Retirees need not only income, but also cost of living adjustments (known as COLA). Otherwise, inflation can erode their purchasing power as the years go on. During this long period of historically low interest rates, stocks have become a viable alternative for income because dividends have provided bigger payouts than bonds. But simply looking for the highest dividend yields isn’t enough. You must do additional research to make sure the company can comfortably support the dividend from its cash flow, and then go further and consider whether the firm is in a position to increase its dividend.

Bill McMahon, ThomasPartners’ chief investment officer, said in an interview that he favors conservative companies in mature industries when selecting dividend stocks. Those firms tend to watch what they spend money on. Here’s the list, starting with companies that had the highest headroom to raise dividends: Verizon Communications Inc. (VZ), The Western Union Company (WU), Seagate Technology Public Limited Company (STX), Ford Motor Co. (F) and Cisco Systems, Inc. (CSCO).

Source: Market Watch

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