Dividend stocks can provide retirees with recurring cash flow that can help them accumulate income without having to deplete their nest eggs. What’s important, however, is to also minimize risk and volatility, to ensure that retirees aren’t putting their savings at risk for the sake of a high yield.
Three high-yielding stocks that can offer investors an excellent mix of safety and high dividends are ExxonMobil (NYSE:XOM), McDonald’s (NYSE:MCD), and Abbott Laboratories (NYSE:ABT). For both retirees and risk-averse investors, they can be no-brainer buys for the long term. Here’s why.
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ExxonMobil
Leading oil and gas company ExxonMobil has been an excellent investment for decades. Not only is it a top company in the oil and gas sector, but it has also provided dividend investors with a reliable payout, one that it’s been increasing for years.
Currently, at 2.6%, its yield is a bit lighter than normal, but that’s largely due to the stock’s mammoth rally of late — it has risen by more than 40% in the past 12 months, as rising oil prices have made it a hot buy. It has increased its payout for 43 consecutive years. Its current quarterly dividend of $1.03 is 18% higher than the $0.87 that the company was paying its shareholders five years ago.
While the stock is up big in the past year, it’s historically been a fairly stable, low-volatility investment; it has averaged a beta of just 0.17 over the past five years, indicating that it doesn’t move in unison with the market. For investors, it can be a solid dividend stock to just buy and forget about.
McDonald’s
At 3.1%, fast food giant McDonald’s offers an even higher yield than ExxonMobil. Shares of McDonald’s are down over 17% this year as investors have turned bearish on the company in light of its disappointing growth numbers. In the June quarter, the company’s comparable sales in the U.S. were up by just 0.8%.
While business may not be booming, it is steady for McDonald’s. Its net income rose by 5% in the most recent quarter, as its overall financials remain solid. It’s doing well even amid challenging economic conditions, which is a good sign of resiliency, which dividend investors are sure to value when looking for a long-term investment.
Last week, the company announced it was raising its dividend by 4%, and in doing so, extended its dividend growth streak to 50 consecutive years, becoming a Dividend King, which is an exclusive club of top dividend stocks that have been raising their payouts for at least that long.
This is also a normally low-volatility stock as McDonald’s has averaged a beta of around 0.40 in the past five years. Although it’s down this year, it’s still an excellent investment to hang on to for the long haul.
Abbott Laboratories
Rounding out this list is Abbott Laboratories, a diversified healthcare company known for being a stable, low-risk investment. At 2.4%, its yield is still above the S&P 500 average of 1.1% and is in line with the other stocks on this list. It has a dividend growth streak that spans 54 years, as it too is a Dividend King. Abbott has been a reliable income investment for over a century, paying its first dividend back in 1924.
The company’s diverse operations, which encompass diagnostics, medical devices, nutritional products, and branded generic medicines, give it many different ways to grow. The business has been growing steadily, and it generates solid margins. In the trailing 12 months, it has reported $5.4 billion in earnings on sales of $46.6 billion, for a profit margin of nearly 12%.
The stock has a beta of just under 0.60, as it’s another fairly stable investment. It has struggled this year, falling 17% in value, but that arguably just makes it an even better buy for the long term. It’s trading at a forward price-to-earnings multiple of 17 (based on analyst expectations), which is lower than the S&P 500 average of 20.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.
3 High-Yielding Dividend Stocks That Are No-Brainer Buys for Retirees and Risk-Averse Investors was originally published by The Motley Fool
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
