Dividend stocks are among the most bankable investment options for retirees to supplement their income and grow their nest eggs. However, not all dividend stocks belong in a retiree's portfolio. I'd look for companies that can offer stable, preferably even growing dividends year after year that are backed by strong underlying growth potential in earnings and cash flow.

Our Motley Fool contributors believe ShotSpotter (SSTI -0.69%), Dominion Energy (D 0.31%), and Johnson & Johnson (JNJ -0.10%) are three such dividend stocks ideal for retirees. Here's why.

Off with a bang

Rich Duprey (ShotSpotter): Gunshot detection specialist ShotSpotter has seen some wild swings in its stock price, swinging from a low of $18.50 last year to over $66 a share last September, only to fall once more to $26 a stub before climbing higher again. Today it trades at $39 per share, some 40% below its highs, but 68% above its low point.

Part of the reason for the volatility is the fact that it's a small-cap stock, and the hills and valleys it hit had more to do with the general stock market than its business. It has been growing sales as more cities install its sensors, expanding the number of miles covered. Revenue surged 49% in the fourth quarter, and the company added 24 more net miles of coverage without losing any miles, which brought the total to 643 miles.

A jar filled with coins and labeled "Retirement"

Image source: Getty Images.

The technology used allows ShotSpotter's sensors to "hear" a gunshot, determine whether high-capacity weapons are being used and if there are multiple shooters, then transmit a report to law enforcement within 45 seconds.

ShotSpotter has near-monopoly status in wide-area detection capabilities, and with fewer than a dozen cities in its portfolio of coverage, there's a lot of room for growth. Much as Axon Enterprise has a lock on major city contracts for stun-gun and body-camera sales, ShotSpotter can build on the gains it's already made and see its stock grow further even though it has already more than doubled in value.

Check out the latest earnings call transcripts for ShotSpotter, Dominion Energy, and Johnson & Johnson.

A safe dividend growth stock

Neha Chamaria (Dominion Energy): A utility is often a safe place for retirees to park money for one simple reason: It's a highly regulated business that ensures stability in revenue and cash flow, which can then be passed on to shareholders as regular, even growing, dividends. Consider Dominion Energy, for example. The stock yields a solid 4.4% currently, and management is committed to growing its dividend in the years to come.

Dominion Energy is one of the largest electricity and natural gas utilities in the U.S., with a customer base of almost 7.5 million and nearly 90% regulated operations. For a regulated utility, while the prices are set by the state public utility commissions, the company gets exclusive selling rights in the regions in which it operates, effectively making it a monopoly. A regulated market works in favor of shareholders in two ways: The utility generates predictable revenue and profit and allocates capital prudently to ensure its investment and spending generates a set rate of return. Eventually, that translates into strong returns for shareholders in the long run, both as stock price appreciation and dividends.

Dominion has increased its dividend every year for 15 consecutive years and is targeting 10% annual dividend growth in 2019 and beyond, backed by as much growth in operating earnings per share. The company recently acquired SCANA to expand its footprint substantially, sold some non-core assets, and pared down debt by nearly $8 billion last financial year. With these moves, Dominion has addressed several investor concerns and looks well placed to strengthen its balance sheet further and grow its cash flow and dividend for years to come. For retirees, that should mean consistently high dividend yields backed by fatter dividend checks year after year.

Growth, income, and safety

George Budwell (Johnson & Johnson): There aren't a whole lot of stocks suitable for retirees that can offer a rock-solid dividend, a lengthy history of market-beating returns, and most importantly, a world-class economic moat. Healthcare behemoth Johnson & Johnson, though, is one of the few stocks that truly ticks all of these boxes, making it an ideal stock for investors in their golden years.

Not only has J&J hiked its dividend for 56 consecutive years -- making it a so-called Dividend Aristocrat, but the company has also posted 35 straight years of earnings growth, and it sports one of the only AAA-rated balance sheets in the world. This diversified healthcare giant thus offers investors the best of both worlds -- top-shelf returns on capital and a fundamentally sound company.

How does J&J outshine the competition? J&J's secret is its heavy investment in innovation. Over the course of 2018, the company plowed an eye-catching $11 billion into research and development, enabling it to stay one step ahead of emerging competitive threats and patent expirations. 

Still, J&J is going through some turbulent times with the ongoing baby powder scandal and the loss of exclusivity for its megablockbuster medicine Remicade. Consequently, 2019 is slated to be a trough year for the company. But J&J's top line is expected to bounce back as early as 2020 thanks to its exceptionally strong pipeline of next-generation products. 

All told, there's no other large-cap stock that can arguably stand toe to toe with J&J from either a long-term growth or safety perspective.