Investing during a global pandemic is not easy.
It's even more challenging for retirees, as you may not have the time to wait for the market to recover if you need the money to help you pay your current living expenses. That makes it even more important to invest in strong, defensive businesses that are likely to hold up well during any potential downturn -- coronavirus-related or otherwise.
To help you in this regard, here are three outstanding dividend stocks that can add ballast to your retirement portfolio in the current market environment.
COVID-19 isn't going to stop these companies from earning profits for their investors. Image source: Getty Images.
The biotech giant
Gilead Sciences (GILD 2.42%) can not only weather the pandemic, it could also be part of the solution -- and, by extension, profit from it.
Gilead's experiential drug remdesivir is perhaps the most promising potential treatment for COVID-19. Remdesivir delivered encouraging results in animal models for the treatment of SARS and MERS, which are also caused by coronaviruses that are structurally similar to COVID-19. Thus, health officials are hopeful that the drug could also potentially help to treat patients afflicted by the novel coronavirus.
Yet even if remdesivir fails to produce the desired results, Gilead would likely be just fine. The biotech leader generates robust cash flow from its existing pipeline of drugs, which makes it possible for the company to pay a reliable and bountiful dividend -- currently yielding a hefty 3.7%.
The telecom leader
Mobile phone bills are likely to be one of the last expenses people would look to eliminate during times of crisis, as they will no doubt want to keep in touch with family and friends. Businesses will likewise want to maintain contact with their employees and customers. This, in turn, helps to make telecommunications titan Verizon (VZ 1.78%) a relatively defensive investment during the COVID-19 pandemic.
Moreover, Verizon's nearly 120 million wireless retail customers tend to be loyal; the company enjoys industry-leading postpaid phone churn rates of less than 1%. As such, Verizon produces strong, recurring cash flow -- to the tune of $35.7 billion and $17.8 billion in operating and free cash flow, respectively, in 2019. Retirees will also appreciate Verizon's commitment to passing this cash on to its shareholders via a steadily rising dividend, which currently yields a sizable 4.6%.
The tax titan
Like mobile phone bills, tax preparation fees are a nearly unavoidable expense for businesses and many individuals. That makes accounting and tax prep software maker Intuit (INTU +3.31%) another great defensive investment for retirees.
Even in the midst of a global pandemic, tax payment deadlines in the U.S. have only been delayed by a few months. This will likely have the effect of just postponing some of Intuit's revenue from one quarter to the next. And while it's true that the company's Quickbooks revenue could decline should the COVID-19 crisis result in a wave of small business closures, Intuit's TurboTax business could benefit if more people choose to file their taxes online, rather than in-person with a tax professional, due to stay-at-home directives and fears of disease transmission.
Most likely is that Intuit's revenue and profits will remain relatively stable throughout the crisis and return to steady growth once the pandemic is eventually contained. Moreover, dividends account for only about a third of its profits, so Intuit should have little trouble maintaining and even increasing its dividend during the crisis. The company pays a modest dividend of 0.9%, but it's growing rapidly. Intuit increased its cash payout to investors by 21% in fiscal 2019 and intends to raise it by 13% in 2020.
