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3 Stocks for a Better Retirement

By Selena Maranjian - Apr 21, 2021 at 5:45AM

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Want dividends? How do yields of 4.8% and 5.8% sound?

When it comes to investing for your retirement or investing in retirement, it's hard to beat dividend-paying stocks. No matter what the overall economy is doing, as long as a dividend-paying company is healthy, it will keep sending you regular infusions of cash. That money can be used for expenses in retirement or to buy more shares of stock.

Better still, good dividend-paying stocks are also likely to see their share prices appreciate over time, giving shareholders another way to profit from them.

Three rockets in flight together.

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Here are three dividend payers to consider for your long-term portfolio. See if any or all of them pique your interest.

1. Waste Management

Waste Management ( WM 2.24% ), as you might have guessed by its name, is a garbage specialist. If you've seen its name emblazoned on lots of trucks in your town, you may have (correctly) surmised that it's a big garbage specialist. Indeed, with a market value recently near $57 billion, it's "the leading provider of comprehensive waste management environmental services in North America, providing services throughout the United States and Canada" -- and it's very involved in recycling and energy recovery, too, with multiple landfill gas-to-energy facilities. (Its fleet features more than 8,900 alternative-fuel vehicles.)

This is a wonderful business to invest in because it's so dependable. Whether the economy is booming or busting, there will always be garbage to collect -- along with continued calls for recycling and generating green energy, in order to protect the planet. Waste Management's business is diversified, serving residential, commercial, and industrial customers, and it gets some 20% of its revenue from landfills, among other operations.

Waste Management's dividend recently yielded about 1.7%, and it has increased that payout by an annual average of 7% over the past five years. Its payout ratio of about 62% shows that it's only spending about 62% of its earnings on dividends, leaving room for other uses and further dividend growth.

2. W. P. Carey

W. P. Carey ( WPC 3.48% ) is another attractive business. It's structured as a real estate investment trust (REIT), which means that in exchange for favorable tax treatment, it must pay out at least 90% of earnings as dividends. Like a typical REIT, it owns lots of properties and profits by renting them out. Unlike many REITs, it's quite diversified, with a portfolio of more than 1,200 industrial, warehouse, office, retail, and self-storage properties (plus 10% of properties in an "other" category), many of which feature long-term net leases with built-in rent escalators.

Attesting to its quality, the company performed quite well during the pandemic, with its worst monthly collection rate only dipping to 96%, in May of 2020.

W. P. Carey's dividend recently yielded 5.8%. It has hiked that payout by an annual average of only about 1.5% over the past five years, which may not be an exciting growth rate, but it's already offering a very solid yield. With some 22 consecutive years of dividend increases, the company is likely to end up added to the roster of Dividend Aristocrats -- companies that have hiked their payouts for at least 25 years in a row.

3. AbbVie

Pharmaceutical giant AbbVie ( ABBV 1.36% ), with a recent market value near $191 billion, is another promising company that can help you build a better retirement. It's a dividend-paying company, recently yielding 4.8%. It has upped its payout by an annual average of 18% over the past five years, too.

The company's drug lineup stars blockbuster Humira (for Crohn's disease and other indications), Skyrizi (for psoriasis), and Rinvoq (for rheumatoid arthritis), along with antipsychotic drug Vraylar and migraine drug Ubrelvy, among others. The stock is being held back to some degree because of worries over Humira, which has a looming patent expiration.

But those worrying about that may be forgetting that AbbVie has plenty of formulas in its pipeline, some of which are likely to eventually win approval from the U.S. Food and Drug Administration (FDA). And some of its drugs already on the market, such as Skyrizi and Rinvoq, may win approval to treat additional indications.

With its price-to-sales ratio, price-to-cash-flow ratio, and forward-looking price-to-earnings (P/E) ratio all recently below their five-year averages, AbbVie stock looks undervalued -- while offering a tantalizing dividend yield, too.

These are just some of the many dividend-paying stocks out there that could serve you well as you save and invest for retirement -- or if you're already investing in retirement. If any of them intrigue you, take a closer look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$117.49 (1.36%) $1.58
Waste Management, Inc. Stock Quote
Waste Management, Inc.
WM
$164.10 (2.24%) $3.59
W. P. Carey Inc. Stock Quote
W. P. Carey Inc.
WPC
$78.13 (3.48%) $2.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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