When we leave the workforce, our investment priorities typically change significantly. Retirees aren't nearly as interested in growing their nest egg as they are in preserving their money and generating income. Unfortunately, fixed-income investments simply aren't generating the type of income that many retirees need, especially in the current environment of record-low bond yields. While stocks can certainly be a bit more volatile than bonds over the short run, there are some excellent dividend stocks with high yields and relatively low risk that could be just what retirees are looking for.
I've called Realty Income (NYSE:O) the best all-around dividend stock in the market, and that can be just as true for retirees as it is for 25-year-old investors just getting started. Realty Income is a real estate investment trust that specializes in single-tenant retail properties. Realty Income focuses on tenants that are recession-resistant, not easily disrupted by online competitors, or both. AT&T (NYSE:T) is unlikely to produce impressive stock price growth anytime soon. Yet AT&T can still be a retiree's dream stock. The company pays a 7.5% dividend yield that's well-covered by earnings and has increased its payout for 36 consecutive years (including in 2020). Unless you have the time and desire to research, evaluate, and monitor your investments, you're probably better off putting your portfolio on autopilot with index funds. One index fund that's an excellent addition to a retiree's portfolio is the Vanguard High Dividend Yield ETF (NYSEMKT:VYM). This is an exchange-traded fund, or ETF, that invests in a diverse portfolio of stocks that pay above-average dividend yields.
Source: Motley Fool
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