If you are approaching retirement or have already put the daily grind behind you, supporting your lifestyle is likely one of your top concerns. One way to do that is to generate income from your stock investments.
Ideally, you'll want to make sure the dividends are secure. Not only are the below companies reliable payers, but they are Dividend Kings. These are members of the S&P 500 that have increased their payments for at least 50 straight years, putting both businesses in exclusive company.
Let's take a look at each company to see why you can count on it to contribute to your retirement income.
When 3M (NYSE:MMM) raised its March quarterly dividend from $1.44 to $1.47, that made it 62 straight years that the board of directors has instituted an increase. At the current share price, the dividend yield is 3.6%.
It makes a lot of well-known products, including various tapes and adhesives, transportation and electronic components sold to manufacturers, and healthcare products like medical and surgical supplies. Then, there's its consumer business, which includes Scotch and Post-it branded goods.
Granted, these aren't the most exciting businesses, but they generate a lot of cash flow. 3M's operating cash flow was $5.6 billion for the first nine months of the year. After subtracting $1.1 billion for capital expenditures, there was plenty of free cash flow to pay the $2.5 billion of dividends.
Procter & Gamble
Procter & Gamble (NYSE:PG) raised its quarterly dividend by a sharp 6% earlier this year to about $0.79. This works out to a 2.3% yield. Paying dividends is so important to the company that it has done so for the last 130 straight years, including raising the payment for the last 64 years.
This means it has increased its dividend through all kinds of conditions, including wars, recessions, hyperinflation, stagflation, and, most recently, the COVID-19 pandemic. Given this, it is hard to imagine Procter & Gamble cutting its dividend.
It's no wonder that the company has built up an impressive dividend track record with its stable of trusted everyday household products that have steady demand even in economic downturns. These include shampoos, deodorants, razors, toothbrushes, toothpastes, detergents, cleaners, diapers, and paper products such as towels and toilet paper. Procter & Gamble sells these under the Head & Shoulders, Luvs, Gillette, Always, and Pampers brands, to name just a few.
In its first fiscal quarter, which ended on Sept. 30, Procter & Gamble's free cash flow was $3.9 billion. This was plenty to pay the $2 billion of dividends. Looking back over fiscal 2020, there was $14.3 billion of free cash flow that handily covered the $7.8 billion of dividends.
With these two companies, you can feel confident that you'll receive steady and growing dividend income streams. That's a reassuring thought that should give you more freedom to pursue your interests in retirement.