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Wednesday, April 20, 2011

10 Dividend Stocks For Healthy and Wealthy Retirement

Americans are worried that they might not have enough money for retirement. Women who outlive their husbands are at special risk, with 40 percent of widows living almost exclusively on Social Security. There are a lot of worried retirees out there.

According to WebMD excessive worrying can lead to suppression of the immune system, digestive disorders, muscle tension, short-term memory loss, premature coronary artery disease and heart attack. This isn't the way to spend our golden years. Here are some things we can do about it today for a healthy and wealthy retirement tomorrow...

Have A Plan

Many people are putting money into various retirement vehicles, but they haven’t taken the time to envision how it is all going to come together and ultimately if it will be enough. We often will spend enormous amounts of time planning every detail of our vacation, but I have no idea what our estimated income or expenses will be when we retire.

As the old adage goes, ‘Everyone has a plan – failing to plan is planning to fail.’ Retirement planning does not have to be complicated, but not doing it will complicate your retirement. To help you start the planning process, take a look these FREE retirement calculators (Retirement-Calculator.xls [Excel] Retirement-Calculator.ods [Open Office] or the Web version at the bottom of the page.)

Take Advantage Of Free Money

If someone were trying to shove large sums of money in your hands with no strings attached, would you turn it down? Unfortunately, a significant number of people are doing just that by not taking advantage of retirement tools at their disposal.

I work in finance and accounting. I was shocked to hear some people who should know better say they weren't participating in the company's 401(k). With a company matching plan up to 6% of the employees' salary, this is like refusing free money. Assuming the company-match compounds tax-free at 8% for over the 30 years they are likely to work, this foregone free money would amount to sizable amount at retirement if taken advantage of.

Select Blue-Chip Dividend Growth Stocks

To mitigate the risk associated with relying solely on capital appreciation, consider introducing an income component to the equation. In addition to bonds, some high-quality lower-risk dividend stocks could help provide a growing income allowing you to rely less on selling securities to harvest their capital gains.

Of the 199 dividend stocks that I currently follow, only 10 carry the lowest risk rating of 1.00. The are:

Lowe's Companies, Inc. (LOW) | Yield: 1.6%
Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.

Walgreen Co. (WAG) | Yield: 1.7%
Walgreen Co. is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.

Becton, Dickinson and Co. (BDX) | Yield: 2.0%
Becton, Dickinson and Co. provides a wide range of medical devices and diagnostic products used in hospitals, doctors' offices, research labs and other settings.

Medtronic Inc. (MDT) | Yield: 2.2%
Medtronic Inc. is a global medical device manufacturer has leadership positions in the pacemaker, defibrillator, orthopedic, diabetes management, and other medical markets.

AFLAC Incorporated (AFL) | Yield: 2.3%
Aflac Incorporated provides supplemental health and life insurance in the U.S. and Japan. Products are marketed at worksites and help fill gaps in primary insurance coverage. Approximately 80% of earnings comes from Japan and 20% from the U.S.

Weyco Group, Inc. (WEYS) | Yield: 2.6%
Weyco Group, Inc. distributes, wholesale & retail, men's branded footwear in the U.S., Canada, Europe; it offers casual footwear, dress shoes and accessories under Florsheim, other brands.

Coca-Cola Company (KO) | Yield: 2.8%
The Coca-Cola Company is the world's largest soft drink company with a sizable fruit juice business.

Procter & Gamble (PG) | Yield: 3.0%
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.

Community Trust Bank Corp. (CTBI) | Yield: 4.4%
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.

Cincinnati Financial Corp. (CINF) | Yield: 5.0%
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

So, what are your retirement plans? Are you going to rely on the government to print your social security check and the money backing it up, or will you choose to take charge of your future and prepare for it? As it is with most things in life, those that prepare for retirement will find more success than those that don’t. It is really not that hard when you start young. Quality low-risk dividend growth stocks make an excellent addition to our retirement portfolio, and the good new is, you don’t have to wait until you retire to figure out what income it will generate.

Resources:
- How Worrying Affects Your Body
- Retirement money worries mount for workers

Full Disclosure: Long CINF, PG, KO, MDT. See a list of all my income holdings here.

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(Photo Credit)

Tags: [CINF] [CTBI] [PG] [KO] [WEYS] [AFL] [MDT] [BDX] [WAG] [LOW]

5 comments:

  1. It is hard to understand why people pass up the company match. Part of the reason is that it is money they won't see for a number of years. It is sad because these very same people would go bonkers if they turn the corner and find a $10 bill on the ground. Go figure!

    ReplyDelete
  2. What's more amazing is that some of the people passing it up work in finance and should know better.

    Best Wishes,
    D4L

    ReplyDelete
  3. D4L - how do you explain KO and PG being so flat since January of 2000. Both of these stocks have continued to pay a dividend during this time, but "wow" they are really under performing on this long term 11 year view.

    ReplyDelete
  4. Anon: A lot of stocks have been "flat" over that period (you can add JNJ and WMT to the group, among others) due to a significant run-up during the prior decade. Over time everything reverts to the norm. I will add flat stock prices are good for dividend growth investors - each year new purchases yield more than the prior year.

    Best Wishes,
    D4L

    ReplyDelete
  5. I would add that being a net-buyer of dividend-growth stocks I hope that these stocks remain flat for quite some time so I can continue to add to my positions while they are still undervalued. Increased value in shares only look good on my net-worth statement. If I want more passive income from more shares, then I want lower prices. Thanks for the excellent article D4L!

    On a separate note, AFL has had astounding dividend growth, but watching the unfolding information in Japan would be prudent before initiating a position.

    ReplyDelete

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