Here’s how to maximize your retirement portfolio with these top-notch dividend stocks


Strange but true: Seniors fear death less than lack of money in retirement.

And older Americans have legitimate reasons for that concern, even if they’ve been dutifully saving for their golden years. That’s because the traditional way people manage retirement may no longer provide enough income to cover expenses — and as people tend to live longer, the core retirement savings are exhausted far too early in retirement .

Your parents’ retirement plan isn’t enough today.

For many years, bonds or other fixed-income assets have been able to provide the returns needed to generate a solid income for retirement. However, those yields have fallen over time: 10-year Treasury yields were around 6.50% in the late 1990s, but today that rate is a thing of the past, and the likelihood of rates returning any time soon , is low.

The impact of this drop in interest rates is significant: over 20 years, the change in yield on a $1 million investment in 10-year Treasuries is over $1 million.

And lower bond yields aren’t the only potential problem facing seniors. Today’s retirees don’t feel as secure about Social Security as they once did, either. Performance reviews will come for the foreseeable future, but according to current estimates, the social security funds will run out of money in 2035.

How can you avoid delving into your capital when the investments you relied on in retirement aren’t generating income? All you can do so far is cut back on your expenses, and the only other option is to find another investment vehicle to generate income.

Invest in dividend stocks

We think these dividend-paying stocks — as long as they’re from high-quality, low-risk issuers — can offer retired investors a smart option to replace low-yielding government (or other) bonds.

Look for stocks that have paid steadily increasing dividends for years (or decades) and haven’t cut their dividends even during recessions.

One approach to identifying suitable stocks is to look for companies with an average dividend yield of 3% and positive compound annual dividend growth. Many stocks increase dividends over time and offset inflation risks.

Here are three dividend-paying stocks retirees should consider adding to their nest egg portfolio.

Amgen (AMGN) currently pays a dividend of $2.13 per share, with a dividend yield of 3.63%. This compares to the medical, biomedical, and genetics industry’s return of 0% and the S&P 500’s return of 1.6%. The company’s annualized dividend growth was 10.23% over the past year. Check Amgen (AMGN) dividend history here>>>

Cisco Systems (CSCO) currently pays a dividend of $0.39 per share, with a dividend yield of 3.08% compared to the computer networking industry yield of 0% and the S&P 500 yield. The company’s annualized dividend growth rate over the past year was 2. 7% Check Cisco Systems (CSCO) dividend history here>>>

Currently paying a dividend of $0.31 per share, Inter-Public Group (IPG) has a dividend yield of 3.47%. This is compared to the advertising and marketing industry return of 0% and the current return of the S&P 500. The company’s annualized dividend growth was 7.41% over the past year. Check Interpublic Group (IPG) dividend history here>>>

But aren’t stocks generally riskier than bonds?

Yes, that’s right. As a broad category, bonds carry less risk than stocks. However, the stocks we’re talking about – dividend-paying stocks of quality companies – can generate income over time and also reduce the overall volatility of your portfolio relative to the stock market as a whole.

One benefit of owning dividend stocks for your retirement is that many companies, particularly blue-chip stocks, will increase their dividends over time, helping to mitigate the impact of inflation on your potential retirement income.

Considering dividend-focused mutual funds or ETFs? Watch out for fees.

If you’re interested in investing in dividends but are thinking of mutual funds or ETFs rather than stocks, watch out for fees. Mutual funds and specialty ETFs can incur high fees that could reduce the overall profits you make from dividends and undermine your dividend income strategy. Be sure to look for low-fee funds if you decide to take this approach.

bottom line

Whether you choose high-quality funds or low-fee stocks, striving for steady income from dividend stocks can potentially offer you a path to a better, less stressful retirement.

5 shares are doubled

Each was handpicked by a Zacks expert as the #1 most popular stock to gain +100% or more in 2021. Previous recommendations are up +143.0%, +175.9%, +498.3%, and +673.0%.

Most of the stocks in this report fly under Wall Street’s radar, which presents a great opportunity to get on the ground floor.

Check out these 5 potential home runs today >>

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Amgen Inc. (AMGN): Free Stock Research Report

Cisco Systems, Inc. (CSCO): Free Stock Research Report

Interpublic Group of Companies, Inc. (The) (IPG): Free Stock Research Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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