In this article, we discuss 15 best dividend stocks for retirement. You can skip our detailed analysis of the early retirement phenomenon and dividend stocks, and go directly to read Early Retirement Portfolio: 5 Stocks to Live Off Dividends.
Due to the onset of the pandemic in 2020, early retirement gained a steady pace among Americans. According to a report by New York Times, millennial workers plan to retire in their 50s to pursue their interests. However, their financial condition suggests otherwise. The report showed results from the Global Benefits Attitudes Survey, revealing that 36% of millennial workers were just saving around 5% of their income, which is not sufficient to cover living expenses post-retirement.
The financial instability, coupled with growing inflation, has somewhat altered investor sentiment who are now delaying their retirement plans. According to a survey conducted by the Nationwide Retirement Institute, 40% of US workers ages 45 years or above are holding up on their retirement, which is twice the number of workers who asserted the same last year. The survey also mentioned that only 58% of the workers are positive about their retirement plans, down from 74% in 2021. This was also supported by data from Natixis Investment Managers, which highlighted that 58% of high-net-worth individuals plan to work beyond their retirement age due to market uncertainty.
As major stocks and bonds fell in 2022, retiree investors are turning to stocks that offer long-term growth and can generate stable income. Over the years, dividend stocks have shown promising performance, becoming investors’ top choices in times of financial instability. Moreover, companies with long dividend growth streaks and positive cash flow generation are also great investment options for retirees. Among these companies are PepsiCo, Inc. (NASDAQ:PEP), AbbVie Inc. (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ) who have raised their dividends for decades, even during market turmoil. Readers can also have a look at 30 Best Stocks for Retirement, which discusses dividends retirement stocks in detail.
Last year, I wrote an article on Early Retirement Portfolio: 15 Stocks to Live Off Dividends, which listed dividend companies derived from different user platforms. With soaring inflation and risks of recession, it was time to update that list and focus on stocks that offer passive income opportunities to retiree investors. This list includes stocks that have impressive track records of making regular dividend payments and have raised their payouts for at least 10 years. For this reason, some of the stocks from the previous list were replaced by those that regularly increase their payouts. Costco Wholesale Corporation (NASDAQ:COST), Raytheon Technologies Corporation (NYSE:RTX), Kellogg Company (NYSE:K), Eastman Chemical Company (NYSE:EMN), Realty Income Corporation (NYSE:O), Walgreens Boots Alliance, Inc. (NASDAQ:WBA), and AT&T Inc. (NYSE:T) still make it to our list of the best dividend stocks for early retirement among others.
Early Retirement Portfolio: 15 Stocks to Live Off Dividends Revisited
For this list, we selected companies that have raised their payouts for over 10 years and generated stable returns over the years. Their dividend growth histories make them suitable options for retiree investors who seek to generate stable income. In addition to this, the hedge fund sentiment was measured using data from 920 hedge funds tracked by Insider Monkey in Q3 2022. The stocks are ranked in ascending order of their dividend yields, as of February 14.
Early Retirement Portfolio: 15 Stocks to Live Off Dividends Revisited
Costco Wholesale Corporation (NASDAQ:COST) is a Washington-based company that operates an international chain of membership warehouses. In December, the company reported over $23.8 billion in sales, which showed a 7% growth from the same period last year. Its fiscal Q1 2023's revenue came in at $54.4 billion, up 8.1% from the prior-year quarter. The stock has gained 11.73% year-to-date, as of February 14.
On January 19, Costco Wholesale Corporation (NASDAQ:COST) declared a quarterly dividend of $0.90 per share, which fell in line with its previous dividend. The company maintains an 18-year streak of consistent dividend growth, which makes it one of the best dividend stocks for retirement. The stock has a dividend yield of 0.71%, as of February 14. It can be a good addition to dividend portfolios alongside popular dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), AbbVie Inc. (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ).
Truist raised its price target on Costco Wholesale Corporation (NASDAQ:COST) to $568 with a Buy rating on the shares, highlighting the company's recent sales and low gross margin structure.
At the end of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in Costco Wholesale Corporation (NASDAQ:COST), up from 64 in the previous quarter. The collective value of these stakes is over $4.4 billion. With over 2.5 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
Madison Funds mentioned Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2022 investor letter. Here is what the firm has to say:
“Costco Wholesale Corporation (NASDAQ:COST) stock fell after November sales results showed a slowing consumer. The slower November sales were followed by a slight first quarter miss with lower-than-expected margins. Costco commented that they are not seeing trade-down but private label penetration has increased modestly. Traffic continues to be positive, and Costco remains well-positioned in a more challenging macro environment due to its strong value proposition.”
Raytheon Technologies Corporation (NYSE:RTX) is an American aerospace and defense company that also provides intelligence services to different industries. In the past 12 months, the stock delivered a 7.4% return to shareholders, while its 6-month return came in at 4.61%, as of February 14.
