If you're retired (or close to that point), there are typically two main things you'll look for in stocks. First, the stock should pay an attractive dividend. Second, the underlying business should be solid and reliable.
Once you find stocks that check off these boxes, you can buy and hold without losing any sleep at night. Your retirement should be relatively secure, with dividends rolling in regularly.
But what stocks meet both of these criteria? Here are three dividend stocks yielding more than 4% that are safe buys right now.
1. Brookfield Infrastructure Partners
Brookfield Infrastructure Partners' (BIP 1.31%) dividend currently yields 4.4%. The company has consistently distributed a dividend to unitholders since it went public in 2008. It has also increased its distribution by an average of 10% annually over the last 10 years.
The company's business is about as steady as they come. Brookfield Infrastructure, as its name indicates, owns and manages infrastructure assets. These assets include electricity distribution and transmission systems, railroads, ports, toll roads, natural gas pipelines, communications towers, and data centers.
As you would expect, these are the kinds of infrastructure assets that provide a stable revenue stream month in and month out. In fact, roughly 95% of Brookfield Infrastructure's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are either regulated or locked into long-term contracts. It's also helpful that the company's assets are well diversified geographically across five continents, with no region generating more than 30% of total cash flows. .
Brookfield Infrastructure expects to deliver organic funds from operations (FFO) growth of between 6% and 9% each year and could boost that level with acquisitions. The company targets distributing between 60% and 70% of its FFO to unitholders.
2. Duke Energy
Duke Energy (DUK -0.52%) offers a dividend yield of nearly 4.7%. It has consistently paid a dividend every quarter for decades. However, Duke's dividend payout didn't increase during the latter part of the 1990s and the early years of the 21st century. The company also reduced its dividend in 2007. Since then, though, Duke Energy has increased its dividend every year.
Thanks to some acquisitions and mergers through the years, Duke Energy now ranks as one of the largest utilities in the U.S. It provides electricity to around 7.7 million customers in six states and natural gas to more than 1.6 million customers in five states. In addition, Duke operates solar and wind power facilities in 14 states.
The good news for investors is that Duke can count on generating a stable cash flow. Utilities are highly regulated, but they also enjoy monopolies. Duke's markets include fast-growing areas such as Florida and North Carolina that will likely need more electric power in the future.
Granted, Duke's business could be viewed as boring. The stock isn't going to deliver soaring growth. But for dividend-seeking investors, that's not a problem at all.
AbbVie (ABBV -0.63%) pays the most attractive dividend of the three, with a juicy yield of close to 5%. The big pharma company also belongs to the elite group of stocks known as Dividend Aristocrats, members of the S&P 500 index that have increased their dividends for at least 25 consecutive years.
The company's top-selling drug Humira faces biosimilar rivals in the U.S. beginning in 2023. Is that something for dividend investors to worry about, considering that Humira generated nearly 58% of AbbVie's total revenue last year? I don't think so.
For one thing, Humira is now a smaller (although still important) part of AbbVie's portfolio now that the company has completed its acquisition of Allergan. Also, AbbVie's lineup and pipeline include fast-rising stars that should further reduce its dependence on Humira.
AbbVie's blood cancer drugs Imbruvica and Venclexta rank at the top of that list. It also has two new immunology drugs, Rinvoq and Skyrizi, that will take the baton from Humira. These and other drugs should enable AbbVie's dividends to keep flowing and growing for a long time to come.