Many stocks have to walk up, but some areas of the market offer more stable stocks with inflation-beating returns to finance your golden years.
One of the most difficult problems is retirees face in today's financial markets how to make a decent return on our savings. In the old days, we could put money in the Bank, drawing 5 percent interest and life from the proceeds. No more.
Actually a little in the past year, interest rates have risen. But a 5-year Treasury Bills only 1.6 percent interest charged. A 5-year Bank CD offers less than 2 percent. A medium-term corporate bond or bond fund might be 3 percent, but let helpless against inflation bonds.
Other investments offer better repayment, but it's always a compromise. Master limited partnerships (MLPs), such as can high yields to drop, but you are subject to a complex tax situation. Life annuity can pay more, but usually does not provide protection against inflation.
What is shares with high dividend? This is not a new idea, and many of the stocks have already offered much of investors to limit maybe future income. But several areas of the market offer relatively stable stocks with inflation-beating dividend.
We all go to the supermarket, shampoo, toothpaste and cleaning supplies to buy. Procter & gamble (PG) expresses a 3.2 per cent dividend. Clorox (CLX), the producer of bleach, pays also 3.2 percent. Warren Buffett favorite stock, Coca Cola (KO), a little less bubbly pour 3 percent. And you always go to McDonalds (MCD)? The company offers a 3.5 percent dividend.
Are these stocks a good bet? Yes. But keep in mind that you bet still.
Americans are aware of the risks of oil production by environmental disruption in the Middle East. But we need fuel for our cars and our homes for heating, and some offer the large energy companies for decent dividends.
Chevron (CVX), the second largest United States oil company, yields 3.6 percent. Conoco (COP) Income 4.3 percent. Energy companies increase their attractiveness by providing a well-accepted hedge against inflation. A good bet? Probably as good as you will find.
Johnson & Johnson (JNJ), Merck (MRK) and Pfizer (PFE) are large, companies that sell recipes, non-prescription drugs, and in some cases medical devices. All numbers better than 3 percent dividend. And despite the uncertainties of expiring patents and the affordable care Act, one could argue that as long as we need medical care, these companies remains healthy. A good bet? Likely.
Verizon (VZ) and AT & T (T) call solid dividend-4.6 percent and 5.7 percent respectively. Both companies generate enough money. But they are price pressures from consumers, even while they are forced to heavy investments to upgrade their networks. Are dividends safe? Most likely. Are the shares a good bet? Your guess is as good as me.
Electric turn enterprises traditional retiree income. Duke Energy (DUK), Southern Company (SO) and American electric power (AEP) deliver all dividends more than 4 percent. But the most utility stocks have suffered in the past year, the heat-related interest revealed its weakness: when interest rates rise, these shares go up. A good bet? Only if you think interest rates are not higher.
Individual stocks present their own risks, so that for many of us an ETF or fund with high dividend stocks promises a more secure way. Vanguard offers such ETFs that cover each of these five areas, as well as a more general high dividend yield (VHDYX) mutual funds with a 2.8 percent dividend. Most other major fund companies have their own versions of high dividend of equity fund.
Make no mistake, dividend stocks put on the risks of the market, which can be sizeable. Should still be high better payouts than bank offer CDs or State bond and probably at least a part of the portfolios of most pensioners paid shares.
At the time of publication sightings in the possession of a small number of shares of the VZ and T.
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