10 Quality Retirement Stocks Now

 


Income investors have faced a significant challenge in recent years. Generating suitable income to live off a dividend portfolio has not been easy, as the Federal Reserve kept interest rates low for many years. And, soaring stock prices caused the average dividend yield of the S&P 500 Index to sink to multi-decade lows.


Interest rates are rising again, but even so, the average dividend yield of the S&P 500 Index is just ~1.7%.


We recommend income investors focus on quality dividend stocks such as the Dividend Aristocrats, a group of 67 stocks in the S&P 500 Index which have raised their dividends for 25+ consecutive years.


At the same time, investors looking for high yields may not find the Dividend Aristocrats immediately attractive, as many of them have relatively low yields. Therefore, the task for income investors hoping to live off their dividends in retirement, is to find stocks that have a combination of a high yield and a high level of dividend safety.


With the proper research, investors can construct a portfolio that allows income investors to live off their dividends in retirement.


There are a number of different asset classes that investors can gain exposure to, in the search for higher income. One of the most popular asset classes for retirees is fixed income, otherwise known as bonds. These are debt securities issued by corporations, governments and municipalities which pay investors periodic interest, as well as principal at maturity.


Bonds are certainly a worthwhile selection for income investors such as retirees, particularly for those with a higher level of risk aversion. Bonds generally carry a higher level of safety than stocks, as bondholders are paid before common stockholders.



At the same time, stocks have certain advantages of their own. For investors who are willing to accept a higher level of risk by investing in the stock market, the trade-off is that stocks could pay higher income over the long-run.


Continue reading …


Comments