Raytheon Technologies Corporation (NYSE:RTX), one of the best dividend stocks for retirement, currently pays a quarterly dividend of $0.55 per share and has a dividend yield of 2.19%, as of February 14. The company has been raising its dividends consistently for the past 29 years.
Following the company's recent quarterly earnings, RBC Capital raised its price target on Raytheon Technologies Corporation (NYSE:RTX) to $110 with an Outperform rating on the shares. The firm noted the company's strong aerospace business growth.
Raytheon Technologies Corporation (NYSE:RTX) was a popular buy among hedge funds in Q3 2022, as 55 funds in Insider Monkey's database owned stakes in the company, up from 45 in the previous quarter. The collective value of these stakes is over $1.6 billion.
Carillon Tower Advisers mentioned Raytheon Technologies Corporation (NYSE:RTX) in its Q3 2022 investor letter. Here is what the firm has to say:
“Raytheon Technologies Corporation (NYSE:RTX) announced strong results led by strength in its commercial segment, but weakness in its defense business led to investor consternation. Management guided to a recovery in this segment, citing both transitory supply chain issues and continued strong demand.”
Another best dividend stock for retirement on our list is Atmos Energy Corporation (NYSE:ATO), which is an American natural gas distribution company. The company pays a quarterly dividend of $0.74 per share and has a dividend yield of 2.53%, as of February 14. It is taken as one of the best dividend stocks for retirement because of its 38-year-long dividend growth streak.
In fiscal Q1 2023, Atmos Energy Corporation (NYSE:ATO) reported an operating cash flow of roughly $189 million, compared with $61.8 million during the same period last year. The stock delivered a 10.2% return in the past 12 months and its year-to-date returns came in at 5.04%, as of February 14.
In February, Mizuho raised its price target on Atmos Energy Corporation (NYSE:ATO) to $137 with a Buy rating on the shares.
At the end of Q3 2022, 23 hedge funds in Insider Monkey’s database reported having stakes in Atmos Energy Corporation (NYSE:ATO), up from 21 in the previous quarter. These stakes have a consolidated value of over $293 million.
Aristotle Capital Management mentioned Atmos Energy Corporation (NYSE:ATO) in its Q1 2022 investor letter. Here is what the firm has to say:
“Headquartered in Dallas, Atmos Energy is the largest fully regulated natural gas-only utility in the U.S. It serves over three million distribution customers across eight states, primarily in the South. Approximately 70% of its revenue comes from Texas, where it owns one of the largest natural gas pipeline systems in the state. (Click here to view the full text)
An American multinational consumer goods company, The Procter & Gamble Company (NYSE:PG) is one of the best dividend stocks for retirement as it has remained consistently profitable for decades. Moreover, the company has raised its dividends for 66 years consecutively. It offers a quarterly dividend of $0.9133 per share and has a dividend yield of 2.61%, as of February 14.
Stifel appreciated the quarterly earnings of The Procter & Gamble Company (NYSE:PG) and appreciated its FY23 organic sales guidance. The firm raised its price target on the stock to $147 and maintained a Hold rating on the shares.
As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in The Procter & Gamble Company (NYSE:PG), down from 71 in the previous quarter. The collective value of these stakes is over $4.08 billion.
Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
The Coca-Cola Company (NYSE:KO) has kept its dividends steady during previous inflationary periods. The American beverage company has been raising its dividends consistently for the past 60 years. It currently offers a per-share dividend of $0.44 every quarter and has a dividend yield of 2.90%, as of February 14. It is among the best dividend stocks for retirement on our list.
In Q4 2022, The Coca-Cola Company (NYSE:KO) reported revenue of $101 billion, which showed a 6.3% growth from the same period last year.
In December, Atlantic Equities raised its price target on The Coca-Cola Company (NYSE:KO) to $69 with an Overweight rating on the shares, highlighting the company's sales, strong execution, and ongoing investments.
Warren Buffett’s Berkshire Hathaway was the leading stakeholder of The Coca-Cola Company (NYSE:KO) in Q3 2022. Overall, 59 hedge funds in Insider Monkey’s database owned investments in the company in Q3, worth over $25 billion.
Rowan Street Capital mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s take The Coca-Cola Company (NYSE:KO) for example. Its dividend yield is 2.8%, earnings are estimated to grow at only 3.6% rate per year over next 4 years, and its earnings multiple is currently at 24x (based on next years forecasted earnings). KO has an anemic growth, so we can argue that paying 24x earnings is not very attractive. Let’s assume that the multiple will stay constant over the next 3-5 years, thus our expected annual returns will be 2.8%+3.6% = 6.4% (that is below the current reported inflation rate and only slightly above the risk-free rate of 4%).”
