20 Dividend Stocks for All Baby Boomers to Retire On

4. AIG
> Dividend Yield: 2.4%

Strengths: American International Group Inc. (NYSE: AIG) remains one of the top insurers in the world, and it is no longer under such strict regulatory scrutiny as it was after the Great Recession. It insures millions of individuals, residences, lives and businesses, and it is barely valued at 10 times earnings and has a low earnings payout ratio for its dividend.

Risks/Concerns: Many investors hold AIG in contempt for the endless number of over-the-counter derivatives from before the Great Recession. Some investors worry that ever-lower interest rates will act to cap its profitability on long-term obligations and life insurance.

5. American Water Works
> Dividend Yield: 1.6%

Strengths: American Water Works Co. Inc. (NYSE: AWK) is one of the most defensive names for investors worried about a recession. You can’t replace your water utility if you cannot dig your own well, and it serves millions of customers in most states and is the largest of the publicly traded water utilities. It also has vowed to keep raising its dividend by reasonable metrics for the years ahead as earnings rise.

Risks/Concerns: All water stocks are expensive on a price-to-earnings basis, and American Water Works is no exception. It has made bolt-on and small acquisitions here and there, but it’s hard for a water utility to go find new and untapped growth markets. Infrastructure spending is also expensive, but the need for better infrastructure is growing.

6. Aimco
> Dividend Yield: 2.9%

Strengths: Apartment Investment and Management Co. (NYSE: AIV) is a top apartment owning and management real estate investment trust (REIT) with living centers in more than 130 communities in 17 states. It has a strong team behind it, and it targets dense population areas with attractive properties.

Risks/Concerns: As with all apartments and real estate plays, there is a cyclical nature of its business and apartment rents are competitive, even if they are expensive. The Great Recession was brutal on the shares, before the great recovery lifted them back up.

7. Aqua America
> Dividend Yield: 2.1%

Strengths: After making an acquisition of Peoples in Pennsylvania, this company diversified its utility operations from just water into water and natural gas. Its location in Pennsylvania made that an easy strategic fit. Water investors are still more than willing to invest in the company, and it dates back to before 1900, long before its more modernized name change in 2004. Its 7% dividend hike in 2019 was said to be the 29th in 28 years.

Risks/Concerns: By acquiring a natural gas utility, Aqua America Inc. (NYSE: WTR) has changed how investors will view the company. This may be a path for other companies to follow, or it may create operational issues wherein the sum is not worth as much as the parts. Model-changing mergers also can come with risks that may not be fully recognized for years.

8. ADM
> Dividend Yield: 3.7%

Strengths: As a top agricultural commodities player in America, Archer Daniels Midland Co. (NYSE: ADM) reaches into food, oils, ingredients, energy, chemicals and industries of all sorts. It has over 100 years of operations, and its shares are still at a sizable discount from its peak.

Risks/Concerns: ADM is involved in so many operations that it’s hard to pinpoint ahead of time from where the next problem (and the one after) that will come. The company also has had a hard time growing revenues in recent years, and Wall Street expects slow growth ahead. While stock buybacks are not a net-negative for shareholders, the company’s 100 million share buyback authorization (about 18% of its outstanding shares) may compete against big dividend hikes or potential growth-oriented acquisitions.

9. AT&T
> Dividend Yield: 5.4%

Strengths: This wireless giant is in a virtual duopoly with Verizon and is expected to maintain its dominance even if Sprint and T-Mobile merge. AT&T Inc. (NYSE: T) has diversified its revenue base by acquiring DirecTV and Time Warner to ensure multiple income streams for the coming decade as 5G rolls out. It has one of the highest dividends of its class, with an acceptable payout ratio.

Risks/Concerns: AT&T has taken on massive debt to help fund and bolster the acquisitions of Time Warner and DirecTV; wireless markets are deemed as mature; and 5G buildout spending expected to remain high for years. It now has Elliott Management targeting it as an activist, and the conglomerate model of telecom, media and connectivity into the home makes it expensive to operate at a time when the 5G buildout is already going to cost wireless carriers billions per year.

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