With life expectancy in the U.S. reaching all-time highs, it’s a great time to be alive. Of course, the flip side of that coin is the increasing difficulty of saving a suitable nest egg for retirement. It’s one thing to save enough money for 10 years after retirement, but it’s another to have to save for 20 or even 30 years!
That’s why if you’re looking at investing in your future, you’ll want to be armed with some solid, established dividend stocks that will throw off income throughout your retirement.
Today, we’re looking at three dividend stocks that not only are established and boast solid financials, but also yield at least 3% — easily trumping the 10-year Treasury right now, not to mention the income you’ll reap as their dividends grow in the future.
Here they are, in no particular order:
Best Dividend Stocks to Buy for Retirement: Cisco Systems, Inc. (CSCO)
Dividend Yield (as of 11/13): 3%
YTD Stock Performance: +15%
The dynamic growth days of the 1990s are far behind us, and Cisco Systems (CSCO) isn’t the go-go stock that split its shares nine times in 10 years.
But that’s OK — now, CSCO is an established tech giant that has quickly ramped up its dividends ever since establishing payments in 2011.
Sure, Cisco isn’t very exciting without the less explosive sales and earnings growth of old. But CSCO still dominates the worldwide switching market, controlling 56% of the global routing market, so it’s not exactly going away, either.
Meanwhile, Cisco is a cash cow that initiated a 6-cent dividend back in 2011 and has more than tripled that to a current quarterly payout of 19 cents. CSCO also took to the bond markets earlier this year, borrowing $8 billion to finance a new share buyback program.
Best Dividend Stocks to Buy for Retirement: Verizon Communications Inc. (VZ)
Dividend Yield (as of 11/13): 4.3%
YTD Stock Performance: +3%
Verizon (VZ) stock offers shareholders exposure to another high-quality, established business that’s going to keep churning out cash till the cows come home.
Income investors should love VZ stock at current prices, as shares yield an impressive 4.4%. The safety and sustainability of a dividend are other vital aspects for investors to consider when they’re considering the best dividend stocks to buy for retirement. But Verizon succeeds there, too.
VZ has hiked its dividend every year since 2007, proving to investors that even the worst financial setback since the Great Depression wasn’t going to shake its payout. Moreover, Verizon is already among the most conservative plays on all of Wall Street, and the 2013 buyout of the remaining stake in Verizon Wireless will help pour more cash into the business going forward.
This dividend isn’t going anywhere unless people suddenly quit talking on the phone, surfing the web, and watching TV.
Best Dividend Stocks to Buy for Retirement: Pfizer Inc. (PFE)
Dividend Yield (as of 11/13): 3.4%
YTD Stock Performance: -1%
If you’re looking for the best stocks to buy for retirement, look for companies that you’ll be shelling out money to for the next few decades.
Medical expenses are a major concern for just about everyone of retirement age, and pharmaceutical giants like Pfizer (PFE) are among the biggest beneficiaries of an aging population as people take more and more medications to keep the clock rolling.
Sure, the much-anticipated $176 billion Pfizer-AstraZeneca (AZN) merger is dead in the water, but that doesn’t mean Pfizer can’t grow on its own merits. For instance, PFE has a potential blockbuster in its pipeline: Palbociclib, a breast cancer treatment, could hit the shelves as early as 2015 if all goes as planned. Meanwhile, Pfizer has 82 other products in clinical trials and should remain a pharmaceutical powerhouse for decades to come.
As far as the dividend goes? Yes, unlike Verizon, Pfizer did cut its dividend in the midst of the financial crisis. However, it came amid a transformative merger with Wyeth, and when the topic was breached earlier this year when Pfizer was looking to merge with AstraZeneca, management said Pfizer “gets the importance of the dividend” now.
Add in the fact that PFE has improved its dividend from its post-cut 16 cents to 26 cents currently, and it’s clear that Pfizer is taking its income-focused shareholders seriously.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid.