Boring is good when you’re looking for stocks to supplement your Social Security income. You don’t want high-risk, high-reward growth stocks. You want companies with long and profitable histories that have increased their dividends even in tough times. If you’re looking for dividend stocks to generate income in retirement, Procter & Gamble (NYSE:PG), Realty Income (NYSE:O), and Costco Wholesale (NASDAQ:COST) are fabulous options.
1. Procter & Gamble
Procter & Gamble may seem like the kind of stodgy company your grandparents would have invested in. The consumer staples behemoth isn’t exactly known as cutting-edge, though you probably have its products somewhere in your home. Its 65 brands include Pampers diapers, Tide laundry products, Charmin toilet paper, Bounty paper towels, Gillette razors and shaving gel, and Herbal Essences hair care. Even in recessions, people need the products that Procter & Gamble makes, and they don’t change their consumption habits much in good times or bad.
The company may not have a ton of room to grow, but there are plenty of reasons to bet on Procter & Gamble’s long-term success. In 2014, it began streamlining and ultimately axed about 100 of its less profitable brands. In its 2020 fiscal year, its operating cash flow rose 14% to $17.4 billion. And while the company has been somewhat slow to adopt e-commerce, in its fiscal quarter that ended in September, it grew online sales by 50%.
There’s no such thing as a guaranteed dividend, but Procter & Gamble’s is about as close as you can get. It’s paid out dividends since 1890 and has achieved Dividend King status, with 64 years of consecutive increases under its belt. With annual dividends of about $3.16 per share, it has a yield of 2.28%. Procter & Gamble was a solid bet for your grandparents’ retirement portfolio, and it will probably still be a great stock for your grandchildren to have in their portfolios when they retire.
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