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7 Best Long-Term Dividend Stocks for Your Retirement Portfolio

Long-term stocks for retirement - 7 Best Long-Term Dividend Stocks for Your Retirement Portfolio

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Investors seek high risk-adjusted total returns through share appreciation and dividends. Therefore, long-term equity investing is regarded as the best income and wealth compounding engine available to retail investors. Today’s article introduces seven dividend-paying long-term stocks for retirement portfolios.

Over the past 12 months, the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq 100 Index are up 45%, 46%, and 47%, respectively. Analysts are debating whether the current euphoria can continue in the coming months.

It is not possible to know what the markets could do in the short run. But in the longer term, many robust names with juicy dividends will likely be higher from where they are today. Most market participants do not usually sell dividend shares in panic, even when markets become volatile or fall.

Investing in quality names with strong balance sheets and safe dividends is one of the proven methods to ensure financial freedom in retirement. In fact, seasoned investors appreciate that including wide-moat blue-chips in retirement portfolios and having a long-term focus are crucial for comfortable days in golden years.

Against that background, here are our seven long-term dividend stocks for retirement:

  • Altria (NYSE:MO)
  • AbbVie (NYSE:ABBV
  • Aflac (NYSE:AFL
  • iShares Morningstar Multi-Asset Income ETF (NYSEARCA:IYLD)
  • PepsiCo (NASDAQ:PEP
  • SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD)
  • VanEck Vectors Morningstar Wide Moat ETF (NYSEARCA:MOAT)

Long-Term Stocks for Retirement: Altria (MO)

Altria office sign in Virginia capital city tobacco business closeup by road street
Source: Kristi Blokhin / Shutterstock.com

52-Week range: $35.83 – $52.59
YTD change: Up about 22%  
Dividend yield: 6.84%

We start our discussion with the leading tobacco company, namely Altria. It is also known as the owner of Philip Morris USA. The company’s segments include smokable products, smokeless products as well as wine.

Understandably, buying sin stocks that manufacture and sell tobacco products and alcohol may not be appropriate for all investors. Some investors are also concerned with various regulatory risks (such as a potential ban on low-nicotine cigarettes) that could affect the share price of a stock like MO. If you are one of them, you may want move on to our next stock. 

Altria’s Marlboro brand commands the top spot among cigarette brands in the U.S. (more than 40% market share). The group also has a 10% stake in alcoholic drinks producer Anheuser-Busch InBev (NYSE:BUD) as well as a 45% stake in cannabis-producer Cronos (NASDAQ:CRON). Therefore, Altria acts as a bet on the marijuana space as well.

On April 29, the company announced first-quarter metrics. Net revenue came at $6.04 billion, a decline of 5.1%. Adjusted diluted EPS was $1.07, down 1.8%.

“In the first quarter,” the company said in a statement, “Altria paid $1.6 billion in dividends… Altria maintains its long-term objective of a dividend payout ratio target of approximately 80% of its adjusted diluted EPS.”

Altria stock’s forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are 10.14 and 4.01, respectively. You could regard any decline toward $47.50 as a good opportunity to buy the shares.  

AbbVie (ABBV)

abbvie (ABBV) website and logo on mobile phone
Source: Piotr Swat / Shutterstock.com

52-Week range: $79.11 – $117.20
YTD change: Up about 9 %  
Dividend yield: 4.46%

North Chicago-based biopharma group AbbVie operates numerous research and development centers and manufacturing facilities globally. The key therapeutic areas the group focuses include immunology, oncology, neuroscience, eye care, virology, women’s health and gastroenterology. Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) is an investor in the company.

AbbVie announced Q1 metrics in late April. Adjusted net revenues were $12.94 billion, and increased 5.2% year-over-year (YOY). Net earnings came at $3.5 billion, up 18%. Adjusted diluted EPS was $2.95, increased 22% YOY. 

“We are off to an excellent start to 2021, with strong performance across our core therapeutic areas and first quarter revenue and earnings results ahead of our expectations,” CEO Richard A. Gonzalez said. “Our new products are delivering impressive performance and we are on the cusp of potential commercial approvals for more than a dozen new products or indications over the next two years – including five expected approvals in 2021.”

Investors were pleased with the overall results and that management increased its adjusted diluted EPS anticipated for 2021 from $12.32-$12.52 to $12.37-$12.57.

ABBV stock hit an all-time high (ATH) in recent days. Forward P/E and P/S ratios are 9.40 and 4.06, respectively. With its current products and pipeline, the potential for revenue growth, and high net margins, the company should create shareholder value for many quarters to come.

Long-Term Stocks for Retirement: Aflac (AFL)

Stocks to Buy
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52-Week range: $30.32 – $57.35
YTD change: Up about 25%
Dividend yield: 2.38% 

Columbus, Georgia-based Aflac is a provider of supplemental health insurance and life insurance in the U.S. and Japan. It covers more than 50 million people. For instance in Japan, it markets cancer treatment insurance as supplemental insurance. That nation’s government healthcare system does not cover some of the expenses, so this insurance contributes to revenues significantly. 

As over half of Aflac’s net income is from Japan, its fortunes are in part tied to the Japanese Yen, a currency that investors typically regard as a safe haven. In other words, if the yen declines versus the U.S. dollar, then Aflac’s earnings also fall.

In late April, Aflac announced Q1 metrics. Total revenue was $5.9 billion, an increase of 13.7% YOY. Net earnings came at $1.3 billion, or $1.87 per diluted share. A year ago, they had been $566 million, or 78 cents per diluted share. Total investments and cash at the end of March 2021 were $143.3 billion, up 4.6%.

