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2 Solid Dividend Stocks for a Better Retirement

By Rich Duprey – Jun 10, 2020 at 8:53AM

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Stability, income, and a track record of withstanding adversity are hallmarks of companies suitable for a retiree's portfolio.

Because even the strongest, most financially sound companies can get battered in a broad market selloff such as the one brought on by the coronavirus pandemic, retirees and investors nearing retirement should focus on high-quality, dividend-paying stocks for their portfolios.

Retirees can't always count on business growth and capital appreciation to provide enough to cover their expenses, but a portfolio of income-generating stocks can help them to maintain their standard of living and get them through the rough spots.

And while many companies pay dividends -- including the large majority of those in the S&P 500 -- seeking out those with a history of stable, growing payouts can provide retirees or those planning for it with the peace of mind they desire. These two stocks fit that description nicely.

Golden egg in a nest with the word retirement

Image source: Getty Images.

A clean sweep

Clorox (CLX -0.74%) has gone from staple to star during the COVID-19 pandemic, which has put its bleach products and disinfecting wipes in high demand. In fact, the consumer products giant says its factories won't be able to catch up with customer demand until the summer at least. "Demand has outstripped what anybody could have imagined," according to CFO Kevin Jacobsen.

Although that has some analysts wondering just how long its streak can continue, Clorox is more than just disinfectants, and its portfolio of top, name-brand goods should give it staying power.

Many of its products hold the No. 1 or No. 2 market-share positions in their respective segments around the world, including other cleaning agents like Pine-Sol and Formula 409, but also Burt's Bees, Kingsford charcoal, and Liquid-Plumr. 

Clorox generates 80% of its revenue from these market-leading products and some 15% of its sales are generated internationally. Foreign markets continue to be significant factors in its strategy for growing out its top brands.

Its overall strength has allowed the consumer discretionary products leader to pay dividends to shareholders for more than 50 straight years, and since 1977 it has raised its payout each and every year, earning it a coveted spot among the Dividend Aristocrats.

That doesn't mean its track record of payout hikes is guaranteed to continue uninterrupted, but as its results amid this crisis show, Clorox retains a resilience that suggests its dividend is secure for many years to come, making it perfect for a retiree's portfolio.

Full of energy

The energy industry has been pummeled this year by the one-two punch of a producer-driven supply glut and a pandemic-generated collapse in demand. The resulting plunge in prices has sent shares of producers like ExxonMobil (XOM -0.28%) careening lower. Yet this oil and gas giant still has a lot to recommend it.

Demand for fossil fuels isn't going away despite the current falloff, nor will it evaporate due to growing competition from alternative sources of energy. Rising income levels, increased discretionary spending opportunities, and an ever-expanding global population bode well for a continuing need for oil.

With its long history, ExxonMobil has plenty of experience with volatile markets, and it has prepared itself to withstand them so that when they pass, it will be positioned to resume its growth.

For example, the energy giant reduced its planned capital expenditures by 30% for this year to preserve liquidity, but it's doing so strategically by focusing those cuts largely on short-cycle investments in the Permian Basin. Development of various deepwater resources, on the other hand, such as those off the coast of Guyana, is being allowed to continue.

That strategy should give Exxon the ability to maintain its long-term goals, and allow it to keep intact a dividend that it has paid for over 100 years -- and has raised annually for the last 37. Investors can feel confident about this company's ability to generate payouts regardless of the energy market's short-term gyrations, which makes it a great stock for retirement portfolios.

Rich Duprey owns shares of ExxonMobil. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$85.51 (-0.28%) $0.24
The Clorox Company Stock Quote
The Clorox Company
CLX
$140.53 (-0.74%) $-1.05

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