3 safe retirement stocks to earn sustainable, growing dividends

For many investors looking to save for retirement, it simply doesn't make sense to keep up with day-to-day market fluctuations. Rather, it is a more effective investment style to buy quality stocks, then hold them and receive regular dividend income.

If the goal is to build a solid cash flow for retirement, a major market correction could provide an opportunity to buy good retirement stocks more cheaply. Good retirement stocks pay dividends no matter what happens to the general economy. Their payouts survive ups and downs, wars, depressions and asset bubbles.

The products and services of these companies are so crucial that we cannot imagine a normal life without them. This quality has turned these businesses into ATMs that never run out.

Here are our top three picks to add to portfolios, especially as markets go through a correction phase that can further increase stock value, making them more attractive:

1. Procter & Gamble

Consumer giant Procter & Gamble (NYSE:) has proven to be a great stock for long-term investors. The company has increased its dividends for 65 years in a row, a track record that is hard to match.

This consistent dividend history also shows the strength of the company's cash flow generation. The product range, including globally recognized brands such as Pampers diapers, Tide detergent and Charmin toilet paper, is strong enough to support sales growth through wars, recessions and market declines.

With steadily growing payouts, P&G has also provided capital growth for its investors. The value of its shares has almost doubled in the past five years.

Procter & Gamble Weekly Review

P&G shares, which closed yesterday at $158.66, are currently yielding 2.14%. That return may not seem exciting if you're looking to get a higher return on your investment, but given its track record, Cincinnati-based P&G is a reliable dividend stock in good times and bad. It currently pays a $0.87 quarterly dividend.

The strength of P&G's consumer brands has also been evident during the current health crisis. The consumer goods giant is one of the few companies to have maintained their full-year profit expectations during the pandemic and have benefited from increased purchases of cleaning products.

P&G's consistent growth and long dividend history make the stock an ideal addition to any retirement portfolio.

2. Lowe's

Home improvement giant Lowe's (NYSE:) is another safe retirement stock we recommend for buy-and-hold investors.

The No. 2 home improvement retailer has outperformed the broader market in the past year, benefiting from the home environment that prompted many Americans to put more money into their homes. After soaring more than 50% in the past year, LOW stocks closed at $249.50 yesterday.

Lowe's Weekly Chart

Analysts expect this trend to continue as we see more people move from the big cities to the less crowded suburbs, as working from home becomes the norm after the pandemic.

This de-urbanization, low interest rates and the massive savings Americans have amassed during the pandemic indicate continued gains for home improvement stocks.

In addition to impressive gains, LOW has also increased its payouts regularly – well above inflation. Over the past five years, Lowe's average dividend per share growth rate has been approximately 17%. The company currently pays a $0.8 quarterly dividend, which translates into an annualized return of 1.2%.

3. Enbridge 

For buy-and-hold investors, we love utilities for one simple reason: These companies invest billions of dollars in building assets that generate solid income for their investors. As long as customers continue to pay their energy bills, the money will keep flowing in.

In this space, we especially like Calgary, Canada-based Enbridge (NYSE:), which is North America's largest gas and oil pipeline operator. The company operates in North America and moves nearly two-thirds of Canadian exports to the US. It also carries about 20% of US consumption and operates North America's third-largest natural gas company by number of consumers.

Enbridge Weekly Chart

ENB, whose shares closed Tuesday at $41.34, has an impressive track record when it comes to paying dividends. It has increased its dividend by 10% year-on-year for the past 27 years. Currently, the utility has a rich annual dividend yield of about 6.6%, which translates into a quarterly payout of $0.6725 per share.

The company forecasts it will increase its distributable cash flows (DCF) between 5% and 7% through 2023. It also expects to pay out between 60% and 70% of its DCF as dividends, making the payouts sustainable.

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