We all know just how important dividends are for creating long-lasting wealth and returns. However, for investors in or approaching retirement, the significance of dividends even grows further.
The steady income stream can help pay for life’s necessities and reduce the need for selling and withdrawing money from your portfolio. After all, getting 3% in dividends reduces the amount you need to pull from your accounts to meet your target withdrawal rate.
At the same time, stock dividends carry lucrative tax advantages and offer the ability beat inflation as companies raise their payouts. That’s something that the interest from bonds can’t do. And let’s not forget that dividend payments can help cushion downturns in stock market as well.
All in all, dividends can be the key to a happy and fruitful retirement. And using exchange-traded funds (ETFs) makes it even easier to add dividends to a retirement portfolio.
There are now several funds that specialize in paying dividends. Here are five of the best dividend ETFs that retirement investors may want to consider: