10 Best Safe Dividend Stocks for Retirement Portfolios

In this article, we discuss the 10 best safe dividend stocks for retirement portfolios.

Retirement portfolios in the US are got hammered in 2022 amid rising inflation, Russia-Ukraine war and rising interest rates. Americans were already notorious for their limited savings. The stock market crash of 2022 made things worse for them. A Bloomberg report cited Alicia Munnell, director of Boston College’s Center for Retirement Research, who said that in the first half of 2022 alone, a whopping $3.4 trillion from 401(k)s and IRAs was erased due to the economic crisis. The same report also quoted Richard Johnson, a retirement expert at the Urban Institute, who thinks that a “large portion of the population” in the retirement age group will see a decline in their living standards because of this crisis. The effects of the 2022 market crash will be huge because millions of Americans are fast approaching the age of retirement.

A Georgetown University report says that 10,000 people from the baby boomer generation will be turning 65 every day between now and 2030. By 2030, there will be 74 million Americans aged 65.

That’s why investors are flocking to safe dividend stocks in 2022. They want to invest their money in companies that have a history of surviving economic volatility and difficult times. We also prefer dividend stocks that are on sale to Treasury bonds that yield north of 4%. The stock market will recover from its lows in the next 12 to 18 months and some of the dividend stocks will deliver significant capital gains on top of the dividend payments. We covered some of these stocks in our article about the best financial dividend stocks to buy. These aren’t the safest dividend stocks but they are likely to outperform the safer dividend stocks over the long-term.

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In this article we picked some of the safest dividend stocks suitable for retirement portfolios. These companies have a history of dividend increases, decent yields and they are trusted by elite investors, especially elite hedge funds.

Best Safe Dividend Stocks For Retirement Portfolios

10. AbbVie Inc. (NYSE:ABBV)

AbbVie Inc. (NYSE:ABBV) is one of the safest dividend stocks available in the market for retirement portfolios. The company has increased its dividend for 51 years in a row, which shows its commitment to its dividend policy. AbbVie Inc. (NYSE:ABBV) recently announced mixed Q3 results and had to narrow its outlook. Despite this, AbbVie Inc. (NYSE:ABBV) increased its divided by 5%. It has declared a $1.48/share quarterly dividend, as compared to its prior dividend of $1.41. On a year-to-date basis AbbVie Inc. (NYSE:ABBV) has gained 9% and analysts believe the company has several growth catalysts for future growth. As of the end of the second quarter of this year, 71 hedge funds had stakes in the company.

Here is what Baron Funds specifically said about AbbVie Inc. (NYSE:ABBV) in its Q3 2022 investor letter:

“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”

9. Abbott Laboratories (NYSE:ABT)

Abbott Laboratories (NYSE:ABT) recently joined the list of dividend kings as it increased its dividend for the 50^th year in a row. The Illinois-based medical device company also stands out because of its dividend safety as its projected dividend payout ratio stands at 38% for 2022. Recently, a team of Morgan Stanley analysts led by Michael Wilson counted Abbott Laboratories (NYSE:ABT) among the large-cap stocks which they believe are defensive despite the current macroeconomic weakness.

As of the end of the second quarter this year, 61 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), as compared to 68 funds in the previous quarter.

Diamond Hill Capital made the following comment about Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter:

“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).

Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”

8. American Electric Power Company, Inc. (NYSE:AEP)

American Electric Power Company, Inc. (NYSE:AEP) is a relatively high-yield dividend payer in the utilities sector with its yield standing at 3.7% as of October 29. American Electric Power Company, Inc. (NYSE:AEP) has increased its dividend for 18 straight years. In October, the company declared a $0.83/share quarterly dividend, representing a 6.4% increase from the previous dividend. American Electric Power Company, Inc. (NYSE:AEP) operates in 11 states in the US, serving 5.5 million customers. American Electric Power Company, Inc. (NYSE:AEP) is actively making efforts to shrink its carbon footprint.

As of the end of the second quarter, 30 hedge funds tracked by Insider Monkey had stakes in American Electric Power Company, Inc. (NYSE:AEP), compared to 33 funds in the previous quarter. Quant billionaire  Jim Simons’s Renaissance Technologies had a $99 million stake in the company at the end of the second quarter.

7. ALLETE, Inc. (NYSE:ALE)

ALLETE, Inc. (NYSE:ALE) is an electric utilities company. The stock’s dividend yield stands at 4.55% as of October 29. ALLETE, Inc. (NYSE:ALE) has upped its dividend for 11 consecutive years. On October 28, ALLETE, Inc. (NYSE:ALE) announced a quarterly dividend of $0.65 per share, in line with the previous dividend. The company is investing heavily to diversify its energy sourcing. It is refining its transmission infrastructure to optimize its investments in wind and hydro power.

Hedge funds are increasing their stakes in ALLETE, Inc. (NYSE:ALE). As of the end of the second quarter, 22 funds had stakes in the company, compared to 16 in the previous quarter. Billionaire Israel Englander upped his stake in the company by about 250% in the second quarter, ending the period with a $43 million stake.

