Buying and holding high-quality dividend stocks is arguably the most effective method for any investor to consistently beat the market. But the combination of dividends and potential share price appreciation creates an especially potent mix for retirees looking to make the most of their nest egg.

So we asked three top Motley Fool contributors to find dividend stocks they think would be a perfect fit for any retirement portfolio. Here's why they picked Walt Disney (DIS -0.33%), AT&T (T 0.12%), and Microsoft (MSFT -0.35%).

Seven successively taller stacks of coins with hand placing gold coins on tallest stack.


This entertainment giant will only grow more dominant

Steve Symington (Walt Disney): There's no denying that Disney is already having an incredible year. Only four weeks into its theatrical run, Disney Marvel's Avengers: Endgame is now the second-biggest movie of all time with worldwide gross box-office sales of $2.63 billion as of this writing. That tally trails only the $2.788 billion collected a decade ago by Avatar -- which Disney also owns now after closing its $71.3 billion acquisition of most of Twenty-First Century Fox's assets in March.

Speaking of which, Disney has four more Avatar films slated to hit theaters between 2021 and 2027. And this year alone, it still looks forward to the debuts of Pixar's Toy Story 4 in June, Marvel's Spider-Man: Far From Home and a live-action version of The Lion King in July, Frozen 2 in November, and Star Wars: The Rise of Skywalker in December.

That's not to mention the fact that the success of these films trickles down to Disney's consumer products, streaming video ambitions, and parks and resorts segment, the last of which is poised to continue taking market share from competitors and largely helped drive a strong fiscal second-quarter 2019 report earlier this month. 

With a solid 1.3% dividend yield and enough entertainment IP to keep consumers happy for decades to come, Disney, in my opinion, is a fantastic option for retired investors today.

A sturdy business and great dividend profile

Keith Noonan (AT&T): AT&T's share price has been relatively stable amid the recent bout of market volatility brought on by increasing separation between the U.S. and China on trade issues. The stock remains cheaply valued, trading at roughly nine times the year's expected earnings and packing a 6.5% dividend yield that should pique the interest of income-focused investors.

The dividend package is fantastic, offering one of the highest yields in the telecom sector, three and a half decades of annual payout growth, and a sturdy position in the telecommunications industry that should help it continue hiking its dividend. The business generates huge amounts of free cash flow -- roughly $25.8 billion over the trailing-12-month period. And while the company's DirecTV satellite television business is feeling the hurt as consumers cut the cord, AT&T still looks reasonably well set up for a world in which internet communications are increasingly integrated into the fabric for everyday life and will facilitate the next big industrial leaps.

AT&T's next-generation wireless networks will provide connectivity for devices including smart cars, wearables, and a wide range of consumer and industrial robotics and smart city technologies. The Internet of Things and 5G should strengthen AT&T's wireless internet business and present opportunities to branch into new sales generators like analytics and device management. The stock is cheap enough to have significant upside at current levels, and it pays a big dividend that will provide retirees with substantial income at dependable intervals.

The right mix of growth potential and dividends

Chris Neiger (Microsoft): Retirees who are looking for a stable company that offers a healthy dividend that doesn't give up the potential for substantial share price gains should consider Microsoft. The company's 1.4% dividend yield may seem modest compared with other dividend plays, but the company has two things going for it that make it a strong contender for retirees: It has the cash to continue paying its dividend and strong sales growth in a growing market.

Microsoft returned $7.4 billion to its shareholders -- a 17% year-over-year increase -- in the most recent quarter through dividends and share repurchases. Most importantly, the company's payout ratio is just 39%, which means that it has plenty of earnings to both keep paying (and raising) its dividend and to keep it growing its business.

Aside from being a compelling dividend play, Microsoft has built itself into a cloud computing powerhouse with its Azure cloud platform and its suite of cloud software and services. In the company's third-quarter 2019, Azure sales jumped 73%, Intelligent Cloud revenue increased 22%, and More Personal cloud computing sales ticked up 8%. And there's no sign of Microsoft losing its cloud position anytime soon -- the company is the No. 2 public cloud computing company after

Retirees looking for a reliable dividend play that's committed to its shareholders and has plenty of room to benefit from the cloud computing market need to consider all that Microsoft has to offer.