S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20

7 Great Dividend Stocks to Buy For a Comfortable Retirement

Posted on Friday, February 19th, 2021 by MarketBeat Staff
7 Great Dividend Stocks to Buy For a Comfortable RetirementThere are people who will say the day of set it and forget it retirement accounts are over. But it’s a narrative we’ve heard before. The truth is the formula for saving for and enjoying a comfortable retirement, like the formula for weight loss, hasn’t really changed. A lot depends on whether an individual has the discipline to see it through.

Dividend stocks remain one of the core elements of a retirement portfolio. As individuals near retirement the ability to reinvest dividends allows for a greater total return. And once individuals need to live off their portfolio, the dividends provide a source of income without having to tap their principal.

However, not all dividend stocks are the same and many investors get sucked in by the allure of a high-yield dividend stock. But what you’re really looking for are companies with a history of increasing its dividend. The ability to increase a dividend over time illustrates that the company has a business model that can hold up regardless of how the broader economy is performing.

In this special presentation, we’ll highlight seven stocks that individuals can buy today to capture a stable, recurring dividend.

#1 - Procter & Gamble (NYSE:PG)

Procter & Gamble logo

One of the best indicators of a strong dividend is a company’s history of increasing its payout. And Procter & Gamble (NYSE:PG) is among the best with a 59-year history of paying out a solid dividend.

This isn’t a stock that’s going to be confused with the high-flying growth stocks. However, during the pandemic, P&G proved its strength as a defensive stock when its products flew off supermarket shelves. That’s what investors are buying; a dividend stock that will be resilient in any economy, but particularly at times when the economy looks weak.

Investors could quibble about the company’s P/E ratio that is a bit elevated compared to its historical trend. However, as P/E stock has dropped from its 5-year high set late last year, the P/E ratio is drifting to be more in-line with its historical average. And currently, PG stock has a dividend yield of 2.49% and a payout ratio of 50.38%.  

About Procter & Gamble

Procter & Gamble Co engages in the provision of branded consumer packaged goods. It operates through the following segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers hair, skin, and personal care. The Grooming segment comprises of shave care like female and male blades and razors, pre and post shave products, and appliances.Read More 
Current Price
$147.47
Consensus Rating
Hold
Ratings Breakdown
8 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$149.53 (1.4% Upside)




#2 - Pepsico (NASDAQ:PEP)

PepsiCo logo

The Pepsico (NASDAQ:PEP) versus Coca-Cola (NYSE:KO) debate extends to more than just the taste of each company’s respective carbonated beverages. Battle lines are frequently drawn on the company’s stock.

The pandemic has tested the narrative that demand for the company’s products was a foregone conclusion. Consumers couldn’t pick up the slack from the demand that was lost due to the suspension of live events and the shuttering of bars and restaurants.  That, however, plays to Pepsi’s favor because Pepsi has been growing its snack food division which gives them a “both/and” model that Coke can’t currently match.

Another reason why dividend investors should consider Pepsico stock is because of its payout ratio which at 58.66% is well below Coke which has a payout ratio in the 80% range. This simply means that Pepsi should have more flexibility to increase its dividend going forward.

Pepsi should be one of the winners as the economy begins to reopen and they can begin to generate revenue from traditional distribution channels. And with a nifty dividend to boot, Pepsi is a solid addition to this list.

About PepsiCo

PepsiCo, Inc engages in the manufacture, marketing, distribution and sale of beverages, food, and snacks. It is a food and beverage company with a complementary portfolio of brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. It operates through the following business segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; and Africa, Middle East and South Asia The Frito-Lay North America segment markets, distributes, and sells snack foods under the Lay's, Doritos, Cheetos, Tostitos, Fritos, Ruffles, and Santitas brands.Read More 
Current Price
$161.14
Consensus Rating
Hold
Ratings Breakdown
6 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$162.77 (1.0% Upside)




#3 - Kimberly-Clark (NYSE:KMB)

Kimberly-Clark logo

You should consider Kimberly-Clark (NYSE:KMB) stock for many of the same reasons as Procter & Gamble. The company’s products are in high demand regardless of the state of the economy and the company has a safe, reliable dividend.

