If there is one driving force when it comes to retirement, it has to be the search for income. Turning your nest egg into a source of reliable income is paramount to enjoying your golden years without worry. Because of this, dividend stocks are increasingly becoming the well from which investors draw their retirement income. There’s just one problem with dividend stocks — waiting to cash your checks.
Most dividend stocks hand out their payouts every three months. Typically in March, June, September and December, as the quarter ends. That poses a bit of a conundrum for those in the throes of retirement: I don’t know about you, but I wouldn’t want my income stream to dry up for months at a time waiting on dividends to clear the bank.
But it’s not a total loss, there are plenty of dividend stocks to buy that offer income in the off months. Yes, that means you’re getting a full 12 months of dividend payouts.
If that sounds like a retirement plan you can get behind, we review three dividend stocks that will ensure a steady, full year’s worth of payouts.
Dividend Stocks to Buy: Cisco Systems (CSCO)
Dividend Yield: 3.7%
Dividend Schedule: January, April, July and October
Want to find the best dividend stocks? The investors should look toward tech. Thanks to high-profit margins and low operating cost, tech stocks have quickly become some of the best dividend-paying firms in the world. Case in point Cisco Systems, Inc. (NASDAQ:CSCO).
The former dot-com darling is still going strong. Wireless routing and networking still rule the roost at CSCO. However, the firm has expanded beyond just switching equipment and routers. It’s now a software and services giant with its tentacles in everything from cloud computing and cyber security to the Internet of Things and renewable energy software.
The real beauty is that these sorts of areas come with much higher growth rates and profit margins. Even more so when it’s able to bundle its services with its networking expertise. That provides customers with a comprehensive solution to build and secure their network in one fell swoop.
All of this has been great for dividend investors. Cisco has become a cash-minting machine! Cash, mind you, that makes its way back into shareholders pocket. Since 2011, when it initiated a dividend, CSCO stock has grown its payout by a whopping 385%. Today, Cisco yields 3.7% and investors should expect that yield to grow further based on its cash-generating powers.
Dividend Stocks to Buy: AbbVie (ABBV)
Dividend Yield: 3.9%
Dividend Schedule: February, May, August, November
Biotech firms aren’t normally a favorite stomping ground for those investors looking for dividend stocks. However, some of the sector’s elder statesmen are amazing when it comes cash flows and producing big-time dividends. Case in point, biotech giant AbbVie Inc (NASDAQ:ABBV).
Spun off from Abbott Laboratories (NYSE:ABT) back in 2013, ABBV has become a monster in the world of dividends thanks to one source — Humira. The autoimmune disease medication is currently the best-selling drug on the planet, funneling more than $16.3 billion in revenues back to ABBV last year. That’s about 63% of its total revenues.
What’s great is that, despite reaching the patent cliff for the drug, Humira sales continue to increase as doctors use it for more than its original purpose. During the last quarter, revenues for the drug actually jumped more than 15%. That’s because ABBV has been able to kick the can on some of these other uses when it comes to patents.
Adding to the appeal of AbbVie is its robust pipeline of drugs entering late-stage critical trials. When these finally hit the ground running, ABBV should continue to see robust cash-flow growth. With a dividend yield of nearly 4%, investors looking for a strong healthcare dividend should prescribe AbbVie for their portfolios.
Dividend Stocks to Buy: Cummins (CMI)
Dividend Yield: 2.7%
Dividend Schedule: March, June, September and December
The only time people ever really think about Cummins Inc. (NYSE:CMI) is when they recognize the logo on the back of a truck. In reality, the company is a powerhouse in the world of engines and industrial generators. The fact that it’s underloved leads to a wonderful opportunity for dividend investors.
Today, CMI controls around 40% of the large heavy-duty engine market in North America and around 70% of the medium-duty engine market. Those engines find their way into everything from passenger trucks to utility-scale generators and mega-sized construction equipment. Increasingly, CMI has turned to emerging markets to fuel its growth and as such, earnings and revenues at the firm have continued to rise. During the last quarter, international sales improved by 17% — driven primarily by China, India and other developing markets.
And CMI should grow further thanks to a recent joint venture with Eaton Corporation, PLC Ordinary Shares (NYSE:ETN). The new J.V. will create new automated transmissions for heavy-duty and medium-duty commercial vehicles that are deigned to save energy while keeping power steady. That’s a vital cross-selling and market dominating partnership that will pull in more customers across CMI’s operating spectrum.
What all this really means is dividends. Over the past ten years, CMI has gotten serious about rewarding shareholders and increased its total payout by 720%. With more growth on the horizon, CMI’s current yield of 2.6% is really just a drop in the bucket for this dividend stock.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.