Investing in dividend paying stocks for retirement

Dividend Stocks Are an Indirect Way of Owning Value Investors often point to historical data that shows dividend-paying stocks have outperformed the average stock. And research suggests that it is the value factor that has driven this outperformance, and that dividend yield is just an indirect way gaining exposure to value. Faber concludes that the only time you would ever want dividend stocks is in a tax-exempt account, and even then you should prefer value. An Alternative Approach: Focus on Total Return A total return approach focuses on building a portfolio that seeks greater long term investment growth, and takes into account returns stemming from both income and capital appreciation.

Its objective is to produce greater wealth and a steadier amount of income over the long run relative to a focus on dividends and income. If dividends and interest from your portfolio along with other income sources are enough to support you in retirement, great. If not, you can fill the gap by selling securities in the portfolio. This approach can work out fine, just as it did for many of our parents and grandparents. Instead, a total return approach that incorporates yield, price appreciation and tax efficiency can provide better outcomes for retirees.

And having paid and increased its dividend since , Realty Income is a Dividend Aristocrat. Here I have another one of the good dividend growth stocks for your retirement accounts… Target TGT Specifically, the multi-channel retailer Target. Whether you desire in-store shopping, ordering online for home delivery, or picking up your order at the store.

Target has your needs covered. And your shopping convenience is front of mind. Servicing customers across all of the major population centers in the United States. As for its dividend history, the company has paid a cash dividend every quarter since it started trading as a public company in Then beginning in , Target increased its dividend rate per share. And has done so every year since then. Speaking of home delivery. Next is a leader in that growing industry.

Known as UPS for short. Because of its vast investment in trucks, airplanes, distribution centers, and technology, UPS has created a strong economic moat. Making it tough for competitors to enter and compete with them in this field. Most importantly, economic moats protect profits. And UPS management is more than willing to share those profits with stockholders in the form of dividends.

Furthermore, with the trend toward more shopping online. Which typically means home delivery. UPS has benefited from higher demand for its services. Finally, for nearly 50 years, the company has either maintained or increased its dividend rate per share. Rewarding investors with a rising stream of dividend income. Next is another popular dividend stock for retirement income.

Verizon VZ Being the big telecommunications provider, Verizon. A supplier of both wireless and wireline telecom services across the United States. The company owns and operates one of the largest networks in the U. And is pushing its business forward with more super-fast fiber optics capacity. By investing in Verizon you get one of the higher dividend yields. While not compromising dividend safety. Although the company increases its dividend every year.

Those increases are typically small. As Verizon must use large amounts of its cash flow. To maintain its network and capabilities.

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The quality and strength of JP Morgan under his leadership became fully apparent for the first time in Not only did JP Morgan help to stabilise the market by taking over the failing Bear Stearns in the spring of that year, but it was the only major US bank that did not require government assistance throughout the Great Financial Crisis and that was highly profitable even in the difficult year of Today, JP Morgan is even bigger, even more profitable, and even stronger than ever before.

Many investors view banks with disdain, but a good bank with good management can be a very good long-term investment. The bank has earned a total net profit of USD billion during this period, of which USD billion has been paid out to shareholders in dividends and in share buybacks.

Citigroup Inc. The financial services provided by Citigroup Inc. NYSE:C include asset management, banking, commodities, insurance, risk management, and wealth management, among others. On January 12, Citigroup Inc. The dividend will be paid on February 25, to shareholders of record on February 7.

NYSE:C offers a dividend yield of 3. Oppenheimer analyst Chris Kotowski lowered the price target on Citigroup Inc. The analyst notes that there will be multiple divestitures and a major re-cutting of the financials at Citigroup Inc.

Harris Associates is the biggest Citigroup Inc. Overall, 79 hedge funds in the Q3 database of Insider Monkey reported owning stakes in Citigroup Inc. The dividend was paid on December 12, to shareholders of record on November The dividend will be distributed on February 15, to shareholders of record on January The analyst stated that "lofty" valuations and "resilient, but modestly decelerating" fundamentals imply multiple contraction risk in the REIT sector.

The analyst emphasizes stock selectivity with a focus on pricing power and duration. Check out our full list of favorite companies that pay dividends below. Now just maybe. You are not interested in picking stocks. And paying regular dividends. Furthermore, you can find funds that will fit with any of the 3 dividend retirement investing strategies. That I explained earlier. The biggest advantage of ETFs is that they provide immediate diversification among dozens even hundreds of stocks.

And the best dividend funds for retirement have very low investment costs too. Build And Maintain The Best Dividend Retirement Portfolio Building a dividend retirement portfolio of stocks or mutual funds brings together much of what we have discussed already.

So when building your dividend portfolio for retirement, remember to… Think long-term Choose and follow an investment strategy Select the best stocks and funds Stay diversified Feed your dividend stocks with fresh capital Reinvest your dividends for as long as possible Monitor your investments periodically Finally, when should you stop reinvesting your dividends?

Stop reinvesting your dividends. Then use them to fund your living expenses when you are ready to. After all. This is the goal: Using dividend income. To fund expenses during your retirement years. However, there are some special situations.

Where you may want to think more about whether or not to reinvest dividends after you retire. For example, if you have other income sources. And do not need your dividends right away. You still may want to take your dividends in cash. So, stop reinvesting dividends if you: Identify better investment alternatives Must diversify beyond dividend stocks On the other hand, you may want to keep reinvesting your dividends in retirement if you: Have enough retirement income from other sources Retire early Anticipate enjoying a long life Want to leave an inheritance Do you want to explore dividend reinvesting in retirement further?

Then check out this article… Okay. One more important topic. Then I will wrap up, I promise! Whether you choose dividends to partially or fully fund your retirement. Or, not.

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