If you are in your 70s, you are likely looking for a mix of safety and income. That can be difficult to find today, with the stock market trading near all-time highs, and valuations that are often witnessed right before deep corrections. But there are opportunities out there if you look hard enough, like Magellan Midstream Partners LP (NYSE:MMP) and General Mills Inc. (NYSE:GIS). If you are in your 70s, these are two high-yield stocks you might want to buy.

Making investors comfortable

Magellan Midstream Partners is a largely fee-based midstream limited partnership. It primarily owns a collection of pipelines and storage facilities that it charges customers for using, like a toll on a highway. The current distribution yield is 5.4%, more than twice the level you would get from buying an S&P 500 Index fund. It's targeting distributable cash flow coverage of 1.2 times in 2018, providing ample safety for the generous disbursement.   

A senior couple talking to a younger man across a table

Image source: Getty Images.

The partnership's distribution has been increased every quarter since it became public in 2001, or around 18 consecutive years. Notably, the distribution has grown at a compound annual rate of around 10% over the past decade. That easily outdistances the historical rate of inflation growth, which is roughly 3%. That distribution's growth rate is set to slow into the mid single digits, but this is actually a good thing.   

Magellan has roughly $1.7 billion worth of growth projects lined up between now and 2020. These projects are well defined, with customers waiting in the wings, or at facilities where demand clearly indicates a need for expansion. However, as a limited partnership, Magellan distributes most of the cash flow it generates to investors, so it has to tap the capital markets for growth capital.     

MMP Chart

MMP data by YCharts.

Knowing that investors are worried about the safety of distributions today, Magellan has elected to slow its distribution growth just a little so it can free up more internal funds for capital projects. It will also rely a little more on debt, but that's not something to worry about because it is one of the most conservatively financed midstream players. Basically, Magellan has decided to pull back on distribution growth so it can maintain 1.2 times distribution coverage to appease investors who prefer a balance of distribution safety and distribution growth. Which makes the partnership a great fit for investors in their 70s.   

Rolling with the punches

General Mills is one of the largest packaged-food companies in the world, with iconic names like Cheerios and Betty Crocker in its broad product portfolio. The company's current yield is around 4.3%, and the dividend has increased for 14 consecutive years. The dividend payout ratio has been hovering between 50% and 70% in recent years, not outlandish for a company that effectively sells lots of small products to lots of customers and on a weekly basis. That said, there's a chance that dividend growth will be halted for a few years, or at the very least slow to a virtual crawl. Once again, however, this isn't a bad thing.   

GIS Dividend Yield (TTM) Chart

GIS dividend yield data by YCharts. TTM = trailing 12 months.

General Mills is adjusting to a dramatic shift in consumer buying habits, just like every other food company. That's a key reason why the dividend yield is currently at the high end of the company's historical range, suggesting the stock is a good buying opportunity for income investors. To change with its customers, General Mills is adjusting its portfolio of brands. This isn't a new tactic, it's just par for the course at a company that's been around for more than 100 years.

The changes include reformulating older products, updating selling tactics (including focusing more on the internet), and buying new brands. A recent acquisition success story was Annie's, a health-conscious brand that's expanded dramatically under General Mills' ownership. In recent years, the company has also bought brands like Larabar and Epic. All of these were relatively small, bolt-on purchases. General Mills' 2018 purchase of natural pet-food maker Blue Buffalo, however, was much larger, at roughly $8 billion.   

Pet food is a new category for General Mills. It's buying the largest natural pet-food company in the market to not only gain scale quickly, but to also take a leadership role in the industry's fastest growing segment. The goal is to increase distribution and product innovation, which is exactly what took place at Annie's. Taking on that cost while it's dealing with other industry pressures, however, rightly has industry watchers concerned. So General Mills intends to focus on reducing leverage over growing the dividend in the near term. It's the right move.   

GIS Financial Debt to Equity (Quarterly) Chart

GIS financial debt to equity data (quarterly) by YCharts.

The pet food business is projected to account for only around 7% of revenue at the start. And while the cost is material, even if General Mills doesn't execute well, it has the financial wherewithal to muddle through and pay down debt without a dividend cut. The upside, however, is that Blue Buffalo continues to expand and helps to reignite revenue growth while General Mills works through a difficult period that's impacting every major industry participant. The risk/reward trade-off is solid, even for septuagenarians.     

Two high-yielders to look at now

Magellan and General Mills are very different entities, but both are effectively doing the same thing. They are focusing on growing their businesses in a way that keeps investors comfortable. Magellan's goal is to fund construction efforts with more internally generated funds to keep its coverage ratio robust while it grows. General Mills' plan is to get scale quickly in a new and growing business and use its reliable and diversified revenue stream to return its balance sheet to fighting form.

Both offer relatively high yields today. Although disbursement growth may slow over the near term, each offers a strong risk/reward trade-off at current price levels. If you are in your 70s, you should definitely consider adding Magellan and General Mills to your portfolio.

Reuben Gregg Brewer owns shares of General Mills. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.