Retirees want their portfolios to provide safe, consistent, reliable income that grows faster than the pace of inflation.
Retirees want investments that will protect their nest egg, allow them to sleep easy at night, and provide steady income.
Dividend stocks perfectly match retirement investor needs. Dividend stocks can also lead to early retirement.
Investing in high quality dividend growth stocks provides retirees with consistent, reliable, growing dividend income.
Not all dividend stocks are created equal.
Some are high risk – high yield stocks. They can be appealing to retirees, but they are dangerous.
The last thing you need in retirement is for your nest egg to get scrambled.
Other dividend stocks have fantastic growth potential and a high degree of safety – but have very low yields.
These stocks may make good investments for younger investors. They do not make good investments for dividend investors in retirement because they don’t satisfy retirees’ income needs.
The best dividend stocks for retirees have the following characteristics:
– High yield for income
– A strong competitive advantage for safety
– A long growth runway for reliable future growth
– A long record of dividend increases for consistency
Finding great businesses like this can be very challenging…
But to find the best dividend stocks for retirees now, you must match all of the criteria above and make sure the stock is trading at fair or better value.
This article examines the 10 best dividend stocks for retirement today. All 10 stocks match the requirements discussed above.
Retirement Dividend Stock: Archer Daniels Midland Company (NYSE:ADM)
Archer Daniels Midland Company (NYSE:ADM) is one of the largest agricultural product businesses in the world. The company originates:
– >15% of the global corn crop
– >15% of the global wheat crop
– >30% of the global soybean crop
Retirees should take notice of Archer-Daniels-Midland. The company is one of the highest ranking stocks using The 8 Rules of Dividend Investing.
Here’s why Archer-Daniels-Midland ranks so highly – the company has a high dividend yield of 3.2%, a reasonable payout ratio of ~50%, a strong competitive advantage, 41 consecutive years of dividend increases, and a long-growth runway ahead. Best of all, it is deeply undervalued at current prices.
Archer-Daniels-Midland’s competitive advantage comes from its excellent global supply chain. The company has:
– 280 processing plants
– 420 procurement facilities
– ~250 warehouses
– A fleet of rail cars, trucks, and ocean vessels
The company’s competitive advantage and continuous growth is what has allowed the company to pay increasing dividends for 41 consecutive years.
Growth is not over at Archer Daniels Midland Company (NYSE:ADM). The long-term growth driver for the company is growing global populations. Growing populations mean more food. More food leads to more profits for Archer-Daniels-Midland shareholders.
In the shorter run, the company is growing through shedding low margin businesses and acquiring higher margin businesses. Recent acquisitions include:
– WILD Flavors (flavorings and additives)
– Harvest Innovations (Non-GMO, organic, and gluten-free ingredients)
These acquisitions will lead to greater stability in Archer-Daniels-Midland’s earnings.
The one downside to the stock is its fluctuating earnings. Archer-Daniels-Midland’s profits are cyclical due to fluctuations in commodity prices and currencies. Right now, the company is in at a cyclical low point.