When it comes to loading your portfolio with dividend stocks for retirement, there are a lot of places you can go. However, if you want the cream of the crop, then you go to the “Dividend Aristocrats”. That’s because these companies have been paying, and raising, dividends for more than 25 consecutive years.
That’s a tall order because it requires a company to continually generate enough cash to be able to do so. The fact that these dividend stocks managed to do so through the early 1990s recession, the 9/11 recession and the financial crisis, demonstrates their resilience.
These dividend stocks also represent the ultimate safe haven, since a company that’s able to manage its capital so efficiently for so long is highly unlikely to be crippled.
Instead of offering the traditional dividend stocks for retirement, though, I’m going outside the box while still remaining on the list.
Here are three odd-ball dividend stocks that will pay through retirement.
Odd-Ball Dividend Stocks for Retirement: Helmerick & Payne, Inc. (HP)
I’m a big fan of energy, but usually only the big producers. So I was shocked when I discovered Helmerick & Payne, Inc. (HP), an oil services play that is holding up very strongly amidst the oil price crash. I hadn’t heard of Helmerick & Payne before, yet I am impressed by the fact that is still turned a $422 million profit last year and generated $285 million of free cash flow.
This is almost impossible to find with most oil services dividend stocks.
That’s probably because, unlike most dividend stocks in the sector, HP also has more cash than debt — $718 million vs. $492 million. Moreover, it drew down most of that debt last year, yet only pays about 3% on it.
HP has been paying its dividend for the past 43 years, and right now, that yield is at 4.3%. I think it’s a good time to get in because the stock is also 20% off its 52-week high.
Odd-Ball Dividend Stocks for Retirement: AbbVie Inc (ABBV)
Dividend Yield: 3.8%
The only reason I even know about AbbVie Inc (ABBV) was because it came up in conversation with a dermatologist I know. He was discussing biological treatments for psoriasis … ABBV has one of the best-selling treatments called Humira. It also develops pharmaceuticals for leukemia, hepatitis, HIV, testosterone replacement, hypthyroidism and prostate cancer.
It is always a shock to discover something like a massive pharma company I’d never heard of. I mean, this is a $99 billion company that somehow I never knew about. ABBV pays a 3.8% yield to boot.
Even more amazing is that it’s a growth stock with 17% earnings-per-share growth, even after all these years. It generated $7 billion in free cash flow last year and only paid about 44% in dividends. And somehow it only trades at 19 times earnings.
Odd-Ball Dividend Stocks for Retirement: Old Republic International Corporation (ORI)
Dividend Yield: 4.1%
It’s difficult to hold dividend stocks for retirement without selecting an insurance company. That’s because insurance, done properly, is a fantastic long-term business.
Old Republic International Corporation (ORI) has been doing it longer than almost anybody — 93 years. As long as ORI or any insurance company underwrites properly, it will collect more in premiums than it pays in claims, and over time will invest the profits. As time goes on, those profits will compound and get paid out as dividends.
As a company like ORI evolves, it also moves into more and more types of insurance products. My favorites are the ones with high margins like extended auto warranty, home warranty and travel accident insurance.
Yet, it also handles the specialty stuff like errors and omissions insurance, insurance for directors and officers, employee fidelity, guaranteed asset protection and surety bonds. In fact, they cover just about every sector where liability exists. It pays a 4.1% yield and has been delivering dividends for 34 straight years.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance. As of this writing, he did not hold a position in any of the aforementioned securities. He has 20 years’ experience in the stock market, and has written more than 1,200 articles on investing. He also is the Manager of the forthcoming Liberty Portfolio. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com. As of this writing, he has no position in any of the aforementioned securities.