The stocks and investments that are right for you will depend a lot on your personal circumstances. If you’re young and have decades of work ahead of you, you may like very different stocks than someone who’s retired or close to them.
If you’re retired, you may be looking for dividend income to pay your bills with cash from your portfolio — you may not need to sell your shares. Most retirees also want peace of mind so they can spend time doing what they love without financial stress.
Don’t worry, I’ve got you covered. Here are three solid high-yielding dividend stocks with dividend yields between 5.5% and 7.5% that will fill your pockets and give you the peace of mind you deserve.
Image credit: Verizon Communications
Wireless networks are a staple of modern US life that you may have used Verizon Communications.(NYSE: VZ) at some point as your telephone or internet service provider. The company is one of the few players in the US telecommunications market that has established itself with an expansive infrastructure built over decades. Today, Verizon has 146 million connected lines in the retail segment.
While Verizon must continually invest in infrastructure, it generates tremendous cash flow that has funded its dividend and allowed management to increase it for 19 consecutive years. The stock is currently yielding a juicy 7% at the current share price.
Fortunately, investors don’t have to worry about Verizon’s ability to pay shareholders. The company’s free cash flow, expected this year to be 19.5-20.5 billion. USD, enough to cover dividends.
Retirees will also like the docile nature of the stock. Its stock has a beta of just 0.35, meaning it has little to no reaction to the ups or downs of the broader market. Verizon’s smooth share price action, generous yield and modest 58% dividend payout ratio tick all the boxes retirees are looking for.
Most retirees grew up in a time when smoking was more accepted than it is today. Despite a steady decline in smoking rates, Altria Group(NYSE: MO)which sells Marlboro cigarettes in the United States, has increased its dividend every year while consistently raising prices.
The company has increased dividends for 54 consecutive years. Tobacco stocks are known for their high dividend yields, and Altria’s 7.5% does not disappoint.
More importantly, the dividend has a solid foundation, including a manageable payout ratio of 78% in 2025. income forecasts, and investment grade (BBB rating) balance sheet. There are some legitimate long-term concerns about the company’s inability to capture significant market share in new smokeless nicotine product categories to date, but that’s not as big of an issue for retirees. Marlboro has carried the company for years and probably won’t fall overnight.
Altria and other tobacco stocks are remarkably resilient. The stock currently has a beta of 0.51, so once again investors are exposed to less risk of stock price fluctuations that could raise their blood pressure to this level. Wall Street still expects earnings to grow in the low single digits over the next three to five years, so there isn’t much concern about the dividend in the near term, unless Altria’s earnings start to unexpectedly decline.
Real estate is an old-school investment property that is still a great source of passive income. Real estate income(NYSE:O) is one of the largest real estate investment trusts (REITs), companies that buy and lease real estate and distribute their earnings to investors as dividends. The stock is currently yielding over 5.5% based on the current share price, and retirees will love that the company pays a monthly dividend.
Realty Income’s strong consumer-focused tenant base, net lease model and skilled management team have delivered 32 years of uninterrupted dividend growth. The only downside to REIT dividends is that they are not qualified, meaning the IRS can tax them as ordinary income unless you hold the shares in a tax-advantaged account.
The stock has languished over the past few years due to rising interest rates and some big acquisitions, but it could be breaking out of the slump after the Fed recently cut interest rates and set a strong profit guidance for this year.
Finally, real estate income is another stock that shouldn’t keep you up at night. The stock currently has a beta of 0.77, so real estate income, like the previous two stocks, tends to be less volatile than the broader market.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Real Estate Income. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
3 High-Yield Dividend Stocks That Could Be Ideal Buys for Retirees was originally published by The Motley Fool
