One of the best ways for retirees to create a regular income from lifelong savings is to invest in dividend shares. Reliable dividend shares generally offer higher returns than bonds and give you the opportunity to see your income rise due to rising dividend payments, but also as a result of capital growth. Bonds, CDs and other traditional fixed-income products cannot.
Here we have selected three stocks that are ideal for that purpose because they pay growing dividends.
1. Home Depot
Home Depot Inc (NYSE 🙂 is one of those retailers who are best placed to continue sending dividend controls to retirees. The reason: management discovered early on how they can thrive in this challenging environment where e-commerce disruptions, such as Amazon.com Inc. (NASDAQ :), cause many retailers to go bankrupt.
With 90% of Americans already living within 10 miles of a Home Depot store, instead of opening new locations, the company instead focused on upgrading its existing store portfolio with better technology and options for fulfilling e-commerce.
Another important step that has helped Home Depot thrive in the relatively weak housing markets of the past decade through diversification into areas that are less dependent on the strength of the housing market.
This retailer is also a reliable dividend payer. The quarterly dividend has increased by 380% over the past decade and, with a healthy payout ratio of 42%, has much more room to grow. With an annual dividend yield of 2.41%, the company pays $ 1.36 per quarter.
Earlier this year, the payout was boosted by 32% when HD also announced a new $ 15 billion share repurchase authorization and said it plans to buy $ 5 billion in shares in 2019. The shares have risen 14% in the last 12 months, closed yesterday at $ 226.67.
2. Merck & Co.
Shares in health care are considered to be reliable income producers. Just like retailers, utilities and garbage collectors, healthcare providers offer services that we cannot afford to postpone in a recession, and economic fluctuations do not usually inhibit the rollout of new drugs and devices.
Shares such as Merck & Company Inc (NYSE 🙂 are well positioned to not only beat the market in a recession, but also offer good sustainable returns.
Merck, a global healthcare provider, plans to invest $ 16 billion in new capital projects until 2022. It also raised its dividend by 15% last year to $ 2.2 per share per year.
The company benefits from its best-selling cancer drug Keytruda. In the second quarter, Merck outperformed Wall Street sales estimates by nearly a billion dollars in revenue, and increased his revenue and profit forecast as Keytruda is on its way to becoming a $ 10 billion product per year.
With a strong earnings momentum, a growing dividend and redemptions, we believe that Merck is a good long-term bet for buy-and-hold retirees, even after the strong gain of 16.5% in the past 12 months. The stock closed yesterday's session at $ 83.29.
3. BCE Inc.
Telecom companies have all those features that make a stock perfect for retirees. In this room we love Canada & # 39; s largest telecom operator BCE Inc ]. (NYSE 🙂 more than its American counterparts. The reason is that the company operates in an oligopoly in Canada, where three major players make the most revenue.
Through its diversified range of services, including wireless internet, internet and media companies, BCE has shown a sustainable growth in the number of subscribers. Over the past five years, the operator has placed the right bets and positioned the company to generate better returns for shareholders.
One of the measures that will stimulate future growth is his investment, worth billions of dollars, in a fiber optic network to support higher internet speeds and to prepare the tool for offering 5G – the next generation of wireless network technology.
BCE has long had a policy of increasing its dividend by 5% annually and has used a number of acquisitions to partially stimulate the growth in cash flow that is needed to continue to stimulate the payout.
According to the company's dividend policy, the company divides between 65% and 75% of its free cash flow into payouts. In accordance with this policy, BCE has more than doubled its annual payment since the fourth quarter of 2008: the payment now amounts to $ 2.38 per share, which translates into a dividend yield of around 5%. The shares have risen by nearly 21% in the past year and end at $ 48.45 yesterday.
Receiving regular dividend controls and protecting your capital should be the two most important goals for people who are retired. Solid dividend shares, which offer a stable return through their stable income, can make that important difference in your pension portfolio.