Some dividend stock investors get hung up on chasing the largest possible yield. However, bigger is not always better – particularly if you're an older investor focused on income in retirement, looking for consistent payouts instead of a big payday.
When looking for long-term dividend stocks, it's important to consider a stock that will pay reliably across your golden years. Retirement investors must be able to depend on an income stream that is stable and, at best, continues to grow over time.
Here are nine stocks that long-term investors should consider as the backbone of a retirement portfolio. Although areas of business differ, all share a bright outlook that should continue for years to come.
Consumer tastes can be fickle. But one brand that will likely never lose its massive global appeal is Coca-Cola. Not only is its flagship soft drink among the most popular in the world, but KO boasts brands including PowerAde sports drinks, Minute Maid and Odwalla juices, plus tea brands including Honest Tea and Gold Peak. Perhaps the biggest long-term endorsement of all comes from noted billionaire investor Warren Buffett, whose Berkshire Hathaway (BRK/A, BRK/B) owns 400 million shares of Coca-Cola worth nearly $20 billion. That ensures stability since Buffett always invests with a long-term horizon, so you can follow his lead and invest in Coke with confidence for many years to come.
Though perhaps not the most growth-oriented tech company, patent powerhouse Qualcomm is one of the most stable names in the sector. That's because rather than rely on the ebb and flow of new gadget sales or the sometimes thin margins of the chip-making game, Qualcomm creates and patents technology that is used in wireless communication and then makes big bucks on the intellectual property when others use its designs. As the royalties roll in, QCOM passes on a share of that cash back to shareholders through reliable dividend payments. And with a history of dividend increases, including a surge of more than 260% in payouts from 17 cents quarterly a decade ago to 62 cents presently, you can bank on income growth, too.
Senior housing and assisted living operator Welltower is perhaps as close to a sure thing as you can find on Wall Street. Thanks to demographic changes, the senior population of America is steadily rising – and according to AARP, by 2030 the population age 65 and older will be larger than the number of children under age 18. That means a stock like Welltower, which provides care to those older Americans, will have plenty of customers for many years to come. The regular payments of rent to senior housing facilities helps fuel regular dividends to shareholders that should continue regardless of the ups and downs of the global economy.
New Orleans-based Entergy Corp. provides and distributes electricity across Arkansas, Mississippi, Texas, and Louisiana. There's not a ton of growth in this industry, as the populations in these states are fairly constant and a push for energy efficiency limits demand. However, electricity is as much a staple as food and shelter so investors can be confident ETR will see consistent performance for many years to come. Among utility stocks, ETR stands out with an impressive gain of more than 20% in the last year or so thanks to efforts to streamline its suite of nuclear power plants and improve its financial performance. That new structure will serve ETR well going forward.
Though you may not think of it as a necessity, reliable telecommunications service is important to just about every consumer and business. Imagine the typical workplace without reliable internet access, or how you would have to change your habits without text messaging or Google maps. As the largest 4G network in America, Verizon is an integral part of how we live and work. And while it's hard to imagine significant growth in the saturated wireless market, it's also difficult to imagine anything substantially reducing the number of VZ customers in the years to come. That makes it a great long-term investment that can weather the ups and downs of the broader stock market.
Cheniere Energy Partners
Cheniere Energy Partners operates the Sabine Pass liquefied natural gas terminal in Louisiana. This key piece of energy infrastructure helps turn LNG back into gas for end-users, as well as turn natural gas into liquid for transportation. The company also operates storage tanks and pipelines. Onshore energy is cheap and abundant, and since natural gas is a relatively clean fossil fuel when compared with oil or coal, there is strong demand across all segments of the economy. CQP isn't an explorer, so may not participate as much in this energy source's growth. But its key part in the production cycle makes CQP very secure as natural gas is sure to remain a dominant energy source.
One of the top operators of hospitals and medical office space in America, HCP is a recession-proof investment. If you're a long-term investor, the fact that HCP's revenue is not linked to broader economic trends is a tremendously attractive factor. Regardless of whether oil prices crash or unemployment rises, patients will continue to seek medical treatment. And since HCP isn't directly responsible for the care, it's insulated from any ups and downs in margins based on new laws or Medicare payment trends. It simply collects the rent checks – and passes on a portion to shareholders through generous dividends.
Recently named one of the best consumer stocks to buy for its dividend, Kimberly-Clark stands out as a great company to buy and hold, too. After all, its Huggies diapers, Kleenex tissues and Cottonelle toilet paper are among the most popular paper products at the grocery store. Furthermore, the ebb and flow of consumer spending doesn't seem to matter much in the context of KMB, since personal paper products are likely to remain in your family budget. Thanks to this reliable sales trend, Kimberly-Clark has offered reliable and growing dividends for many years. KMB this year raised its dividend for the 46th consecutive year.
Leading insurance company MetLife has a very predictable revenue model as it collects premiums on its life, auto and home insurance policies. The company then pays out what it needs for claims and makes a comfortable profit on what's left. Running a business like this requires some complicated arithmetic, but if MET does a good job of assessing the risks of its policyholders and adjusting its rates accordingly, then it will always be ahead. Shareholders can share in this steady and reliable flow of profits via MET's dividends, which have more than doubled from 74 cents annually in 2009 to a projected $1.76 per share this year.