The quest for the right dividend stocks to own during your retirement is an ongoing process. While the idea of "set it and forget it" might seem appealing, the fact is that such a strategy works great until it doesn't.
Take General Electric (GE) , for example. Markets long viewed GE as the ultimate "widows-and-orphans" stock because it seemed like the company always paid a dividend and saw its share price rise. But not only has GE's price lost nearly 50% over the past year, but management cut the dividend in half. Yes, GE still yields 3.4%, but that's after the stock tanked and the company slashed its quarterly payout.
So, those looking for a dividend stream in retirement should be sure to stick with companies that feature staying power, a "moat," a long history of paying dividends and that seem unlikely to cut their payouts. These might be boring old names, but boring and old aren't bad things if you want to get paid.
There are many good candidate stocks that fit the bill, but here are a few to especially consider:
The greatest growth days might be behind Coca-Cola (KO) , but the company remains a force to be reckoned with. After all, it's not only reliably paid a dividend since 1920, but has increased that payout for 55 straight years. Coke also currently yields about 3.5%, while its dividend boasts a nearly 9% five-year compound annual growth rate. And personally, I have yet to find a drink that I like better than Coke. (I prefer Mexican Coke in glass bottles, made with real sugar.)
Procter & Gamble
Consumer-products giant Procter & Gamble (PG) sells well-known consumer products that you likely have all over your house. Boring perhaps, but that's not a negative when you want to reliably get paid. P&G has paid a dividend every year since 1891, and has increased that payout for the past 61 years. The stock currently yields 3.52%, while its dividend has a five-year compound annual growth rate of just over 4%. That's not as compelling as Coke's, but represents good growth nonetheless.
I included Verizon (VZ) on this list with some trepidation, as I waffle on whether the company really has as significant a "moat" as KO and PG do. But then I remember that I pay Verizon month in and month out for cell phones, a land line and FIOS. There's plenty of competition in those areas, but VZ still packs a real punch. And even though the dividend has less than a 3% five-year compound annual growth rate, Verizon currently yields around 5% -- the highest rate among the three stocks on this list.
One Last Point
While the names above all look promising, remember that whether you're retired or not, owning just a handful of even blue-chip dividend stocks exposes you to so-called "concentration risk." If you doubt that, just ask anyone who owns a significant GE stake. So, be sure to make dividend stocks part of a larger, more-diversified investment approach.