Living Off Dividends in Retirement: 10 Best Stocks To Consider

In this article, we discuss 10 best stocks to consider for retirement. If you want to see more dividend stocks in this selection, click Living Off Dividends in Retirement: 5 Best Stocks To Consider. 

The average age of retirement in the United States is 62, and American retirees represent a significant proportion of the adult populace. According to the Federal Reserve, in 2020, 27% of adults considered themselves to be retired, despite a few of them still working in some capacity. More educated retirees are more likely to work after retirement, according to the Fed’s survey.

The survey indicated that Social Security was the most common stream of retirement income in 2020, but 81% of individuals had one or more sources of private income in retirement. 59% of retirees had pension, 46% received interest payments, dividends, or rental income, and 32% depended on labor income. 

On May 11, Edward Jones and Age Wave reported the results from their recent study, “Longevity and the New Journey of Retirement”, comprising over 11,000 North American adults. The study revealed that despite higher living costs and expensive long-term healthcare, about 69% of Americans wish to live to be 100. The average ideal length of retirement is 29 years according to retirees. 

To successfully navigate retirement in this increasingly expensive world, it is important to have more sources of passive income other than pension and Social Security. Dividend investing is a proven way to amass a reliable stream of income that will make retirement more comfortable. Some of the best retirement dividend stocks to consider include Apple Inc. (NASDAQ:AAPL), The Procter & Gamble Company (NYSE:PG), and PepsiCo, Inc. (NASDAQ:PEP), among others discussed in detail below. 

Our Methodology 

We selected dividend stocks that recently received optimistic analyst ratings, are strong industry players with a reliable performance record, and have historically stood steadfast in a volatile macro environment. We have mentioned the dividend yields as of May 13. 

Living Off Dividends in Retirement: Best Stocks To Consider

10. Microsoft Corporation (NASDAQ:MSFT)

Dividend Yield as of May 13: 0.95%

Number of Hedge Fund Holders: 262

Microsoft Corporation (NASDAQ:MSFT), one of the Big Five US tech giants, is one of the most commonly held dividend stocks in the public portfolios of institutional and retail investors alike. In Q4 2021, Microsoft Corporation (NASDAQ:MSFT) made its way in the portfolios of 262 hedge funds tracked by Insider Monkey, up from 250 stocks in the earlier quarter. The total stakes owned in the December quarter amounted to $75.6 billion, compared to almost $66 billion in the quarter before. 

On May 13, Tigress Financial analyst Ivan Feinseth stated that the recent pullback in Microsoft Corporation (NASDAQ:MSFT) shares is a “major buying opportunity”. He maintained a Buy rating on the shares with a $411 price target. He believes that cloud growth will drive strong business performance at Microsoft Corporation (NASDAQ:MSFT), and the company will continue to be a “dominant force” in the gaming industry and the metaverse with the recent acquisition of Activision Blizzard, Inc. (NASDAQ:ATVI). 

Microsoft Corporation (NASDAQ:MSFT)’s announced its quarterly dividend of $0.62 per share on March 15, in line with previous. The dividend is payable to shareholders on June 9, to shareholders of record on May 19. 

Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management reported owning a significant stake in Microsoft Corporation (NASDAQ:MSFT) at the end of Q1 2022, with 27.8 million shares worth about $8.6 billion. 

Like Apple Inc. (NASDAQ:AAPL), The Procter & Gamble Company (NYSE:PG), and PepsiCo, Inc. (NASDAQ:PEP), institutional investors are pouring into Microsoft Corporation (NASDAQ:MSFT) for dividend income. 

Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:

“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”

9. PepsiCo, Inc. (NASDAQ:PEP)

Dividend Yield as of May 13: 2.65%

Number of Hedge Fund Holders: 60

PepsiCo, Inc. (NASDAQ:PEP), the American multinational beverage corporation, is one of the most notable dividend kings, with 50 consecutive annual dividend increases under its belt. PepsiCo, Inc. (NASDAQ:PEP) declared on May 3 a $1.15 per share quarterly dividend, a 7% increase from its prior dividend of $1.075. The dividend is payable on June 30, to shareholders of the company as of June 3. The company’s dividend yield on May 13 stood at 2.65%. 

On April 26, PepsiCo, Inc. (NASDAQ:PEP) reported earnings for the first fiscal quarter of 2022. The company posted an EPS of $1.29, beating consensus estimates by $0.06. The $16.20 billion revenue grew 9.31% year-over-year, outperforming market forecasts by $658.69 million. 

Guggenheim analyst Laurent Grandet on April 27 reiterated a Buy recommendation on PepsiCo, Inc. (NASDAQ:PEP) and raised the firm’s price target on the shares to $193 from $188 after “another strong quarter”. The company increased organic top-line FY22 guidance to 8% from 6% year-over-year despite a low-single digit negative impact from quitting operations in Russia, while maintaining its EPS guidance, which should reassure investors so early into FY22, the analyst told investors.

In Q1 2022, Donald Yacktman’s Yacktman Asset Management held a prominent stake in PepsiCo, Inc. (NASDAQ:PEP), with 4.2 million shares worth $715.4 million. Overall, 60 hedge funds in the Q4 2021 database of Insider Monkey were bullish on the stock. 

Here is what ClearBridge Investments had to say about PepsiCo, Inc. (NYSE:PEP) in its Q4 2021 investor letter:

“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”

8. BlackRock, Inc. (NYSE:BLK)

Dividend Yield as of May 13: 3.17%

Number of Hedge Fund Holders: 49

BlackRock, Inc. (NYSE:BLK) is an American investment manager that serves institutional, intermediary, and individual investors, offering global risk management and advisory services. BlackRock, Inc. (NYSE:BLK) posted on April 13 its Q1 results, reporting earnings per share of $9.52, beating market estimates by $0.76. 