10. Old Republic International Corporation (NYSE:ORI)
Dividend Yield as of February 14: 3.45%
Old Republic International Corporation (NYSE:ORI) is an Illinois-based property insurance company. The stock has delivered a 9.52% return to shareholders this year so far, as of February 14.
At the end of December 2022, Old Republic International Corporation (NYSE:ORI) had over $16 million available in cash and invested assets. During Q4 2022, the company returned $243.7 million to shareholders, including $67.2 million in dividends. Its commitment to shareholders makes it one of the best dividend stocks for retirement.
Old Republic International Corporation (NYSE:ORI) has been raising its dividends consistently for the past 42 years. The company offers a quarterly dividend of $0.23 per share and has a dividend yield of 3.45%, as of February 14.
As of the close of Q3 2022, 25 hedge funds tracked by Insider Monkey reported owning stakes in Old Republic International Corporation (NYSE:ORI), the same as in the previous quarter. The collective value of these stakes is nearly $160 million.
Kellogg Company (NYSE:K) is a Michigan-based multinational food manufacturing company. In December, Morgan Stanley raised its price target on the stock to $74 with an Equal Weight rating on the shares. The firm expects the food packaged food stocks to maintain their performance this year. In the past 12 months, the stock delivered a 4.3% return to shareholders.
Kellogg Company (NYSE:K) is one of the best dividend stocks for retirement as the company maintains an 18-year streak of consistent dividend growth. Moreover, the company has been paying regular dividends to shareholders since 1925. Its current quarterly dividend stands at $0.59 per share for a dividend yield of 3.49%, as of February 14.
As per Insider Monkey's Q3 2022 database, 25 hedge funds owned stakes in Kellogg Company (NYSE:K), the same as in the previous quarter. These stakes are valued at $474.3 million collectively.
Eastman Chemical Company (NYSE:EMN) is an American company that is involved that deals in specialty chemicals and a wide range of advanced materials. On December 21, the company declared a quarterly dividend of $0.79 per share, up 3.9% from its previous dividend. This was the company's 13th consecutive year of dividend growth, which makes it one of the best dividend stocks for retirement. The stock has a dividend yield of 3.58%, as of February 14.
In Q4 2022, Eastman Chemical Company (NYSE:EMN) reported revenue of $2.37 billion, which fell by 12% from the same period last year. However, the company's operating cash flow for the quarter came in at $457 million, up from $430 million in the prior-year period. In Fy22, it returned over $1.4 billion to shareholders in dividends and share repurchases.
In January, UBS raised its price target on Eastman Chemical Company (NYSE:EMN) to $108 with a Buy rating on the shares, expecting the company's earnings to accelerate this year.
At the end of Q3 2022, 32 hedge funds in Insider Monkey's database owned stakes in Eastman Chemical Company (NYSE:EMN), up from 29 in the previous quarter. The collective value of these stakes is over $258 million.
Kimberly-Clark Corporation (NYSE:KMB) is a Texas-based manufacturing company that specializes in paper products and other medical instruments. UBS expects the company to deliver a gross margin recovery this year. In view of this, the firm raised its price target on the stock to $136 in January with a Neutral rating on the shares.
Kimberly-Clark Corporation (NYSE:KMB) currently pays a quarterly dividend of $1.18 per share and has a dividend yield of 3.63%, as of February 14. The company has been raising its dividends consistently for the past 51 years while paying uninterrupted dividends for the past 51 years.
The number of hedge funds tracked by Insider Monkey owning stakes in Kimberly-Clark Corporation (NYSE:KMB) jumped to 34 in Q3 2022, from 24 in the previous quarter. These stakes have a total value of nearly $680 million. With over 1 million shares, Two Sigma Advisors was the company's leading stakeholder in Q3.
6. American Electric Power Company, Inc. (NASDAQ:AEP)
Dividend Yield as of February 14: 3.64%
American Electric Power Company, Inc. (NASDAQ:AEP) is an Ohio-based electric utility company that provides services to over five million customers in 11 states. In the past 12 months, the stock gained 5.4%, as of February 14.
American Electric Power Company, Inc. (NASDAQ:AEP) has been paying regular dividends to shareholders since 1910 and also maintains a 13-year track record of consistent dividend growth. This one of the best dividend stocks for retirement currently pays a quarterly dividend of $0.83 per share and has a dividend yield of 3.64%, as of February 14. PepsiCo, Inc. (NASDAQ:PEP), AbbVie Inc. (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ) are some other dividend stocks that are preferred by investors.
In December, BMO Capital raised its price target on American Electric Power Company, Inc. (NASDAQ:AEP) to $105 with an Outperform rating on the shares. The firm appreciated the company's retail business.
At the end of Q3 2022, 35 hedge funds tracked by Insider Monkey owned stakes in American Electric Power Company, Inc. (NASDAQ:AEP), up from 30 in the previous quarter. These stakes have a total value of over $671.2 million.
