As interest rates continue to drop each year, retirees continue to find themselves in a tight spot, unable to make an income from their assets.
However, one solution, albeit a bit slow, might be dividend growth stocks, which, if invested in cleverly, can provide a steady cash flow each month if one opts for that option.
Currently, the 3 best standing stocks are Magellan Midstream Partners, Realty Income, and Verizon, due to their great potential and acceptable dividend withdrawal rate.
Magellan Midstream Partners
While the world may be shifting away from fossil fuels and focusing on cleaner energy supply options, MMP might fall under the radar for many, especially considering the fact that the pandemic crippled the crude oil and refined product industry.
That being said, MMP is still recovering, as of now standing at 75% of its value before the covid outbreak.
However, the US remains a dominant petroleum consumer in the world, with 35% of its energy being derived from this source, making the disappearance of crude oil as a resource a far-fetched idea.
On top of that, the stock’s $4.15 per share annual dividend brings a cash return of around 9%, while payout grows by approximately 1% every 2 years.
The stock might continue to underperform, but the world’s dependence on fossil fuels is too great for this to become an unfavorable investment for many retirees.
Realty Income
The pandemic has largely impacted the retailing industry, so the Realty Income stock might at first seem like a counterintuitive option, but that becomes easily refutable due to the trust’s prosperous recovery, with them looking to invest $5 billion in new properties across the US, the UK, and Spain.
While the occupancy rate is at 99%, the FFO per share is $2.41, only 2 cents less than during the first 3 quarters of 2019, hinting at a steady rate of growth.
However, the payout per stock is $2.95 annually, providing a cash yield of around 4.2%, but due to the stock’s steady increase over the past 25 years, it’s looking like a safe investment option.
The trust is still recovering though, with stocks still selling under the January 2020 price, but should still provide acceptable and rising levels of payouts for retirees.
Verizon
The US 5G market is a triangle of constant competition, with Verizon being one of the most advantageous due to constant support and awards from J. D . Power.
5G allowed Verizon to branch out into the industry of Network-as-a-service, which allows devices and cars to connect to an internet grid, a feat that was not achievable with 4G.
With their payouts being $2.56 yearly per stock, retirees will be smart to invest in the stock, as new investors continue to earn nearly 5%, making Verizon one of the best dividend stocks on the market.
While a 2% payout hike might not seem like much, especially for a stock that fell off 14% over the past year, its great potential and P/E ratio make Verizon a smart investment