“We treasure our 38-year track record of dividend growth and remain committed to extending it, supported by the strength of our capital and cash flows,” CEO Daniel P. Amos said. “At the same time, we will continue to tactically repurchase shares, focused on integrating the growth investments we have made in our platform.”

AFL stock hit a record high in May. Forward P/E and P/S ratios are 11.39 and 1.72, respectively. Interested investors should keep in mind that the company is a bet on the Japanese currency, too. Yet, despite the currency risk, Aflac has been growing its earnings. A potential decline toward the $52 level would improve the margin of safety.

 iShares Morningstar Multi-Asset Income ETF (IYLD)

A person drawing a line graph with the phrase "ETF" in large letters on a chalkboard. index funds to buy
Source: Shutterstock

52-week range: $20.29 – $24.13
YTD change: Down 1%  
Dividend yield: 3.79%
Expense ratio: 0.60% per year

Our next discussion centers around an exchange-traded fund, or ETF. The iShares Morningstar Multi-Asset Income ETF gives access to several asset classes, including bonds (60%), equities (20%) and alternative income sources (20%). The fund’s objective is to achieve high current income and some capital appreciation.

IYLD, which began trading in April 2012, tracks the returns of the Morningstar Multi-Asset High Income Index. With 11 holdings, its net assets are over $240 million. The top five names in IYLD make up more than 75% of the ETF. They include bond and dividend ETFs.

IYLD further invests in government bonds issued by emerging market countries, the U.S. mortgage real estate sector, dividend-paying U.S. shares and emerging market stocks. Over the past year, IYLD is up 14%. I believe its composition makes the ETF appropriate for dividend investors.

Long-Term Stocks for Retirement: PepsiCo (PEP)

Cans of PepsiCo's (PEP) Pepsi soda are in a bucket of ice.
Source: suriyachan / Shutterstock.com

52-Week range: $126.53 – $148.77 
YTD change: Down about 1%  
Dividend yield: 2.93%

Global food and beverage giant PepsiCo needs little introduction. The group has been increasing its dividends annually for almost five decades. The shares give exposure to the consumer staples sector.

PepsiCo released Q1 metrics in mid-April.  Net revenue totaled $14.8 billion, up 6.8% YOY. Net income of $1.71 billion, or $1.24 per share. A year ago, they had been $1.34 billion, or 96 cents per share. The Street agreed that  management delivered better-than-expected growth and robust earnings.

“Our results are indicative of the strength and resilience of our highly dedicated employees, diversified portfolio, agile supply chain and go-to-market systems and strong marketplace execution,” CEO Ramon Laguarta said. “Following our first quarter results, we have greater confidence in delivering on our financial guidance for the full year.”

In the past year, PEP stock is up about 8%, and saw an ATH in late December, 2020. Forward P/E and P/S ratios are 24.04 and 2.85, respectively. If you are a dividend income growth investor, then you should put the shares on your watchlist. A decline toward $140 would offer batter value for the long term.

Long-Term Stocks for Retirement: SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

keyboard featuring a bull on the etf key. etfs to buy
Source: Shutterstock

52-Week Range: $26.15 – $42.41
YTD change: Up about 27 %  
Dividend Yield: 5.4%
Expense Ratio: 0.07% per year

The SPDR Portfolio S&P 500 High Dividend ETF gives access to shares stocks with high dividends as well as the potential for capital appreciation. The fund began trading in October 2015 and net assets stand at $3.8 billion.

SPYD, which has 77 holdings, tracks the returns of the S&P 500 High Dividend Index, which is a benchmark for dividend seekers. The top 10 stocks make up around 15% of the fund, and no company has a weighting of more than 1.7%. In terms of sector breakdown, financials (24.08%) has the top spot. Next in line are real estate (18.16%), energy (14.32%), utilities (12.93%) and information technology (6.50%).

Data storage firm Seagate Technology (NASDAQ:STX), data and record storage group Iron Mountain (NYSE:IRM), and financial groups Fifth Third Bancorp (NASDAQ:FITB) and Lincoln National (NYSE:LNC) are among the leading names On the roster.

Over the past 12 months, the fund returned 63%. Trailing P/E and P/B ratios of 15.22% and 1.82% as well as the current dividend yield suggest the fund could possibly see new highs in 2021.

VanEck Vectors Morningstar Wide Moat (MOAT)

Three wood blocks spelling out "ETF". representing best etfs
Source: Shutterstock

52-Week Range: $46.08 – $73.43
YTD change: Up about 17%  
Dividend Yield: 2.22%
Expense Ratio: 0.47% per year

Having an established economic moat typically translates into a competitive advantage for a firm. Such a company regularly shows superior business performance and provides robust shareholder value.

Our final choice is another ETF. The VanEck Vectors Morningstar Wide Moat ETF invests in businesses with wide moats that also offer good value. The fund’s benchmark index is the Morningstar Wide Moat Focus

MOAT, which has 49 holdings, began trading in April 2012. The top 10 stocks comprise about 26% of net assets of $5.8 billion. In terms of allocation, healthcare tops the list with 20.4%. Next in line are IT (17.0%), industrials (15.2%), financials (12.9%), consumer staples (11.0%), and others.

Among the leading names in the fund are Wells Fargo (NYSE:WFC), Cheniere Energy (NYSE:LNG), Google’s Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), and General Dynamics (NYSE:GD). The ETF hit a record high of $73.43 in May. You could regard a potential drop toward the $67.5 level as an opportunity to buy the fund. I expect many of the names to continue creating shareholder value in future quarters.

On the date of publication, Tezcan Gecgil held both long and shorts positions in GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.


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