Boomers today are between 60 and 79 years old. You may be just a few years away from retirement, or it has been over a decade since your retirement. Either way, it’s a good time to start focusing on income instead of growth.
Most retirees no longer have the stomach for moonshot growth stories or the patience to ride out another tech tantrum. What they want, and arguably need, is money that shows up on schedule and beats the meager interest offered by bank CDs. That is exactly why dividend stocks have become the quiet backbone of countless boomer portfolios.
Well-chosen dividend payers keep mailing checks. Better yet, history shows that companies that regularly share profits with investors tend to weather recessions better and deliver steadier total returns than the broader market.
Here are three dividend stocks to look into:
Energy Transfer (ET)
Energy Transfer (NYSE:ET) is one of the largest midstream energy companies you can invest in. The company owns and operates energy infrastructure and transports natural gas and crude oil. It does not have much exposure to fluctuating energy prices and mainly makes money through long-term volume-based contracts.
This stability translates over into share prices, which have been on a consistent upward trajectory for the past five years, beating even the QQQ.
Obviously, the next five years are unlikely to be as stellar, as ET’s gains were partly due to a post-COVID recovery. Nonetheless, this is one of the most concrete dividend investments you can make in the current environment. Midstream companies are detached from the tariff drama, and they are benefiting from the energy export boom to Europe as European countries switch from Russia to North America for their energy needs. The outlook remains positive for this midstream company.
The best part is that ET gets you a fat 7.81% dividend yield.
Pfizer (PFE)
Pfizer (NYSE:PFE) became a household name almost overnight around 4 years ago. But if you look deeper, there’s far more going on than a vaccine that has faded away. This is one of the world’s biggest biopharmaceutical companies and a portfolio that does not rely on vaccines.
Its top-selling medicines are Ibrance for breast cancer and Xtandi for prostate cancer. It has plenty more drugs in its pipeline and on pharmacy shelves that generate recurring cash flow.
The cash flow is exceptionally strong, and PFE stock comes with a forward dividend yield of nearly 7% today. Dividends have been raised for 14 consecutive years, and the payout ratio is still a bit over 50%. There’s room for more payout increases down the line, though analysts don’t expect much growth.
The dividend alone is a strong enough case for the average boomer to keep PFE stock in their portfolio. The valuation is great at the moment, considering you’re paying just over 7 times earnings when you take out one-time expenses. The median PE (minus non-recurring items) has been 13 over the past decade.
Eastman Chemical (EMN)
Eastman Chemical (NYSE:EMN) sells advanced materials, chemicals, and fibers. It makes a variety of products that span across multiple industries, and this diversification gives it the reliability that few other companies can match.
Revenue has been sticky around $9-10 billion since at least 2013, with debt slowly being paid off since then. Speaking of debt, that has been a significant problem for Eastman, but it also spells opportunity.
The company has a market cap of $7.24 billion, but the balance sheet has $4.7 billion of net debt. Servicing this debt cost the company $200 million in 2024. That’s a big chunk of the company’s operating cash flow of $1.4 billion. However, interest rates are finally coming down, and the bottom line seems set to rebound.
Eastman has managed to not only keep its dividends intact during this rough period but also do share buybacks. The 3-year average share buyback ratio is at 3.7% annually, on top of the 5.28% forward dividend yield. Dividends have been increased for 15 consecutive years, and the payout ratio of 43.19% means EMN could double its dividends and still have more money left over.
The stock itself has big upside potential from the current dip, as automotive and industrial demand are showing signs of a rebound.
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