Since the start of the pandemic, it has become more difficult to earn a decent pension from your portfolio. Many blue chip companies have suspended or reduced their payouts to keep cash while revenues cratered.
If you are one of those savers who need to plan their retirement trip on your own, or who are still working but depend on steady income payments from your property, unfortunately you will not find many high-yielding opportunities to earn a decent income stream.
Retirees also face an interest-rate environment in which some of the safest assets, such as government bonds and bank savings accounts, pay next to nothing. The return on, for example, is approaching 1.7%, which hardly compensates for inflation.
In this challenging environment, we advise retirees looking for returns to focus more on companies with stable balance sheets that tend to increase dividends, rather than stocks with the highest total dividend yields.
Below are three dividend stocks that we believe can support their dividends and provide a steady stream of income to retirees at these low interest rates.
1. Bank of Nova Scotia
Market Cap: $ 75.73 Billion
Quarterly Payout: $ 0.71
Dividend Yield: 4.5%
Canadian banks are very different from their US counterparts. They operate in a kind of oligopoly with very limited foreign competition. This lack of external challenges allowed these lenders to not only maintain their market share, but also maintain some very robust profit margins.
While this is not good for consumers who have little choice but to accept exceptionally high bank and investment fees, these lenders have been a great place for investors, especially when compared to their American peers.
If you want to get an exceptionally high dividend yield from one of these lenders, the Toronto-based Bank of Nova Scotia (NYSE 🙂 is an option.
Bank of Nova Scotia Weekly Chart.
There is no doubt that Scotiabank is going through a rough time, as are other lenders, as the recession caused by COVID-19 is hurting its margins and forcing it to set aside more money for expected credit losses, but the $ 0 quarterly dividend, We believe that 71 per share of the company is safe. The lender's payout ratio is in the 40% range, leaving a lot of room for the dividend to grow in the future.
One of the main factors of this strength is that BNS is well funded with a capital reserve well above legal requirements, and that it is still profitable. Scotiabank has paid a dividend to investors every year since 1832, while it has also paid out a dividend in 44 of the past 45 years.
2. Verizon Communications
Market Cap : $ 244 Billion
Quarterly Payout: $ 0.71
Dividend Yield: 4.5%
Like banks, telecom operators are also major producers of fixed-income securities. Whatever direction the economy takes, the Internet and wireless connections will be among the last items consumers are removing from their must-have lists. This predictability and stickiness increase their appeal to long-term investors.
In this space, Verizon Communications (NYSE 🙂 is a good choice, especially for retirees. The company has a solid track record of rewarding investors with dividends, which have grown since 2007. The company currently pays $ 0.71 per share per quarter, which translates to an annual return of 4.5%.
Verizon Weekly Chart.
CEO Hans Vestberg is cutting back on investment in high-risk areas, such as media, to fully focus on network expansion, thanks to a wave of new 5G technology that represents a quantum leap in speed, capacity and connectivity.
The company told investors last month that its 5G network will cover 100 million people by the end of the year and reach coast-to-coast coverage by 2024. That expansion will help the airline double its revenue growth to 4% by 2024.
Telecom stocks may not generate significant capital gains, especially when compared to fast-growing stocks. But these stocks are defensive in nature and help retirees in times of economic need.
3. Duke Energy
Market Cap: $ 74.68 Billion
Quarterly Payout: $ 0.965
Dividend Yield: 4%
Energy and gas companies offer another attractive way to earn growing dividends. In this space, we love Duke Energy (NYSE 🙂 of North Carolina.
The utility, which provides electricity to 7.8 million customers in six states, is well positioned to reward its long-term investors in a major portfolio restructuring with a $ 60 billion development plan.
Duke Energy Weekly Chart.
The turmoil includes the sale of carbon-based energy resources and foreign operations, the purchase of a utility company, and expanding the reach in renewable energy. In January, Duke sold its 19.9% ??stake in its Indiana business to Singapore's state investment fund, GIC, as it prioritizes renewable energy development.
The country's largest utility company has set a target to halve its CO2 emissions by 2030 and become net zero by 2050.
Owning Duke stock also makes sense to retirees, as their regulated business models make their cash flows predictable, meaning there is little risk of negative surprises. The stock is up nearly 27% in the past 12 months.
