Please ensure Javascript is enabled for purposes of website accessibility

3 Top Stocks for Retirees

By Joe Tenebruso - Updated Apr 17, 2019 at 2:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Searching for yield? Then check out these outstanding businesses.

Are you seeking reliable income streams that can help to fund your living expenses in retirement? Then you've come to the right place.

The following businesses possess powerful competitive advantages that allow them to generate strong and steady profits, which they then use to reward investors with sizable cash payouts. Read on to learn more about them.

Dice spelling the word yield on top of stacks of gold coins

Image source: Getty Images.

Fun-fueled dividends

Cedar Fair's (FUN 3.87%) amusement parks have thrilled roller-coaster fans for decades. But retirees are likely to find its cash payouts even more exciting.

Cedar Fair is one of the largest regional amusement-resort operators in the world. Its 14 parks serve 26 million guests and generate more than $1.3 billion in revenue annually. These valuable assets also produce bountiful free cash flow, which, as a publicly traded partnership, Cedar Fair passes on to its unitholders in the form of a steadily growing cash distribution.

The amusement park leader has paid a cash distribution to its investors for 33 straight years, and its units currently yield a hefty 7%.

Infrastructure-powered income

Like Cedar Fair, Brookfield Infrastructure Partners (BIP -1.26%) is a publicly traded partnership with a strong history of investor wealth creation. Brookfield is one of the largest infrastructure companies in the world, with a diverse collection of high-quality assets spread across the globe. 

Brookfield focuses its efforts on four main areas: utilities, transportation, energy, and data infrastructure. Think electricity lines, ports, natural gas processing plants, and cell towers. These businesses benefit from substantial barriers to entry; high replacement costs, long-term contracts, and regulatory protections help to insulate their cash flows from the competition. 

Brookfield expects to grow its distribution by 5% to 9% annually. The company has increased its cash payout for 10 consecutive years, and its units currently yield 4.9%.

Less risk, more profit

CME Group (CME 1.96%) takes a different approach than Cedar Fair and Brookfield toward generating profits. As a securities exchange, it's an asset-light business that generates some of the highest profit margins in the public markets.

CME Group operates the world's largest exchange and clearinghouse for futures contracts. Futures help businesses and individuals manage risk in areas such as interest rates, foreign exchange, and agricultural commodities. As these financial products continue to grow more popular, CME Group stands to benefit.

Check out the latest earnings call transcripts for Cedar Fair, Brookfield Infrastructure Partners, and CME Group.

CME enjoys powerful competitive advantages in the form of network effects. The exchange's wide selection of products and unmatched liquidity are highly valued by traders. Each additional trader it attracts provides more liquidity, which attracts more traders, and so on. This virtuous cycle -- and CME's massive scale -- makes it difficult for its competitors to wrest away market share.

CME Group passes its bountiful profits on to shareholders via a steadily growing dividend stream. The stock currently yields 1.9% based on its regular quarterly payout. Additionally, CME Group also pays a special dividend that has historically boosted its overall annual dividend yield to more than 5%, making it one if the highest-yielding wide-moat stocks available in the market today.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cedar Fair, L.P. Stock Quote
Cedar Fair, L.P.
FUN
$43.80 (3.87%) $1.63
Brookfield Infrastructure Partners L.P. Stock Quote
Brookfield Infrastructure Partners L.P.
BIP
$61.02 (-1.26%) $0.78
CME Group Inc. Stock Quote
CME Group Inc.
CME
$195.43 (1.96%) $3.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.