3 High Dividend Stocks for Retirement Income
These names have yields that make them attractive for those who live off investment income.
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With the average dividend of the S&P 500 at just 1.3% right now, investors in retirement may feel that there are few places to find safe income in the stock market. Retirees who live off investment income such as dividends might be tempted to reach for extreme high yields from riskier investments.
However, there are plenty of high dividend stocks that have strong current yields above 4%, and also have secure dividend payouts that can grow over time.
The following three dividend stocks have yields that make them attractive for retirement income, and have long-term growth potential.
Eversource Energy
Eversource Energy ES is a diversified holding company with subsidiaries that provide regulated electric, gas, and water distribution service in the Northeast U.S. The company's utilities serve more than 4 million customers after acquiring NStar's Massachusetts utilities in 2012, Aquarion in 2017, and Columbia Gas in 2020.
On November 4, Eversource Energy released its third-quarter 2024 results for the period ending September 30, 2024. For the quarter, the company reported a net loss of $118.1 million, a sharp decline from earnings of $339.7 million in the same quarter of last year, which reflects the impact of the company's exit from offshore wind investments.
Earnings from the Electric Transmission segment increased to $174.9 million, up from $160.3 million in the prior year, primarily due to a higher level of investment in Eversource’s electric transmission system, which is necessary to address system capacity growth and deliver clean energy resources for the region.
Earnings from the Electric Distribution segment totaled $203.5 million, up from $173.3 million in the prior-year quarter, driven by base distribution rate increases and continued investments in infrastructure, along with lower storm-related operational expenses.
The company’s earnings-per-share growth ambition remains on a pace of 5% to 7% compound annual rate from 2023 through 2028. Over the last 10 years, the average EPS growth rate is almost 6%. We expect the company to grow its EPS by 6% per year on average over the next five years. The company has a good earnings track record and will benefit from rate hikes, transmission investments, and clean energy initiatives.
The company has a long history of paying dividends and has increased its payout for 26 consecutive years. In February 2024, the quarterly dividend increased by 5.9% from $0.6750 to $0.7150 per share. Over the last five years, the average annual dividend growth rate is 6.0%. Eversource’s target for yearly dividend growth is 5% to 7%.
ES has a current dividend yield 5.0%.
Stanley Black & Decker
Stanley Black & Decker SWK is a world leader in power tools, hand tools, and related items. The company holds the top global position in tools and storage sales. Stanley Black & Decker is second in the world in the areas of commercial electronic security and engineered fastening. Stanley Works and Black & Decker merged in 2010 to form the current company, thought the company can trace its history back to 1843.
On July 25, Stanley Black & Decker announced it was raising its quarterly dividend 1.2% to $0.82, extending the company’s dividend growth streak to 57 consecutive years.
On October 29, Stanley Black & Decker reported third-quarter results for the period ending September 30, 2024. For the quarter, revenue declined 5.1% to $3.75 billion, which was $50 million below estimates. Adjusted earnings per share of $1.22 compared favorably to $1.05 in the prior year and was $0.17 better than expected.
Organic sales for Tools & Outdoor, the largest segment within the company, was down 2% as gains in Europe and the Rest of the World were offset by weaker North American results. The Industrial segment was lower by 1%, as divestitures in Infrastructure and lower volumes were only partially offset by pricing. Adjusted gross margin expanded 290 basis points to 30.5% largely due to supply chain transformation.
SWK has a dividend payout ratio less than 50% expected for 2024. The company’s low payout ratio does make it likely that dividends will continue rising even through a serious economic downturn. Stanley Black & Decker’s key competitive advantage is that its products are well-known and respected by customers.
This was why the company has been able to increase prices in certain product categories over the years and not see a decline in sales. Stanley Black & Decker has also been very active in making strategic acquisitions to help grow the company.
SWK has a current dividend yield of 4.1%.
Archer-Daniels-Midland
Archer-Daniels-Midland ADM is the largest publicly traded farmland product company in the United States. The company, founded in 1902, trades with a market capitalization of $25.2 billion. Archer-Daniels-Midland's businesses include processing cereal grains, oilseeds, and agricultural storage and transportation.
ADM reported its third-quarter results for 2024 on November 18. The company reported adjusted net earnings of $530 million and adjusted EPS of $1.09, both down from the prior year due to a $461 million non-cash charge related to its Wilmar equity investment. Consolidated cash flows year-to-date reached $2.34 billion, reflecting strong operations despite market challenges.
Segment performance was mixed in Q3 2024. The Ag Services & Oilseeds segment reported a 43% decline in operating profit due to weaker South American margins and lower biodiesel profitability. The Carbohydrate Solutions segment was relatively stable, with a 3% drop in profit, driven by strong starch and sweetener performance offset by lower ethanol margins.
The Nutrition segment faced a 19% decline in operating profit, primarily in the Human Nutrition subsegment due to increased costs and operational challenges. Year-to-date, total segment profits fell 32% compared to 2023, reflecting softer global market conditions. Looking ahead, ADM maintains its full-year adjusted EPS guidance of $4.50 to $5.00.
The recent acquisition of Ziegler Group and the establishment of a nutrition flavor research and customer center are expected to contribute to improved growth prospects. This positive outlook leads us to anticipate a feasible growth rate of approximately 3.0% for the future.
ADM currently yields 4% and has increased its dividend for over 50 years.
At the time of publication, Ciura had no positions in any stocks mentioned.