雅虎香港財經 How to Maximize Your Retirement Portfolio with These Top-Ranked Dividend Stocks
Here's an eye-opening statistic: older Americans are more afraid of running out of money than of death itself.
And older Americans have legitimate reasons for this worry, even if they have dutifully saved for their golden years. That's because the traditional ways people manage retirement may no longer provide enough income to meet expenses - and with people generally living longer, the principal retirement savings is exhausted far too early in the retirement period.
Retirement investing approaches of the past don't work today.
In the past, investors going into retirement could invest in bonds and count on attractive yields to produce steady, reliable income streams to fund a predictable retirement. 10-year Treasury bond rates in the late 1990s hovered around 6.50%, whereas the current rate is much lower.
While this yield reduction may not seem drastic, it adds up: for a $1 million investment in 10-year Treasuries, the rate drop means a difference in yield of more than $1 million.
Today's retirees are getting hit hard by reduced bond yields - and the Social Security picture isn't too rosy either. Right now and for the near future, Social Security benefits are still being paid, but it has been estimated that the Social Security funds will be depleted as soon as 2035.
How can you avoid dipping into your principal when the investments you counted on in retirement aren't producing income? You can only cut your expenses so far, and the only other option is to find a different investment vehicle to generate income.
Invest in Dividend Stocks
Dividend-paying stocks from low-risk, high-quality companies are a smart way to generate steady and reliable attractive income streams to replace low risk, low yielding Treasury and bond options.
Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.
One way to identify suitable candidates is to look for stocks with an average dividend yield of 3%, and positive average annual dividend growth. Many stocks increase dividends over time, helping to offset the effects of inflation.
Here are three dividend-paying stocks retirees should consider for their nest egg portfolio.
Brixmor Property (BRX) is currently shelling out a dividend of $0.27 per share, with a dividend yield of 4.84%. This compares to the REIT and Equity Trust - Retail industry's yield of 4.37% and the S&P 500's yield of 1.54%. The company's annualized dividend growth in the past year was 4.81%. Check Brixmor Property (BRX) dividend history here>>>
COPT Defense (CDP) is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 4.94% compared to the REIT and Equity Trust - Other industry's yield of 4.3% and the S&P 500's yield. The annualized dividend growth of the company was 3.51% over the past year. Check COPT Defense (CDP) dividend history here>>>
Currently paying a dividend of $0.25 per share, Kite Realty Group (KRG) has a dividend yield of 4.81%. This is compared to the REIT and Equity Trust - Retail industry's yield of 4.37% and the S&P 500's current yield. Annualized dividend growth for the company in the past year was 4.17%. Check Kite Realty Group (KRG) dividend history here>>>
But aren't stocks generally more risky than bonds?
The fact is that stocks, as an asset class, carry more risk than bonds. To counterbalance this, invest in superior quality dividend stocks that not only can grow over time but more significantly, can also decrease your overall portfolio volatility with respect to the broader stock market.
An advantage of owning dividend stocks for your retirement nest egg is that numerous companies, particularly blue chip stocks, raise their dividends over time, helping alleviate the impact of inflation on your potential retirement income.
Thinking about dividend-focused mutual funds or ETFs? Watch out for fees.
If you prefer investing in funds or ETFs compared to individual stocks, you can still pursue a dividend income strategy. However, it's important to know the fees charged by each fund or ETF, which can ultimately reduce your dividend income, working against your strategy. Do your homework and make sure you know the fees charged by any fund before you invest.
Bottom Line
Pursuing a dividend investing strategy can help protect your retirement portfolio. Whether you choose to invest in stocks or through low-fee mutual funds or ETFs, this approach can potentially help you achieve a more secure and enjoyable retirement.
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Brixmor Property Group Inc. (BRX) : Free Stock Analysis Report
Kite Realty Group Trust (KRG) : Free Stock Analysis Report
COPT Defense Properties (CDP) : Free Stock Analysis Report
