Look to Dividend Aristocrat Stocks, not Annuities, for Retirement Income

For many investors, the main appeal of an annuity, a contract with an insurance company, is that it provides a fixed stream of income for a set period of time. Far more attractive, however, are dividend aristocrat stocks such as HCP (HCP), AT&T (T), and Consolidated Edison (ED) that have increased the dividend payment to shareholders annually for at least the past 25 years. An annuity is similar to a bond in this regard in that anything either can do, a dividend aristocrat stock can do much, much better for an investor.

The buyer of an annuity has to hope that the insurance company stays in business long enough to make the investment worth the money. That has not happened more than sixty times since 1991. In just owning the stock, in comparison, a dividend aristocrat shareholder is given a raise every year in the dividend income received from the company. The longer the retirement lasts for the shareholder, the more the income grows, based on the history of dividend aristocrat stocks. Increasing also over time is the superiority of a dividend aristocrat stock as a long term investment as opposed to an annuity.

Source: The Street

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