If you're an income investor, you probably already know that dividend stocks not only provide a steady stream of welcome income, but they can also produce market-beating returns. Some income stocks may be better to own in retirement than others, though. Retirees need predictable sources of income, and they have less time to make up for mistakes.

So which dividend stocks can retirees consider buying now? To find out, we asked three Motley Fool contributors. Here's why they think AT&T (NYSE:T), Ventas (NYSE:VTR), and Chevron (NYSE:CVX) are retiree-friendly stocks worth adding to income portfolios.

AT&T is a yield giant

Jamal Carnette, CFA (AT&T): You can't blame conservative investors for steering clear of AT&T. At first glance, its balance sheet looks like a mess! AT&T is the biggest nonfinancial issuer of debt, with approximately $170 billion on its balance sheet. With shares now yielding approximately 3.5 times the S&P 500's yield, it's clear investors are pricing in the prospect of a dividend cut.

A senior man working on a laptop in front of a wall with question marks drawn on it.


But merely looking at the liability side of the equation is flawed analysis, and assets should be considered. AT&T acquired DirecTV and Time Warner, two cash flow-accretive businesses. Last year's record free cash flow (cash from operations minus capital expenditure) was more than adequate to pay dividends. Next year, management has guided for $26 billion in free cash flow, which is more than adequate to pay $15 billion in projected dividend outlays.

While AT&T boasts it has raised dividends for 35 consecutive years, investors should look elsewhere for dividend growth stocks. AT&T would be better suited using its remaining free cash flow to pay down debt. And that's what management has promised, a "laser focus" on reducing debt. At a 7% yield, however, the company doesn't have to significantly increase payouts to be an income gem.

Aging boomers make this REIT a top dividend stock to own

Todd Campbell (Ventas): If you'll be over age 65 by 2035, you'll be in good company. Some 78 million Americans will be above that age milestone in 2035, which means that for the first time in U.S. history, there will be more seniors alive than children.

Healthcare real estate investment trusts (REITs) are a great way for dividend-hungry retirees to gain exposure to aging America, and Ventas is one of the biggest healthcare REITs you can buy. Roughly 54% of its healthcare properties are senior housing, but its portfolio also includes medical offices (19%), life sciences properties (7%), and health systems properties (6%). Its portfolio positions Ventas to benefit significantly from demand for specialized senior housing, increasing doctor visits, and investments in next-generation treatments.

Of course, there's no telling if regulators will change healthcare in ways that cause vacancy rates at Ventas properties to increase. Interest rates could make it more costly to develop new properties, also crimping profit. However, I think those risks are more than offset by the opportunity associated with addressing an older, longer-living America. If I'm right, then a 5% dividend yield and the potential to build increasingly more properties make this a top dividend stock retirees can buy.

Check out the latest earnings call transcripts for AT&T, Ventas, and Chevron.

Land oil and gas rigs operating on a hilly landscape.


Big oil, big dividends, consistent returns

Nicholas Rossolillo (Chevron): Oil prices took a header at the end of 2018, falling some 40% from October 2018 highs through the holidays. That kind of price action can wreak havoc on the fossil fuel industry, and this time was no exception. Many stocks fell along with the commodity value, as lower pricing generally means lower profits.

A look at Chevron's stock might indicate the integrated energy giant was in the same boat as the rest of the industry, but that isn't the case here. Though shares fell during the 2018 fourth quarter, they subsequently rebounded and are now up 7% over the last 12 months -- even as energy prices have yet to return to their multiyear highs set last fall.

The key to Chevron's success? It operates a diversified exploration, refining, and services business, which helps it weather the ups and downs inherent in commodity production. In spite of the industrywide downturn, full-year 2018 production was up 7%, with another 4% to 7% growth expected in 2019. As a result, revenues and earnings were up 17% and 60%, respectively, in 2018. With energy prices on the mend and production rising, Chevron should turn in another profitable year for owners of its stock.

For a global operation like Chevron, those are pretty incredible numbers. The usually slow-and-steady enterprise is perfect for retirees, though, as the consistent growth the company posts leads to dividend increases. That was the case early in 2019 when Chevron doled out a 6% raise for shareholders, the 32nd year in a row it has increased the payout. Given an annual yield of 3.9%, investors who live off their savings should give this one a look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.