5 Income Stocks for Retirees

PUBLISHED Sep 16, 2022, 7:29:13 PM        SHARE

imgDividend Power Blog

When most people reach the age of 50, they start thinking about retirement. At this age, you need a strategy in place about housing, working, and income before retiring. For instance, should you pay off the mortgage or sell your house and downsize to a smaller home? Similarly, income during retirement is a vital consideration because Social Security will probably not cover all your needs. Even $1 million may not be enough in a retirement account, assuming you follow the 4% withdrawal rule. If you are used to living on more income, then it may be time to look at dividend stocks for income. Below we discuss 5 income stocks for retirees.

To obtain our list, we screen for stocks increasing their dividend for at least ten years combined with a 4%+ dividend yield. At this level dividends are important because they become a major component of total return. In addition, we add criteria for dividend safety and require an earnings payout ratio of less than 65%. We don’t want to overpay for income, so we also need a price-to-earnings ratio (P/E ratio) of not more than 15X.


If you are interested in investing in stocks that pay dividends I recommend signing up for the Sure Dividend Newsletter* . It is a good value and one of the best dividend stock newsletters available. There is a 7-day free trial and grace period so it is risk free. The service provides top 10 stock picks each month with discussion of advantages, valuation, and risks. I highly recommend them and use their insights for my own stock research.

5 Income Stocks for Retirees

The Western Union Company

The Western Union Company (WU) is the first income stock for retirees. The company was founded in 1851 as a telegraph company but added services with time. Today, the corporation is the world’s largest money movement and payment services business. Western Union operates globally with 550,000+ retail agents and a digital business. Total revenue was about $4,865 million in the past twelve months.

The company’s yield is outstanding at approximately 6.0%. Few companies, besides real estate investment trusts (REITs) and master limited partnerships (MLPs), offer a dividend yield this high. Moreover, the dividend is well covered, with a payout ratio of ~43%.

One risk is that competition is increasing for money transfer services; thus, the stock price has been down about 28% in the past 1-year. However, Western Union is undervalued, trading at an earnings multiple of 8.7X, below the 10-year range and near the lower end of the 5-year range. Therefore, investors should look strongly at this stock when combined with dividend safety.

dividend yield history

Source: Portfolio Insight*

Verizon Communications

Verizon Communications (VZ) is the second income stock for retirees. The company is a well-known telecommunications giant focusing on cellular and broadband services for consumers and businesses. The company has roughly 115 retail cellular customers, 7.3 million broadband connections, of which about 6.6 million are FiOS, and 28 million business connections. Total revenue was around $134,325 million in the last twelve months.

Verizon is paying a ~5.9% dividend yield, the highest in a decade. Verizon only slowly raises the dividend at about a 2% CAGR, but the dividend safety is strong, with a payout ratio of approximately 47%.

The stock is ridiculously cheap because of recession fears, competition, and worries about subscriber growth. Verizon is trading at a P/E ratio of about 8.4X, well below the 5-year and 10-year ranges. I view Verizon as a convincing addition to income portfolios.

Dividend Yield History

Source: Portfolio Insight*

Related Articles About Verizon

M.D.C. Holdings

M.D.C. Holdings is a homebuilding and financial services company founded in 1972. The company builds new homes under its Richmond American brand, mainly in Colorado, California, Arizona, Nevada, and Florida. In addition, the company has smaller operations in other states. Total revenue was $5,523 million in the past twelve months.

The homebuilder’s stock is now yielding 6.0%, the highest since the COVID-19 pandemic bear market. Furthermore, the dividend is snowballing at an approximately 17% compound rate in the trailing 5-years. Finally, the dividend is supported by a conservative payout ratio of only around 21%, lowering the possibility of a cut or omission.

M.D.C. Holdings’ stock price has been battered in 2022 and is down nearly 39%. Investors fear rising mortgage rates and a recession will cause contraction in the housing market, impacting revenue and profitability. That said, mortgage rates are off their peak, and the unemployment rate is near a record low. Moreover, at a forward P/E ratio of roughly 3.6X, the stock is inexpensive and trading well below its 5-year and 10-year P/E ranges, making it worthwhile.

Dividend Yield History MDC

Source: Portfolio Insight*

Walgreens Boots Alliance

The fourth income stock for retirees is Walgreens Boots Alliance (WBA). The company is one of two large pharmacy retail chains in the US. Walgreens Boots also has international operations. The total store count is more than 9,000 in the US and 4,000 internationally. Walgreens Boots also owns an e-commerce site. Total revenue was $134,516 million in the last twelve months.

Walgreens Boots has a dividend yield of about 5.2%, the highest since the market decline during the worst months of the COVID-19 pandemic. Despite the high yield, the earnings payout ratio is modest at approximately 36%, making the dividend relatively safe. It has also allowed Walgreens Boots to increase the dividend at a 5.1% compound rate in the past 5-years. Furthermore, the company is a Dividend Aristocrat with 47 years of increases.

The pharmacy retailer is undervalued, too, trading at a low valuation of 7.3X earnings. In addition, the company is facing more competition and an overhang from opioid lawsuits resulting in a 30% decline in the stock price. That said, Walgreens Boots is cheap, and trading below is 5-year and 10-year valuation ranges, and investors should take a look here.

