Dividend stocks can be great assets for you in retirement. They can provide you with some recurring income, and they can be relatively safe places to invest your money into for a while. Not all high-yielding stocks are safe, but by going with established, top companies within their respective industries, you can keep your risk down while keeping your dividend income high.
Three stocks that you’ll want to consider for your portfolio if you’re a retiree craving some dividends and stability are AbbVie (NYSE: ABBV), AT&T (NYSE: T), and Exxon Mobil (NYSE: XOM).
1. AbbVie
Drugmaker AbbVie provides investors with a fairly high dividend that yields 3.8%. That’s more than double the S&P 500 average of 1.4%. And the stock is also a reliable one when it comes to growing its payouts. Including the time when it was part of Abbott Laboratories, AbbVie has a dividend growth streak that goes back 50-plus years, making it a Dividend King.
What low-risk investors will like about this stock is that is has a fairly low beta value of 0.6, which indicates that it won’t go on wild swings along with the market. It can make for a stable investment to hang on to. The company has done a great job of balancing both dividends and growth opportunities.
This year, AbbVie acquired cancer drugmaker Immunogen for $10.1 billion. And last year it announced plans to acquire Cerevel Therapeutics for $8.7 billion (the deal remains pending). Cerevel has drug candidates that can help patients with Parkinson’s disease and schizophrenia.
For the first three months of 2024, AbbVie reported revenue of $9 billion, which was flat from the same period last year. But that’s even with top-selling drug Humira suffering a 36% decline in revenue due to rising competition. AbbVie’s ability to adapt and develop new drugs has allowed it to soften the blow, and it’s a great example of how versatile the business is, making it ideal for retirees who just want a stock they can buy and forget about.
2. AT&T
AT&T has had a rough few years. Its merger with WarnerMedia didn’t work out. The telecom giant has also been involved with concerns about lead-covered cables and the potential financial costs of that. And most recently, there’s also been a data breach involving the company.
There has been ample reason for investors to be bearish on the stock in recent years. And while investors shouldn’t dismiss those issues, they aren’t problems that are likely to weigh down the business over the long haul. At its core, AT&T remains a fairly safe telecom stock to buy and hold. It pays a high yield of 6.6% today, which makes now an attractive time to load up on the dividend stock.
While investors may be concerned about the dividend, AT&T has demonstrated fairly strong resiliency. During the first three months of the year, the company’s revenue totaled $30 billion, which was flat from a year ago. Operating income of $5.8 billion was only slightly below the $6 billion AT&T reported in the prior-year period.
Meanwhile, free cash flow of $3.1 billion more than tripled from just $1 billion. Overall, AT&T’s business looks sound and the dividend is safe — the stock’s payout ratio sits at around 60%.
3. ExxonMobil
A good option for investors who are worried about inflation is oil and gas giant ExxonMobil. It has benefited from rising oil prices but even if they fall, there’s enough of a buffer here that the business should remain in good shape and still be able to pay a dividend.
Although oil prices have come down a bit, the business remains solid. For the three-month period ended March 31, Exxon’s per-share earnings came in at $2.06 (versus $2.79 a year ago), which is still far higher than the quarterly dividend it pays — $0.95. The company has raised its dividend payments for 41 straight years and makes for another reliable income investment to hang on to.
Earlier this month, Exxon wrapped up its acquisition of Pioneer Natural Resources, which doubles its upstream portfolio in the highly coveted Permian. With greater production volume and room for more growth, Exxon has become an even stronger oil and gas play than before. At 3.3%, it offers investors a high yield and it’s an excellent way to diversify your holdings.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.
3 Rock-Solid Dividend Stocks That Are Ideal for Retirees was originally published by The Motley Fool
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