The last of the Baby Boomers are expected to retire this decade. Dividend stocks like Realty Income (NYSE:O), Enterprise Products Partners (NYSE:EPD | EPD Price Prediction), and Verizon (NYSE:VZ) should be looked into if you are one of them.
If you were born from 1946 to 1964 during the post-war baby boom, you’re now a part of the ongoing retirement boom. You should now be investing like a retiree, meaning you prioritize income over growth.
Will the money you have now last longer than you do? This is the riddle you need to solve, and certain dividend stocks can make it much easier to solve with how dependable they have been historically. Rate cuts have trimmed bond coupons, money markets are slipping, and investors are increasingly being pushed towards dividend stocks for a higher yield. You should look for both a high yield and reliability when you buy them.
The three stocks we’ll be looking into today check both those boxes.
Realty Income (O)
There’s a reason why Realty Income is so popular. The company has been paying rising monthly dividends for decades, and the cash flow remains strong. It is a real estate investment trust, so it is required to pay at least 90% of taxable dividends to its shareholders. Realty Income’s customer base is formed out of retail companies that themselves are very stable.
No recession has been able to knock O stock out, and it maintained an occupancy rate of 97% during 2008. Companies linked to real estate were clobbered during the Great Recession, but O stock managed to recover from that in earnest. It is now one of the best income vehicles if you want a high yield, some upside, and top-notch reliability.
O stock pays 5.28% in dividends and is a Dividend Aristocrat. The stock is trading just over $60 today. I believe it can cross $80 or touch even $100 by 2030.
Enterprise Products Partners (EPD)
Enterprise Products Partners is a North American midstream energy company. These companies may look risky and unwise to invest in for the uninformed. However, once you understand the business model, it becomes very appealing. Midstream companies are not exposed to day-to-day price swings of oil.
Instead, their earnings come from long-term fee-based contracts. They simply carry the oil using their pipelines and charge for the volume being used. Since oil is almost always on the move through its pipes, EPD stock is one of the most stable dividend stocks to buy for a safe and reliable yield.
The stock has appreciated steadily over the past few years and is up over 5% in the past 6 months alone. If you include the 6.7% dividend yield, the total return is in the double digits. It is a must-own stock if you want something consistent and reliable with a very high yield.
Verizon (VZ)
Speaking of a stock with a very high yield, it would be a crime not to include Verizon. It pays a giant dividend due to its telecom business essentially being a cash cow for the company. Verizon has been through turmoil periods, and the telecom business has weathered the storm in each one. The most recent interest rate hike cycle burdened the company with significant interest payments, but Verizon managed to continue paying dividends and remained profitable. In fact, it actually increased its dividends during this period.
I believe Verizon can mount a recovery very soon. The company’s biggest competitor is AT&T (NYSE:T), which pulled off a full recovery in the recent past. VZ stock can follow in its footsteps and deliver solid returns.
Interest rate cuts will alleviate Verizon’s interest rate payments and make the dividend yield a lot more attractive. It currently comes with a dividend yield of above 7%. Moreover, telecom companies are far more reliable than previously thought, as customers treat the internet as a non-discretionary item and keep their subscriptions even if there’s a crisis.
The forward dividend payout ratio is 57.68% despite the high yield. I see the stock moving above $60 by 2029.
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