In the case of Kimberly-Clark, the company has increased its dividend for the last 49 years. If it makes it to 50 it will become part of a very select group of stocks known as Dividend Kings. The company also has a payout ratio of just 44.32% suggesting that there is much more room to grow its dividend.

KMB stock is down significantly from its all-time high which was set late last year. However, a key catalyst is likely to remain in place for some time to come.

An event like the Covid-19 pandemic leaves ripple effects that last for years, and sometimes indicate permanent behavioral shifts. Americans will likely continue to buy the products sanitary products. And that trend will be amplified in offices, schools, and other public venues.

About Kimberly-Clark

Kimberly-Clark Corp. engages in the manufacture and marketing of products made from natural or synthetic fibers. It operates through the following segments: Personal Care, Consumer Tissue, and K-C Professional (KCP). The Personal Care segment offers disposable diapers, training and youth pants, swim pants, baby wipes, feminine and incontinence care products, and other related products.Read More 
Current Price
$135.27
Consensus Rating
Hold
Ratings Breakdown
2 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$134.00 (0.9% Downside)




#4 - Cardinal Health (NYSE:CAH)

Cardinal Health logo

Health care will always be a strong sector, particularly if you’re a pharmaceutical distributor. The ability to help individuals manage chronic conditions transcends political ideology. And that’s one reason why Cardinal Health (NYSE:CAH) makes this list.

CAH stock struggled in 2020 due to its being named in a lawsuit brought by states that named Cardinal Health as a defendant for its role in the opioid epidemic. However, in late 2020, Cardinal Health along with other drug wholesalers reached a $26 billion settlement. That should decrease the uncertainty on the company’s balance sheet.

And this allows investors to focus on the company’s fundamentals. With a P/E ratio of just over 10, CAH stock is trading at a level that is significantly lower than where it was just a few years ago. And the company pays out a solid dividend that has a yield of 3.77%.

Cardinal has increased its dividend for the last 34 years and has a comfortable payout ratio of 24.28%.

About Cardinal Health

Cardinal Health, Inc is a healthcare services and products company, which engages in the provision of customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices. It also provides medical products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency.Read More 
Current Price
$47.60
Consensus Rating
Hold
Ratings Breakdown
1 Buy Ratings, 6 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$57.44 (20.7% Upside)




#5 - Automatic Data Processing (NASDAQ:ADP)

Automatic Data Processing logo

For investors that are nearing retirement, consistency is the name of the game. And that’s what investors get from Automatic Data Processing (NASDAQ:ADP). The company is the largest payroll processor in the United States. The company has competition from Paycom (NYSE:PAYC). However, the company still has a strong moat with small- and mid-size businesses. This is because of the flexible packages that ADP provides for its customers.

The company’s 2.15% dividend yield is pedestrian. But as dividend investors know, yield is not the best measure of a company’s dividend. ADP has increased its dividend for 47 years and has a payout ratio of 37.24% which is easily supported by the company’s recurring revenue.

That recurring revenue is also a reason that the company has managed a 100% increase in its stock price over the last five years. And ADP stock is up 57% since the onset of the pandemic. The company should also have a short-term catalyst as the economy begins to reopen and hiring increases.

About Automatic Data Processing

Automatic Data Processing, Inc engages in the provision of business outsourcing solutions specializes in cloud-based human capital management. It operates through the following business segments: Employer Services; and Professional Employer Organization Services; and Other. The Employer Services segment provides clients ranging from single-employee small businesses to large enterprises with tens of thousands of employees around the world, offering a range of human resources outsourcing and technology-based human capital management solutions, including strategic, cloud-based platforms.Read More 
Current Price
$229.62
Consensus Rating
Hold
Ratings Breakdown
3 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$223.42 (2.7% Downside)




#6 - UPS (NYSE:UPS)

United Parcel Service logo

I can imagine you’re thinking that if I’m going to be pushing a stock that will benefit from the growth of e-commerce I should suggest Amazon (NASDAQ;AMZN). That’s a great choice. But AMZN stock doesn’t pay a dividend and that’s why UPS (NYSE:UPS) merits consideration.

