Retirement Stock Portfolio: 12 Safe Dividend Stocks To Consider

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In this article, we discuss 12 safe dividend stocks to consider for a retirement stock portfolio. You can skip our detailed analysis of the retirement situation in the US and the performance of dividend stocks over the years, and go directly to read Retirement Stock Portfolio: 5 Safe Dividend Stocks To Consider.

Over three and a half years after the onset of COVID-19, the US continues to have approximately 2 million more retirees than initially projected, marking one of the most notable and lasting shifts in the country's workforce, as reported by Bloomberg. This unexpected rise in retirements is evident in the significant difference between the number of retirees currently and what was forecasted by a Federal Reserve economic model. Though the gap has decreased from 2.8 million late last year, it remains higher than anticipated and has even increased from 1.7 million in June. Even with the increasing population of retirees in the US, numerous baby boomers express that they lack adequate funds to sustain their retirement lifestyle.

In the current market landscape, investing for retirement requires a thoughtful and diversified approach. With economic uncertainties, varying interest rates, and market volatility, choosing the right investment avenues becomes pivotal. Due to these challenges, many ordinary Americans are struggling to retire comfortably with their existing income. Bankrate's September survey revealed that approximately 56% of employed or temporarily unemployed Americans believe they're falling short in saving for retirement. Additionally, nearly a quarter of workers admitted to not making any contributions to their retirement accounts for at least a year. Mark Hamrick, Bankrate’s senior economic analyst, made the following comments in the report:

“Amid the tumultuous developments of the past several years, including a short but severe recession and a period of high and sustained inflation, a majority of Americans say they’re not where they need to be to achieve their retirement savings goals.”

Retirement investments ideally balance growth potential with stability. Typically, a diversified portfolio involving a mix of stocks, bonds, and other assets can be beneficial. In addition to this, dividend stocks can be a valuable component of a retirement portfolio due to their potential to generate consistent income. These stocks belong to companies that regularly distribute a portion of their earnings to shareholders. For retirees seeking a reliable income stream, dividend-paying stocks can be beneficial as they provide a source of passive income. Over recent years, dividend stocks have demonstrated considerable returns. Conover et al. (2016) conducted an empirical study spanning more than 50 years of US data, from 1962 to 2014, revealing that investing in dividend-paying stocks not only boosts returns but also notably mitigates risk across both value and growth portfolios, regardless of market capitalization. Their findings highlighted that the risk reduction was particularly pronounced when combining growth and value styles. The study also indicated that dividend-paying growth stocks tend to yield higher returns compared to non-dividend-paying stocks. This research underscores the diversification advantages gained by incorporating an income-focused strategy into an investment portfolio.