian marijuana producer Cronos Group, invested nearly $13 billion for a 35% equity stake in e-vapor manufacturer Juul Labs, and the company owns 10% of Anheuser-Busch InBev (BUD).
Altria will also continue to expand its own heated tobacco products, IQOS and Marlboro HeatSticks, in 2021. Shares currently yield 7.7%.
Retirement Stock #3: Exxon Mobil (XOM)
Like Chevron, Exxon Mobil is also a Dividend Aristocrat and is a global energy super-major.
In the second quarter, Exxon’s production in the Permian grew 34% over last year’s quarter but total production dipped -2% due to maintenance activity. However, the chemical segment posted record earnings of $2.3 billion thanks to high margins.
In addition, the upstream segment thrived thanks to the rally of the price of oil, which resulted from the deep production cuts of OPEC and Russia and the recovery from the pandemic. As a result, Exxon switched from an adjusted loss of -$0.70 per share in last year’s quarter to an adjusted profit of $1.10 per share.
Exxon Mobil stock yields 5.7%.
Retirement Stock #4: AT&T Inc. (T)
AT&T is a telecom giant with a 7.4% 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.
In the 2021 second quarter, AT&T generated 7% growth in revenue and adjusted earnings-per-share.
AT&T has announced a deal to combine WarnerMedia with Discovery, Inc. (DISCA) to create a new global entertainment company. AT&T will receive $43 billion in a combination of cash, securities and retention of debt.
We believe these various deals with allow AT&T to simplify its operations, become more efficient, and return to its core focus on telecom services such as 5G rollout. Shares currently yield over 7%.
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 $71 billion in sales in fiscal 2020.
Procter & Gamble has paid a dividend for 130 years and increased its dividend for 64 consecutive years. This is due in large part to the company’s ability to withstand recessions.
In the most recent quarter, P&G grew sales by 7% year-over-year. Adjusted earnings-per-share increased 10.5% for fiscal 2021. Procter & Gamble also provided fiscal 2022 guidance, anticipating 2% to 4% sales growth and 3% to 6% adjusted EPS growth. 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 39,000 locations in over 100 countries. Approximately 93% of the stores are independently owned and operated. Its accelerated franchising activity over the past few years 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 most universally recognized and most valuable brands in the world.
McDonald’s has raised its dividend every year since paying its first dividend in 1976, qualifying the stock as a Dividend Aristocrat. Shares currently yield 2.2%.
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 service.
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 the company’s wireless net additions and very low churn rate.
In the 2021 second quarter, Verizon’s revenue grew 11.2% to $33.8 billion, beating expectations by $1.1 billion. Adjusted earnings-per-share of $1.37 was a 16.1% increase from the prior year, and $0.07 ahead of estimates. Verizon stock offers a high yield of 4.7%.
Retirement Stock #8: 3M Company (MMM)
3M is a diversified global industrial manufacturer. Its most popular consumer brands are Post-It and Scotch tape. In all, 3M manufactures more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world.
3M reported second-quarter earnings results on 7/27/2021. Revenue improved 24.7% to just under $9 billion and topped expectations by $360 million. Adjusted earnings-per-share of $2.59 compared favorably to adjusted earnings-per-share of $1.78 in the previous year and was $0.31 above estimates. Organic growth was 21.4% for the quarter, with each segment posting at least a high-teens growth rate.
3M has increased its dividend for over 60 consecutive years, making it a Dividend King. Shares currently yield 3.3%.
Retirement Stock #9: Johnson & Johnson (JNJ)
Johnson & Johnson is a diversified health care company and a mega-cap stock with a market cap above $400 billion. J&J is a market leader in the area of pharmaceuticals (~49% of sales), medical devices (~34% of sales) and consumer products (~17% of sales). Johnson & Johnson generates annual sales in excess of $90 billion.
The company has built a dominant business model and has produced 8% average annual earnings-per-share growth over the past 20 years. Johnson & Johnson generated over $20 billion in free cash flow last year.
Johnson & Johnson has increased its dividend for 59 consecutive years. With over 50 consecutive years of dividend increases, Johnson & Johnson is on the exclusive list of Dividend Kings. Shares currently yield 2.6%.
Retirement Stock #10: The Coca-Cola Company (KO)
Coca-Cola is a global beverage giant. It is the world’s largest beverage company, as it owns or licenses more than 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 every day, producing roughly $36 billion in annual revenue.
Acquisitions are a key component of Coca-Cola’s future growth strategy. For example, Coca-Cola acquired Costa in a $4.9 billion acquisition, which gave it instant exposure to coffee, a high-growth market.
Coca-Cola stock yields 3.1% and the company has increased its dividend for over 50 years in a row.
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 each generate at least $1 billion in annual sales.
In the 2021 third quarter, PepsiCo’s revenue grew 11.6% to $20.2 billion, which was $800 million above expectations. Adjusted earnings-per-share of $1.79 was a 7.8% improvement year-over-year and $0.06 ahead of estimates. Organic sales were higher by 9%. Beverages overall had an 8% increase in volumes while food and snack was up 4%.
PepsiCo has increased its dividend for over 40 years in a row, and currently yields 2.7%.
Retirement Stock #12: Consolidated Edison (ED)
Consolidated Edison is a major U.S. utility that delivers electricity, natural gas, and steam to its customers in New York City and Westchester County. It has annual revenues of about $12 billion.
In the 2021 second quarter, revenue improved 9.2% to $3 billion, beating expectations by $140 million. Adjusted net income of $183 million, or $0.53 per share, was $0.09 below 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 40 consecutive years, making it a Dividend Aristocrat. Shares currently yield 4.2%.
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 second quarter earnings on July 23rd, 2021. Total sales were up 2% year-over-year to $4.7 billion, as forex added 3% to the top line, while organic sales declined 3%. Kimberly-Clark is being challenged by rising raw materials costs, but the company has the ability to pass this along through price increases.
Kimberly-Clark has increased its dividend for 49 consecutive years, including a solid 6.5% raise for 2021. With another yearly increase, Kimberly-Clark will join the list of Dividend Kings. Shares currently yield 3.5%.
Retirement Stock #14: American Electric Power (AEP)
American Electric Power was founded in 1906 and has evolved its business model along with 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 5.5 million customers and has over $80 billion in assets, with 40,000 miles of transmission. AEP has paid 444 consecutive quarterly dividends on its common stock. It has paid a cash dividend on its common stock every quarter since July 1910. Shares currently yield 3.5%.
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 tripled its earnings per share, from $3.14 in 2013 to $10.56 in 2020. It has continued to generate growth this year. In the most recent quarter, revenue of $14.0 billion increased 34% from the previous year’s quarter. AbbVie earned $3.11 per share during the second quarter, up 33% year-over-year.
AbbVie stock has a high dividend yield of 4.7%.
Retirement investors typically have a need for more investment income. Many retirees are less concerned with capital appreciation and are more concerned with capital preservation along with income generation.
Many retirement investors prefer to buy high dividend stocks with 5%+ yields, as this provides them with more income than the typical stock. The broader S&P 500 Index yields just 1.4% on average right now.
All stocks have risks, and high dividend stocks are no different. Specifically, investors must be confident that the high dividend payout can be sustained by the underlying business, with sufficient profits and cash flow.