Wednesday, June 7, 2017

9 Dividend Stocks Beating The 4% Rule

Over time the 4% rule has been criticized for leaving too much money on the table and in some cases retirees could outlive their money. For those not familiar with the 4% rule, William P. Bengen in 1994 published a study concluding that if retirees withdrew 4% (the 4% rule) of their nest egg in the first year, and then increased the dollar amount by the inflation rate every year, their savings would easily last 30 years.

At the time of the initial study, he assumed the portfolio was held in a tax-deferred account and was evenly split between large-company stocks and U.S. Treasury bonds. In a subsequent study he revised the withdrawal rate to 4.5%. The higher rate was supported by adding U.S. small-company stocks to the portfolio. This increased the portfolio's potential return, and also increased its volatility

Bengen notes that people who retired in 2000 are of the greatest concern. Since retiring, they have endured two major bear markets. The next five years will be critical for this group. A surge of inflation above its historical average of 3 percent, could derail the 4% rule for this group.

You have to be able to survive worst-case scenarios. There is a better way...

Instead of eating away at your principle, why not live off the fruit of your portfolio. The best way to do that is with a hand-selected portfolio of dividend growth stocks. Not only will you receive an annual income, but it will grow each year.

This week week, I screened my dividend growth stocks database for select stocks with a minimum 3.5% dividend growth rate and yield of 4.5% or more. The results are presented below:

Westwood Holdings Inc. (WHG) provides investment advisory services to a wide range of institutional clients, and also provides trust and custodial services.
Yield: 4.5% | Dividend Growth: 8.8%

Realty Income Corporation (O) is an equity real estate investment trust that owns, develops and manages retail real estate, primarily single tenant buildings throughout most of the U.S. The trust is also among a handful of REITS that pay monthly dividends.
Yield: 4.6% | Dividend Growth: 4.0%

LTC Properties Inc. (LTC) is a health care REIT that invests primarily in long-term care and other health care related properties through mortgage loans, property lease transactions, and other investments.
Yield: 4.7% | Dividend Growth: 4.2%

Magellan Midstream Partners LP (MMP) is engaged in the transportation, storage and distribution of refined petroleum products primarily through its 9,600-mile pipeline system.
Yield: 4.8% | Dividend Growth: 5.4%

National Health Investors (NHI) is a real estate investment trust that invests in income-producing health care properties primarily in the long-term care industry.
Yield: 5.0% | Dividend Growth: 5.6%

Tanger Factory Outlet Centers (SKT) is a self-administered and self-managed real estate investment trust that develops, acquires, owns, operates and manages factory outlet shopping centers in the United States.
Yield: 5.3% | Dividend Growth: 6.3%

Helmerich & Payne, Inc. (HP) is the holding company for Helmerich & Payne International Drilling Company, an international drilling contractor.
Yield: 5.2% | Dividend Growth: 15.0%

Omega Healthcare Investors Inc. (OHI) is a real estate investment trust (REIT) that invests in income-producing healthcare facilities, mainly long-term care facilities located in the United States.
Yield: 8.1% | Dividend Growth: 5.1%

Genesis Energy LP (GEL) is a limited partnership transports crude oil for others; it owns and operates a 235-mile Mississippi System, a 109-mile Texas System, and a 135-mile Jay System (AL).
Yield: 9.4% | Dividend Growth: 3.9%

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 200+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long O, WHG, NHI, OHI. See a list of all my Dividend Growth Portfolio holdings here.

Related Posts
- 8 Dividend Stocks With A 15% Yield In 15 Years
- Don't Touch These 5 Dividend Stocks!
- 9 Higher Yielders With A Low Free Cash Flow Payout
- 6 Dividend Stocks Headed In The Right Direction
- Are The Dividends Safe For These High-Yielding Stocks?

Sources: Wall Street Journal, Yahoo Finance, Wikipedia

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