If you’re a retiree and want some dependable income, high-yielding dividend stocks can help make the most of your money. While the average stock on the S&P 500 might pay just an average of 1.2%, there are many other stocks out there that pay much higher than that — and they aren’t risky investments to hold in your portfolio.
For retirees, three blue chip stocks that can be ideal options for your portfolio include Bristol Myers Squibb (BMY -0.19%), Enbridge (ENB 0.78%), and Coca-Cola (KO -0.37%). These dividend stocks will also help diversify your portfolio, giving you exposure to different sectors of the economy.
1. Bristol Myers Squibb
Drugmaker Bristol Myers pays a dividend that yields 4.5% right now. It’s a fairly attractive payout for a relatively stable investment to hold in your portfolio. Bristol Myers has averaged a beta of just 0.44 over the past five years, which means this is a low-volatility investment. While it likely won’t double your money in a short time frame, it can be a good way to generate recurring cash flow while keeping your money fairly safe.
Investors haven’t been all that excited about Bristol Myers in recent years, as it has multiple drugs losing patent protection this decade. But the good news is the business has also been developing new ones. Recently, regulators approved the company’s schizophrenia drug, Cobenfy, which could be a blockbuster, with some analysts estimating its sales could top $7.5 billion. And the company is still looking at more opportunities, as its pipeline features 51 compounds currently in development, and it’s studying over 50 different disease areas.
There’s plenty of safety with Bristol Myers’ dividend, as over the trailing 12 months, the company has generated $13.8 billion in free cash flow and its dividend payments during that stretch have totaled $4.8 billion. Last week, the company also increased its dividend by 3%, extending its dividend growth streak to 16 consecutive years.
Strong financials, a great dividend, and continuing innovation make Bristol Myers a solid stock to buy right now.
2. Enbridge
A top oil and gas stock for investors to consider for their portfolios today is Enbridge. The Canadian pipeline company pays a dividend that yields 6.4%, making it the highest payout on this list. Earlier this month, the company announced it would be increasing its dividend by 3%, marking the 30th consecutive year Enbridge has boosted its payout.
The company has a lot of predictability in its earnings due to long-term contracts. And management still expects to see solid single-digit growth (between 7% and 9%) in its earnings before interest, taxes, depreciation, and amortization (EBITDA) until 2026. The company has acquired multiple U.S. gas utilities this year, which can help drive more efficiency and growth in the future.
As one of the larger players in the oil and gas industry in North America, Enbridge can be a safe stock for retirees to hang on to now.
3. Coca-Cola
Possibly the safest stock on this list is Coca-Cola. The top beverage company has many iconic brands in its portfolio, and it has strong profit margins in excess of 20%. With margins so high, the company’s strong financials put it in an excellent position to invest and grow its operations in the long run, while leaving it room to pad its dividend along the way, which it has been doing for decades.
The stock has an incredible dividend growth streak that spans 62 consecutive years. And the company’s latest increase was a fairly generous one, with a 5.4% bump up to the payout. Currently, the Dividend King yields 3.1%, so this too can make for a solid stock that retirees can rely on for consistency and recurring dividend income.
Coca-Cola has been able to adapt to varying economic conditions and has demonstrated strong pricing power due to its excellent brands, which include not only Coca-Cola but also Sprite, Fanta, and a host of others, which give it many ways to grow its business in the long run. This can be an ideal investment to hold under a myriad of economic conditions, making it a great buy-and-forget stock for retirees.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Enbridge. The Motley Fool has a disclosure policy.
