You have a lot of choices when it comes to investing your retirement money. Some of those choices aren't so great, but many are good alternatives. It's a similar story with one of the very best options for retired investors -- dividend stocks. There are many good dividend stocks on the market, although not all of them are ideal.
But are there specific dividend stocks that are must-haves for your retirement portfolio? I think so. Three that fit the bill, in my opinion, are Brookfield Infrastructure Partners (BIP 3.19%), Duke Energy (DUK 1.13%), and Welltower (WELL -1.06%).
1. Brookfield Infrastructure Partners
Brookfield Infrastructure Partners ranks as my favorite dividend stock of all. Yes, I really like the juicy dividend yield of 3.9%. But there's something that I like even more about Brookfield Infrastructure: its remarkably steady revenue stream.
As its name indicates, Brookfield Infrastructure owns infrastructure assets. If you can think of a kind of infrastructure, the company probably owns it. Brookfield's assets include cell towers, data centers, electricity transmission operations, natural gas pipelines, ports, railroads, toll roads, and more.
The great thing about these assets is that they generate revenue for Brookfield Infrastructure rain or shine, regardless of what happens at a macroeconomic level. Actually, that's just one great thing about those assets. Another is that they're distributed across multiple sectors and geographic regions.
Brookfield Infrastructure has increased its dividend by 42% over the last five years. I look for more dividend increases in the future as the company continues to execute its strategy of selling off underperforming assets and reinvesting the money in assets with higher growth potential.
2. Duke Energy
Duke Energy is, well, boring. And that's a good thing for your retirement portfolio. What isn't boring is that Duke's dividend yields north of 3.7% and that the company has paid a dividend for 93 consecutive years.
Instead of describing Duke Energy as boring, perhaps the better word to use is "solid." As a regulated public utility, Duke doesn't face competition. The company operates in six states, including three of the five fastest-growing states in the U.S. -- Florida, North Carolina, and South Carolina.
While Duke primarily generates power from fossil fuels right now, it's in a good position to reap the benefits from renewable energy sources. Duke Energy owns 25 hydroelectric power assets in North Carolina, South Carolina, and Tennessee with a total capacity of more than 1.3 gigawatts. It also operates solar facilities and wind farms in several states.
Although Duke Energy won't deliver awe-inspiring earnings growth, the company has achieved adjusted earnings-per-share growth of 5% annually over the past three years and projects growth of between 4% and 6% annually through 2024. With its strong dividend added into the mix, that translates to total shareholder returns of 8% to 10%.
Few stocks are poised to benefit from demographic trends like Welltower. The company ranks as the leading real estate investment trust (REIT) focused on the senior market.
Consider that the number of Americans aged 75 and older is expected to double over the next two decades. I think that could be on the low end, especially with the potential for medical advanced to lengthen average lifespans. This will almost certainly drive significantly higher demand for high-quality senior housing.
Welltower currently owns 533 senior housing properties, 658 triple-net lease properties (including assisted living facilities, continuing care retirement communities, and long-term post-acute care facilities), and 387 outpatient medical properties. It focuses on high-growth urban markets with high barriers for entry.
What about Welltower's dividend? Its dividend yield stands at close to 3.9%. The company has paid dividends every year for nearly five decades. With a big demographic tailwind, I think Welltower is a must-have dividend stock for any retirement portfolio.