UPS has an attractive, if not modest, yield of around 2.5%. However it’s the company’s payout ratio that is worth your attention. At around 39% it looks to have a lot of upside particularly considering the fact that demand for the company’s services is only going to increase in coming years. And despite the pandemic, UPS did manage to increase its dividend recently.

In fairness, FedEx (NYSE:FDX) has an attractive payout ratio as well. However, at this time UPS pays a higher yield.

Like many stocks on this list, UPS is not a stock for investors to buy with expectations of long-term growth. However, investors get a reliable dividend that provides income into and through their retirement years.

About United Parcel Service

United Parcel Service, Inc operates as a logistics and package delivery company that provides supply chain management services. Its logistics services include transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage, insurance, and financing. The firm operates through the following segments: U.S.Read More 
Current Price
$205.30
Consensus Rating
Buy
Ratings Breakdown
15 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$212.04 (3.3% Upside)




#7 - Walt Disney Company (NYSE:DIS)

Walt Disney logo

The Walt Disney Company (NYSE:DIS) is the one company on this list that does not currently pay a dividend. Disney suspended its dividend as a countermeasure to weather the global pandemic. However, it’s likely that the company will restart their dividend when the company’s theme parks and production studios return to normal operating conditions. The company had a 40-year history of issuing a dividend with a payout ratio between 15% and 30%.

At the onset of the pandemic, Disney appeared to be a pandemic loser for obvious reasons. However, as time has gone on, the House of Mouse has proven that the whole of the company is greater than the sum of its parts. In this case, the company’s streaming service, Disney+, has helped it weather the lack of revenue from its theme parks, resorts, and cruise ships.

As the economy reopens, Disney looks to be one of the big winners. With that in mind, I would expect that investors can expect strong capital growth in 2021 and 2022. And for those investors with a medium to long-term retirement timeline, you should expect the company to reinstate its dividend.

About Walt Disney

The Walt Disney Co is a diversified international family entertainment and media enterprise. It operates through the following segments: Media Networks, Parks, Experiences and Products, Studio Entertainment and Direct-to-Consumer and International (DTCI). The Media Networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, radio networks and stations.Read More 
Current Price
$148.11
Consensus Rating
Buy
Ratings Breakdown
20 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$200.56 (35.4% Upside)



 

The market is likely to remain volatile for quite some time. At this time, equities remain one of the only places to get a return on capital. But the risk tolerance of some workers may be changing.

A recent study found that many workers in their 50s are using the pandemic as an opportunity to take a step back from their career. The long-term effects of this are yet to be felt, but it’s likely that many individuals may be looking to accelerate their retirement plans.

This doesn’t mean individuals should look to exit stocks. But it may be time to become more selective, particularly for investors who believe a market correction may be coming. Quality, reliable dividend stocks are an ideal way to add diversification to a portfolio.

For investors that have some time, the opportunity to reinvest dividends for a higher total return now will be a source of stable cash in years to come.

20 High-Yield Dividend Stocks that Could Ruin Your Retirement Portfolio

Almost everyone loves a company that pays strong dividends. Who doesn't like receiving a check every quarter for simply owning a stock--especially if that stock is paying you back 4%, 5% or even 10% of its share price in annual income each year?. In a world where 10-year treasuries are yielding just above 2%, it seems hard to go wrong when buying a stock that's yielding significantly above the going rates on fixed-income assets. Unfortunately, the market rarely offers a free lunch.

While high-yield stocks may have a lot of near-term attractiveness, those same high-yields can often signal significant danger ahead. In some cases, it might mean that the company's dividend will stop growing or won't grow as fast as it used to. Worse yet, the company could cut its dividend, reduce the income you receive from owning the stock and drive down the value of the shares that you own.

4%-plus yields might seem like an easy opportunity to boost the investment income you receive, but high-yield stocks can just as often be a track reading to snare unsuspecting investors. It's not always easy to tell the difference though.

This slideshow highlights 10 high-yield dividend stocks that are paying an unsustainably large percentage of their earnings in the form of a dividend. These companies are all paying out more than 100% of their earnings per share in the form of a dividend, a sign that the advertised high-yield probably won't last.

View the "20 High-Yield Dividend Stocks that Could Ruin Your Retirement Portfolio" Here.





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