Four percent is a key threshold for investors. Many financial advisors recommend that you withdraw no more than 4% of your portfolio annually to fund your living expenses during retirement, to ensure your savings last your entire life.
So, if you're able to build your nest egg to a point where 4% is enough to pay your expenses -- and if you can find reliable income-producing stocks that yield 4% or more -- you could live off the dividends alone and never have to sell any shares.
Here are three excellent dividend stocks that can help make this relatively low-stress way of investing -- and living -- possible for you.
Brookfield Infrastructure Partners
Infrastructure is fertile ground for yield hunters. And Brookfield Infrastructure Partners (BIP -1.32%) is one of the best in the business. Brookfield owns one of the biggest and best portfolios of high-quality infrastructure assets in the world. Its limited partnership units, in turn, are a bountiful source of reliable cash payments for income-seeking investors.
Brookfield's global asset base is highly diversified, which helps to limit risk for investors. Key areas of investment include energy, transportation, and communications. Think pipelines, railroads, and cell towers.
Roughly 95% of Brookfield's cash flows are secured by long-term contracts or regulatory frameworks. This helps insulate them from economic cycles, which further reduces risk for investors. These predictable cash flows allow Brookfield to pay out a bountiful cash distribution to its unitholders. Its units currently yield more than 4.5%.
Better still, Brookfield's cash payout is likely to rise steadily in the coming years. With a goal of generating returns on its infrastructure investments of 12% or more, Brookfield intends to grow its cash distribution by as much as 9% annually.
Innovative Industrial Properties
If you appreciate dividend growth, you'll also love Innovative Industrial Properties (IIPR -5.46%). The cannabis-focused real estate investment trust (REIT) is helping fuel the growth of the legalized marijuana market. In the process, it's lining its shareholders' pockets with a rapidly growing cash dividend stream.
Innovative Industrial Properties acquires facilities that are used to grow and process medical marijuana. It then finds state-licensed cannabis companies that want to use its properties under long-term leases. These leases generate stable cash flows, which IIP passes on to shareholders via dividends. Its shares currently yield a sizable 4.4%.
Like Brookfield, IIP is well-positioned to increase its cash payout in the years ahead. Annual marijuana sales could reach $200 billion by 2030, according to some estimates. As a valued real estate partner in this fast-growing and potentially massive industry, IIP should have little trouble expanding its cannabis real estate empire. More properties mean more cash flow, which should equate to larger dividends for shareholders.
Verizon Communications (VZ -1.03%) is another dependable dividend stock with a terrific yield. The U.S. telecom giant's wireless network is widely considered best-in-class. This helps keep its more than 100 million subscribers loyal; it retained 99.4% of its postpaid mobile phone subscribers in its most recent quarter.
Verizon's massive subscriber base thus represents a reliable source of recurring cash flow. In just the first half of 2020, the telecom giant generated operating and free cash flow of $23.6 billion and $13.7 billion, respectively. Verizon passes much of this cash on to its shareholders via hefty dividends. Its shares currently yield a solid 4.3%.
Yet Verizon is more than just a stodgy telecom. New 5G networks represent an exciting growth opportunity. The fifth generation of wireless networking technology promises download speeds of at least 10 times -- and up to 100 times -- faster than what's commonplace today. Verizon's new 5G network will help power game-changing technological advances such as autonomous vehicles and the Internet of Things. This should make Verizon's network even more valuable, allow it to generate greater cash flow, and enable it to pay larger dividends to its shareholders in the decade ahead.