6. Amcor plc (NYSE:AMCR)

Amcor plc (NYSE:AMCR) is a major player in the packaging industry. Amcor plc (NYSE:AMCR) is one of the dividend aristocrats, a select group of stocks that have increased their dividends consistently for 25 years. Recently, BofA analyst George Staphos double upgraded Amcor plc (NYSE:AMCR) to Buy from Underperform. The analyst said that Amcor belongs to packaging, paper and forest products segment, which he said is a “cheap” group. The analyst said that investors should buy these defensive and quality stocks. Amcor plc (NYSE:AMCR), which is trading at $11.75 as of October 29, presents an attractive buying opportunity.

The biggest shareholder of Amcor plc (NYSE:AMCR) as of the end of the second quarter was Bernard Horn’s Polaris Capital Management, which owns a $199.4 million stake in the company. A total of 20 funds tracked by Insider Monkey have stakes in the company as of the end of June.

5. The Clorox Company (NYSE:CLX)

Clorox is a consumer products company. It is a dividend aristocrat, having increased its dividend consecutively for 20 straight years. Clorox’s dividend yield stands at 3.1% as of October 29. In October, the company affirmed its full year sales estimates, prompted by a post-pandemic recovery. In September, BofA identified Clorox as one of the dividend stocks that is safe. The firm’s analyst Savita Subramanian advised investors to find companies that have “secure – not stretched” dividend yields.

Hedge funds are also increasing theirs stakes in the company amid the current recessionary environment. As of the end of the second quarter of this year, 31 funds out of the 895 tracked by Insider Monkey had stakes in the company, compared to 26 funds in the previous quarter.

4. Realty Income Corporation (NYSE:O)

It’s always nice to have a safe dividend stock in your income portfolio that pays monthly dividends. Realty Income has proven itself over the years, raising dividend for 20 consecutive years. In August this year, after posting Q2 results, the company increased its 2022 guidance, due to a rise in occupancy rate and same-store rental revenue growth.

As of the end of the second quarter, 19 funds had stakes in the company, compared to 22 funds in the previous quarter. Ken Griffin’s Citadel Investment Group had $61 million worth of CALL options on the stock as of the end of June.

3. Duke Energy Corporation (NYSE:DUK)

With a dividend yield of 4.2% as of October 29, Duke Energy is one of the best safe dividend stocks for your retirement portfolio. As of July this year, Duke Energy has paid a cash dividend on its common stock for 96 consecutive years. In September, Citi gave a Buy rating to Duke Energy along with several other stocks. Duke Energy has raised its dividends consistently for the past 11 years.

At the end of June this year, 30 hedge funds had stakes in Duke Energy, compared to 32 funds a quarter earlier. The total value of these stakes was $475 million.

2. The Coca-Cola Company (NYSE:KO)

Coca Cola is one of the best stocks to add to any retirement portfolio. The company has increased its dividend for 60 consecutive years. In October, the stock jumped after the company crushed the Street’s estimates and posted an 11% revenue growth. Organic sales in the period jumped 16%. In August, UBS named Coca-Cola Company (NYSE:KO) one of its high-conviction stocks. The firm said that the company has shown “willingness” to pursue higher growth opportunities in recent years through M&A, investment into core brands and innovation.

As of the end of the second quarter, 60 hedge funds had stakes in Coca Cola. Warren Buffett’s Berkshire Hathaway owns a stake worth over $25 million in the company. The Oracle of Omaha has been a shareholder in the company since 2010.

Here is what Aristotle Capital specifically said about The Coca-Cola Company (NYSE:KO) in its Q2 2022 investor letter:

“The Coca-Cola Company (NYSE:KO), the global beverage business, was a leading contributor for the period. Coca-Cola continues to benefit from the refranchising of its bottling operations and realignment of incentives, catalysts we previously identified. These initiatives are demonstrating their strength in an inflationary and supply-chain-challenged environment. Additionally, the company has focused on evolving its customer engagement practices by leveraging digital and social medias for targeted campaigns, such as the design and launch of Coke Byte in the metaverse. Lastly, Coca-Cola has furthered its transformation into a total beverage company, as it debuted its new Jack Daniel’s Tennessee Whiskey and Coca-Cola ready-to-drink premixed cocktail. Although uncertainties surrounding cost pressures, lockdowns and geopolitical conflicts remain, we believe Coca-Cola is uniquely positioned to successfully continue its transition toward a total beverage business.”

1. Exxon Mobil Corporation (NYSE:XOM)

ExxonMobil is one of the market leaders in the ever-green energy market. The company has hiked its dividend for 39 straight years. The stock has jumped 74% year to date. The company recently stunned the markets when its posted its highest-ever quarterly profit of about $20 billion, driven by rising oil and natural gas prices. Regarding its shareholders, the company declared a $0.91/share quarterly dividend, a 3.4% increase from its previous dividend. The stock’s payout ratio is just 38%.

You can also take a look at 10 Most Undervalued Stocks To Buy and Largest Renewable Energy Companies in the World. 

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Disclosure: None. 10 Best Safe Dividend Stocks For Retirement Portfolios is originally published on Insider Monkey.