On January 14, BlackRock, Inc. (NYSE:BLK) declared a $4.88 per share quarterly dividend, an 18.2% increase from its earlier dividend of $4.13. The dividend was distributed to shareholders on March 23. BlackRock, Inc. (NYSE:BLK) has a 13-year history of increasing dividends consistently, and the company delivers a dividend yield of 3.17% as of May 13. 

Deutsche Bank analyst Brian Bedell reiterated a Buy rating on BlackRock, Inc. (NYSE:BLK) but lowered the firm’s price target on the shares to $905 from $950 on April 14. The company reported strong organic growth in Q1 “though mixed on fee revenue”, the analyst claimed. 

Among the hedge funds tracked by Insider Monkey, 49 funds held stakes in BlackRock, Inc. (NYSE:BLK) at the end of December 2021, compared to 44 funds in the last quarter. Tom Gayner’s Markel Gayner Asset Management reported a significant stake in BlackRock, Inc. (NYSE:BLK) in Q1 2022, with 220,200 shares worth $168.27 million. 

Here is what Baron FinTech Fund has to say about BlackRock, Inc. (NYSE:BLK) in its Q4 2021 investor letter:

“Forward-thinking financial institutions are using technology in particularly innovative ways to better serve their customers and operate more efficiently. BlackRock Inc. uses technology to evaluate risk for institutional investors and manage trillions of dollars’ worth of ETF assets at very low cost. The Fund’s Tech-Enabled Financials holdings held up better than their counterparts in the FactSet Global FinTech Index thanks to gains from global asset management firm BlackRock Inc. BlackRock benefited from elevated organic growth in higher-fee products.”

7. Bristol-Myers Squibb Company (NYSE:BMY)

Dividend Yield as of May 13: 2.85%

Number of Hedge Fund Holders: 66

Bristol-Myers Squibb Company (NYSE:BMY) is an American biopharmaceutical firm that develops and markets medicines for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases. Bristol-Myers Squibb Company (NYSE:BMY)’s dividend yield on May 13 was 2.85%.

The company has a history of consistently raising its dividend payouts for 16 years. The annually increasing dividends make it an ideal candidate for a retirement portfolio. On March 1, Bristol-Myers Squibb Company (NYSE:BMY) declared a quarterly dividend of $0.54 per share. The dividend was distributed to shareholders on May 2. 

On April 29, Bristol-Myers Squibb Company (NYSE:BMY) reported earnings for the first fiscal quarter of 2022. The company announced an EPS of $1.96, beating analysts’ consensus estimates by $0.07. The revenue of $11.65 billion surpassed Street forecasts by $308.41 million. 

Guggenheim analyst Seamus Fernandez on May 2 maintained a Buy recommendation on  Bristol-Myers Squibb Company (NYSE:BMY) and raised the price target on the stock to $80 from $72 after the company’s Q1 earnings report and approvals for two drugs – Opdualag and Camzygos. Management expects that these two products will generate $4 billion in 2029. 

According to Insider Monkey’s Q4 2021 database, 66 hedge funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY), compared to 74 funds in the last quarter. At the end of Q1 2022, Richard S. Pzena’s Pzena Investment Management held a prominent stake in the company, with 3.6 million shares worth about $265 million. 

Here is what Saturna Capital Amana Funds has to say about Bristol-Myers Squibb Company (NYSE:BMY) in its Q4 2021 investor letter:

“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. We sold our positions in Bristol Myers. We believe there are better opportunities than Bristol in pharmaceuticals.”

6. Enbridge Inc. (NYSE:ENB)

Dividend Yield as of May 13: 6.02%

Number of Hedge Fund Holders: 21

Enbridge Inc. (NYSE:ENB) is headquartered in Calgary, Canada, operating as an energy infrastructure company through five segments – Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services. Enbridge Inc. (NYSE:ENB)’s dividend yield on May 13 stood at 6.02%. 

On May 4, Enbridge Inc. (NYSE:ENB) declared a C$0.86 per share quarterly dividend, in line with previous. The dividend is distributable on June 1, to shareholders of the company as of May 13. 2022 is the 27th consecutive year in which the company boosted its dividend payment, making it a notable dividend aristocrat to consider.

RBC Capital analyst Robert Kwan on May 9 reiterated a Buy rating on Enbridge Inc. (NYSE:ENB) and raised the firm’s price target on the shares to C$65 from C$60. 

According to the fourth quarter database of Insider Monkey, 21 hedge funds were bullish on Enbridge Inc. (NYSE:ENB), with combined stakes exceeding $550 million. In the first quarter of 2022, Rajiv Jain’s GQG Partners reported a significant stake in the company, with 47.5 million shares worth over $2 billion. 

Enbridge Inc. (NYSE:ENB) has a rich dividend history, just like Apple Inc. (NASDAQ:AAPL), The Procter & Gamble Company (NYSE:PG), and PepsiCo, Inc. (NASDAQ:PEP).

Here is what ClearBridge Investments Dividend Strategy has to say about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:

“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”

Click to continue reading and see Living Off Dividends in Retirement: 5 Best Stocks To Consider. 

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Disclosure: None. Living Off Dividends in Retirement: 10 Best Stocks To Consider is originally published on Insider Monkey.