In any discussion about investing in retirement, conventional wisdom contends that bonds are the way to go. They fluctuate in value far less than the average stock and payout steady interest payments. Fixed-income investments like bonds can be a great way to generate extra cash to supplement Social Security and pay the bills.

When thinking about supplementing basic retirement income like Social Security, though, stocks shouldn't be left out of the equation. There are plenty of rock-solid businesses that pay out steady streams of cash to their shareholders, plus offer the added benefit of possible share price appreciation. Three that look particularly attractive for retirees are AbbVie (ABBV 0.73%), Phillips 66 (PSX 0.41%), and Store Capital (STOR).

1. AbbVie: Prescriptions that pay you back

Global pharmaceutical giant AbbVie has had a rough go of it over the last couple of years. The stock is down some 40% from its high-water mark set in early 2018. Not exactly the kind of number that looks attractive to a typical retiree. Aging autoimmune disease treatment Humira losing some of its patent protection explains some of the price drop, as does AbbVie's proposed acquisition of Botox maker Allergan for $63 billion to diversify its sales base and boost cash flow.  

The merger move has been a contentious one, to say the least. Some investors have panned it as too high a price, with others comfortable that the combined company will be able to repay debt all the while keeping the dividend spigot on. I'm on the side of the latter argument. The two maturing pharmaceutical businesses generate plenty of cash flow (a combined $19 billion in 2018) to pay down the debt financing, and AbbVie thinks an additional $2 billion in cost savings can eventually be found post-merger.

Of course, this is an article about income, so it's the dividend and how it will be affected that's important here. AbbVie's current free cash flow (basic profits after operating and capital expenditures are paid for) handily covers the current payout of $4.28 per share every year, good for a current yield of 5.7%. Allergan is also expected to immediately add to the bottom line once the merger is complete. The company also has a promising pipeline of new treatments that could help keep sales steadily rising in the years ahead. For investors looking for some extra spending money every year, AbbVie looks like a solid pick.

A Social Security card, a Social Security income statement, and a calculator.

Image source: Getty Images.

2. Phillips 66: Paying at the pump is cash in the bank

The number of auto manufacturers lining up to challenge Tesla in the burgeoning electric-car race is astounding. There are only a handful of fully electric vehicle models to choose from now, but there could be dozens in just five years' time. And yet, even with vehicles making the turn to more battery use, gasoline will remain a mainstay for a long time.  

That makes Phillips 66, spun off from ConocoPhillips back in 2012, worth a look. The energy-refining giant provides a wide range of distillate products, and fuel for cars is only part of a much broader product lineup. Fuel for commercial vehicles from trucks to airliners are a growth driver, as are exports overseas and the manufacture of plastics -- which it does through a joint venture with fellow retirement income stock Chevron. With a large number of outlets for its refined oil products, Phillips 66 has been a consistent winner since its independence less than a decade ago, in spite of several recent downturns for the energy industry.

PSX Chart

Data by YCharts.

Besides the potential for steady stock growth, though, the dividend is where there is real value for retirees. Currently running at a 3.5% annualized yield, free cash flow is more than double the dividends paid, giving Phillips 66 plenty of room to keep doling out the payments while still investing in its refining operations. Electric vehicles won't be the end of gas products. Economic activity runs on energy companies, and this staple in the industry has the ability to provide steady cash payments for a long time.

3. Store Capital: Retail that's far from dead

These days, it seems everyone wants to shop online. The movement that sparked has spelled serious trouble for several brick-and-mortar retailers. But not all physical stores are created equal. Store Capital takes a different approach, focusing on retail services like restaurants and gyms rather than merchandise-based companies.

The beauty of Store Capital, though, is that it focuses on being a net-lease real estate investment trust (REIT). The property lease agreements it enters into require the tenant to cover building maintenance, property taxes, and insurance. That creates lots of upside for the property owner and far less downside. And as far as that goes, it is a best-in-class pick among this type of REIT. Store Capital's over 2,400 properties are 99.7% occupied, and the average length for a new lease signing during the second quarter of 2019 was 18 years. That provides a solid long-term business model, one that churns out plenty of cash for shareholders, as well as enough cash for Store Capital to keep making new deals and expanding its portfolio of real estate.

STOR FFO Per Share (TTM) Chart

Data by YCharts.

Store Capital doesn't have the longest track record as it only went public in 2014. Since then though, funds from operations per share have increased over 200%, fueling a steadily rising dividend. The current yield is 3.8%, which includes a recent 6% increase put in place following the second quarter of 2019. Thus, Store Capital doesn't just provide a paycheck -- it has a history of doling out pay raises. When Social Security fails to keep up with living expenses, at least Store Capital will. 

Meeting the retirement income challenge

Finding a good place to generate supplemental income in retirement can be a challenge, but stocks shouldn't be eliminated from the conversation. Diversifying the number of stocks invested in is key to mitigating risk, but AbbVie, Phillips 66, and Store Capital are a good place to get started in the conversation.