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5 Best Dividend Stocks for Retirement Income

You don't just want yield. You want sustainability and dependability.

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Retirement Dividend Stocks: Diageo (DEO)

  • retirement-dividend-stocks-diageo-deo-stockMarket cap: $77 billion
  • Current dividend yield: 2.5% (based on its total 2013 payouts of roughly $2.90)
  • Payout ratio: 48% of projected 2014 earnings
  • Dividend growth: 73% in 10 years, from $1.67 paid in 2003 to $2.90 last year

Diageo (DEO) is the global spirits giant behind such liquor brands as Captain Morgan rum and Smirnoff vodka. And thanks to changing tastes at home in the U.S. and the growth of the liquor biz in emerging markets, DEO stock has managed to see decent growth in the last several years.

But what income investors should really be interested in is the dividend potential.

DEO stock pays a decent yield of 2.5%, and its payments are less than half of total annual profits. Furthermore, the company has a good history of dividend increases over time, sharing its growth with shareholders.

And bigger-picture, there are fewer safe bets in the world than “sin stocks” like alcohol purveyor Diageo. In good times and bad, people like to drink their booze. That makes for a consistent revenue stream and thus reliable dividend payments.

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