Related Articles About Walgreens Boots Alliances

Dividend Yield History WBA

Source: Portfolio Insight*

Fidelity National Financial

Fidelity National Financial (FNF) is the final income stock for retirees. The firm was founded in 1847 and sells insurance products, including title, escrow, trust, home warranty, life, and annuities. Total revenue was $14,495 million in the trailing twelve months.

Fidelity National is paying a dividend yield of 4.4%, a little lower than the other stocks on this list. The value is again the highest since the pandemic bear market. However, the dividend has a payout ratio of about 20%, providing some confidence in its safety and leaving room for future growth. The company has grown the dividend at a roughly 12% compound rate in the past 5-years and decade.

The valuation is low, too at a P/E ratio of ~6.3X, below the market average and less than the 5-year and 10-year averages. The stock price is down about 22% year-to-date because investors fear a housing downturn and a recession will trigger lower demand for insurance products. However, the low valuation, high dividend yield, and dividend safety make Fidelity National a worthy stock to consider.

Dividend Yield History FNF

Source: Portfolio Insight*

Disclosure: Long VZ

Thanks for reading 5 Income Stocks for Retirees!

A version of this post by Dividend Power originally appeared in Investor Place and was republished with permission.

Originally Posted on dividendpower.org

WU, Buy

Western Union Co...
Return: -17.60%

WU, Buy

Return: -17.60%

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Mondelez International: Buy The Snack Giant

Slow and steady wins the race. It holds true for investing in equities because of reversion to the mean. For instance, the latest group of new tech stocks were trading at bubble valuations and plummeted when the Federal Reserve started tightening.

Desperately Seeking Yield: 16 September 2022

The dark side of rising interest rates is conspicuous near and far, but there’s also a bright side: higher yields, which are a byproduct of risk assets that take a beating in price, which in turn lifts trailing payout rates.

Doing Your Due Diligence When Buying a Stock

Doing your due diligence when buying a stock can make the difference between making money or losing it. Obviously, no one wants to lose money on an investment, so doing proper research is critical. This is by no means a comprehensive list, and many factors are beyond the scope of this short article, but here are a few basic things to look for when stock picking.

Market Musing 9-13-2022, CPI Data causes Market Puke Out

The CPI Data confirms inflations persistence. The Market reacted badly and wiped the last 4 days of gains, driven by ECB QE and Rate Hike for European banks. Going forward, Bad Economic news is just bad news for the markets

Monthly Dividend Stock In Focus: Pembina Pipeline

Midstream energy companies are widely-known to be a source of high dividend yields. Midstream operators benefit from favorable economics because of the continued need for oil. In addition, midstream companies are less exposed to commodity price risk than their upstream peers in the exploration and production industry.

NFT Consulting Agencies: Here is Everything you need to know

NFT Consulting Agencies are important to the crypto space. Find out why

Will it break through

At&t feels good to me this week

10 Solid Picks For A Rocky Market - Zen Investor

I searched for companies that are inexpensive relative to their fair value (margin of safety) and have above-average price and earnings growth prospects.

Another failed rally

A quick glance at the chart below tells the story. The rally-sellers dominated the action in January, February, April, June, and August. The dip-buyers tried to take back control in March, May, and July. They nearly succeeded in the two months from June 16 to August 16 by taking the market up 17.4%. It has all been downhill since then.

September 2022 Stock Considerations

With the start of a new trading month, it is time, once again, for me to highlight some of my potential stock buys for September. With all the recent market volatility there is no shortage of stocks that are looking seemingly cheaper when compared to the closing months of 2021.

A Dichotomy

Market Commentary

US CPI in Focus

The US dollar rally is of historic proportions. Its climb is relentless, though there was around a 4-7% pullback for a few weeks beginning in mid-July. Since then, the greenback has made up for lost time and appreciated to multiyear highs against most of the major currencies.

Monthly Dividend Stock In Focus: Prospect Capital

Business Development Companies — or BDCs, for short — allow investors to generate income with the potential for robust total returns while minimizing the amount of tax that is paid at the corporate level.

The 5 Best Cheap Stocks To Buy Now

Everyone loves to buy something on sale. For investors, that means finding undervalued stocks. Although available during bull markets, investors usually find more cheap stocks during bear markets. Prices drop, sometimes falling too far, making some stocks a deal, like in 2022. Hence, now is a good time for investors to scour lists and find the best cheap stocks to buy.

CLIMB USA Community Association

Join CLIMB USA for their CLIMB Community Association

Aussie Sells Off After RBA Hikes 50 bp while Sterling Bounces on UK New Initiative

Overview: A GBP130 bln initiative by the new UK government to protect households from the surge in power costs helped lift sterling from 2.5-year lows.

A Simple Plan To Pay Off Debt [Updated]

We all know how that day ended up. You were scared out of your mind before and during the ride, but after it was all over, you realized it wasn’t that bad.

Market Musing 9-6-2022, Market Volatility through the Midterms

High Volatility: VIX > 25. The Fed strikes Fear into the global markets.


Is The Market In Trouble ?

Market Commentary

Resources for Publishers
Resources for New Investors

Boosted with BossCoin