A recent survey by financial services company Nationwide found that more than three-quarters of Gen Z and Millennials believe that Social Security alone will not be enough to support them in retirement, and that they will need to continue working after retirement. It turned out to be what I expected. Year.
Despite the alarming situation, the good news is that investing in dividend stocks can strengthen your retirement prospects. These types of investments not only increase the value of your portfolio over time, but also provide regular cash flow.
Here are three dividend stocks that can be great investments to include as part of your retirement plan right now. united health group (UNH -0.02%), verizon communications (VZ -0.67%)and exxon mobil (XOM 1.41%).
1. United Health Group
One of the world’s largest healthcare companies, UnitedHealth is a highly profitable business with continuous growth and an attractive dividend. Last week, the health insurance company reported strong quarterly results, with revenue for the period ending Sept. 30 increasing 14% from a year earlier to $92.4 billion. Operating income amounted to $8.5 billion, equivalent to 9% of sales, and is consistent with the company’s previous performance.
UnitedHealth provides investors with superior stability and earning power. As the population grows and ongoing health care needs increase, large health insurance companies are likely to grow as well. This makes it an ideal investment to hold for the long term.
Additionally, UnitedHealth pays a decent dividend yield of 1.3%.only slightly less than that S&P500 Average 1.6%. But one thing this does better than the average dividend stock is the growth it provides.
UnitedHealth has been aggressively increasing its dividend in recent years. Over the past 10 years, the quarterly dividend has increased from $0.28 in 2013 to $1.88 currently, or nearly seven times. This averages out to a compound annual growth rate of 21%. The most recent dividend increase was a 14% increase in dividends. And with a payout ratio of around 30%, UnitedHealth still has plenty of room to continue increasing its dividend in the future.
Overall, this is a great stock to own, trading at a very reasonable price of 19 times forward earnings.
2. Verizon Communications
Perhaps one of the best deals for dividend investors today is Verizon. Telecommunications giants are industry leaders and generate significant profits.
However, investors appear to be overly bearish on the company due to concerns about rising interest rates and potential liabilities related to lead-coated cables. The latter is a problem that can take years to resolve and the economic impact can be far-reaching. And as for the former, the company’s strong financial position has allowed it to weather the storm so far, and there’s little doubt it will continue to do so.
Telcos have a lot of assets, which also means they have a lot of debt on their books. This isn’t great as interest rates rise, but Verizon continues to generate strong returns. Operating income for the most recent quarter (ending June) was $7.2 billion, which is far more than five times the interest costs incurred in the same period ($1.3 billion). Rising interest rates are a concern for Verizon’s business, but they likely won’t last long.
Buying this stock when other investors are pessimistic about the short-term outlook could yield attractive returns over the long term. Verizon’s payout ratio remains at about 50% of its profits, providing investors with a bit of a buffer if conditions worsen. And last month, it raised its dividend for the 17th consecutive year.
Many of the risks associated with Verizon’s business are already factored into its current valuation, which is why the stock trades at just 6 times forward earnings. At 8.7%, this is one of the highest yields in such a strong business. While the short-term outlook may be concerning, Verizon can still make a good long-term investment.
3. ExxonMobil
Another solid dividend stock to add to your portfolio is ExxonMobil. Oil and gas stocks yield 3.3% and have been raising their dividends for years. Last year, the company increased its dividend by a relatively modest $0.03, extending its streak of dividend increases to 40 years in a row.
Although operations were disrupted due to the pandemic, Exxon’s strong financial strength enabled it to maintain its business streak. And now, with oil prices rising, business is in much better shape. Exxon’s dividend payout ratio is less than 30%.
Earlier this month, the company announced plans to merge with the following companies: pioneer natural resources In all stock trading. Pioneer has a strong footprint in the Permian Basin, a key part of Exxon’s growth. It accounted for more than half of last year’s oil and gas production. Exxon believes the deal will allow it to improve its cost structure while increasing production in the Permian.
Increased production and lower costs should bode well for investors with the prospect of further dividend increases. At just 10x forward earnings, Exxon is another low-dividend stock that’s good to buy now and hold for years.
