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3 Dividend Stocks to Bankroll Your Retirement | The Motley Fool

Retirees want reliable cash flows that will allow them to relax during their golden years. To achieve this, they may turn to dividend stocks.

However, not just any stock with a payout will do. These investors need a safe but robust return. Consistently rising dividends also help these stockholders keep up with inflation.

Fortunately, plenty of stocks could help investors cash in on such opportunities. Medical Properties Trust (NYSE:MPW), Prudential (NYSE:PRU), and Verizon (NYSE:VZ) are three stocks that offer such potential.

1. Medical Properties Trust

Dividend yield: 5%

Given the income potential, investors do not want to ignore real estate investment trusts (REITs). Thanks to demographics, healthcare REITs such as Medical Properties Trust can add a healing touch to one’s retirement income portfolio. 

Image source: Getty Images.

Around 10,000 baby boomers per day age into Medicare. This by itself stokes demand for healthcare properties.

Moreover, REITs must pay at least 90% of their taxable income in dividends. The rising demand for healthcare real estate also makes it probable those payouts will rise.

As of the third quarter, Medical Properties Trust owned 385 properties in 33 U.S. states and nine countries. The company also continues to acquire additional facilities. This undoubtedly helped in boosting adjusted funds from operations (AFFO) income for the quarter to $0.41 per share. This is a 24% increase from year-ago levels.

This income helps to fund the dividend, which pays shareholders $1.08 per share annually, a yield of about 5%. The payout has risen yearly since 2013.

The Census Bureau believes the current growth rate in Medicare will continue through 2030. Since Medical Properties has proven adept at profiting from this trend, investors should benefit from a healthy, and likely rising, dividend for years to come.

2. Prudential

Dividend yield: 5.7%

Prudential has built its reputation as “The Rock” partially on its longevity. Aside from its name recognition, the need for life insurance and retirement investments does not go away.

The company’s history spanning more than 140 years can make it a rock to investors. Furthermore, that track record has helped attract 50 million customers and over $1.6 trillion in assets under management and administration.

Although the company may sell mutual funds, Prudential stock itself is arguably one of its more attractive offerings. The stock trades at a forward price-to-earnings (P/E) ratio of just under seven. Net income increased by almost 8% in the most recent quarter. However, income fell amid COVID-19, and analysts expect 2021 income will approximate 2019 levels.

Nonetheless, even amid stagnant profits, dividends continue to deliver for long-term investors. The annual payout now stands at $4.40 per share. It has also risen every year since 2009. At current prices, it yields about 5.7%. Such a payout could provide the kind of asset management retirees need to boost their income.

3. Verizon

Dividend yield: 4.2%

One telco that will connect with investors is Verizon. On the surface, it might look like a slow-growth, legacy company. After all, it sells for a forward P/E ratio of about 12.

Moreover, its earnings fell by 7% for the first nine months of the year from year-ago levels. By next year, analysts forecast that the growth rate will increase to about 3%. Such growth will probably not inspire investors.

However, Verizon is also one of only three companies that will offer nationwide fifth-generation (5G) networking services in the U.S. Additionally, tech experts expect that technologies such as artificial intelligence, virtual reality, and the Internet of Things will rely heavily on 5G. This should give investors a stronger connection to the company.

Furthermore, it looks positioned to remain a dividend stalwart. Its annual payout of $2.51 per share yields about 4.2%. This payout, which Verizon just increased, has risen for 14 consecutive years.

Shareholders should not expect Verizon to become a growth stock. Nonetheless, between the potential for 5G and the stabilizing influence of the rising dividend, Verizon should connect well with investors looking to upload sustainable retirement income.


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