Whether you're working towards retirement or have already reached that point, investing is a great way to set your future self up for some pay raises. Inflation, which makes the cost of living increase over time, is a never-ending problem, and Social Security can only go so far toward paying the bills. Getting a pay raise once in a while isn't a luxury in retirement -- it's essential!
Investing in stocks, especially those with histories of boosting their dividends over time, can help in a big way. Three quality businesses that can supplement Social Security income both now and later are Comcast (CMCSA -2.98%), Broadcom (AVGO -1.37%), and Apple (AAPL 0.23%). Let's find out a bit more about these companies.
1. Comcast: Internet and communications are modern utilities
Cable communications giant Comcast is a dividend machine. Adjusted for a 2-for-1 stock split back in 2017, the company's quarterly payout has increased some 340% over the last decade -- including a 9% hike in the dividend to kick off 2021. Not bad considering the pandemic-fueled recession of 2020 put a damper on some areas of the media conglomerate's business.
Specifically, Comcast's NBCUniversal segment had a tough time. Theatrical releases have been all but sidelined for over a year, and its theme parks are only now just getting up and running again. It's also steadily losing cable TV subscribers as households move to streaming services, and NBCUniversal's Peacock streaming offering has gained limited traction thus far to offset those losses (42 million sign-ups in the U.S., but most are the free ad-supported tier). Nevertheless, revenue in Q1 2021 still increased 2.2% year over year to $27.2 billion. Free cash flow, from which dividends are paid, increased 59% to $5.3 billion.
The company's internet service has been key to this increase. Total broadband internet customers were at 31.0 million at the end of March, up from 29.1 million a year ago right at the start of the pandemic. Internet connectivity is a modern staple, and this utility-like provider has a durable base of customers to work with. And things are about to get even better for Comcast for the rest of 2021. Theme parks and movies are coming back, its new Beijing Universal Studios park is opening this summer, and NBC will be handling the coverage of the Tokyo Summer Olympics. Revenue and profitability are poised to resume their steady climb higher.
Comcast stock currently trades for a reasonable 17 times trailing 12-month free cash flow, and the dividend yields 1.8% a year. However, paying out that dividend used up just $1.08 billion in cash in Q1, an amount handily covered by free cash flow generated. There's plenty of room for this payout to continue to grow even more over time.
2. Broadcom: Leading chip technology with a side of stable software income
Broadcom is another rock-solid dividend play. The semiconductor giant provides hardware for all sorts of tech, from smartphones to data centers to automotive and industrial equipment. In recent years, it's added a complementary software business specializing in enterprise management and security. Between this and its leading chip designs, Broadcom generates massive amounts of free cash flow to fund its dividend, which is currently yielding 3.1% a year as of this writing.
In its latest quarterly report, Broadcom reported a 20% year-over-year increase in its semiconductor business, helping end a slump brought about by the U.S.-China trade war and pandemic lockdowns. The far more stable software business (which is subscription-based, versus more variable chip sales) increased only 4% from a year ago, but the inclusion of software continues to boost Broadcom's bottom line. Overall, total sales were up 15% and free cash flow was $3.44 billion, for an incredible free cash flow profit margin of 52%.
Broadcom management expects a similar pace of growth to last through the rest of this year. And longer-term, this company is benefiting from secular trends like cloud computing, vehicle electrification and autonomy, and the Internet of Things. The semiconductor industry is historically a cyclical one, with sales ebbing and flowing based on demand for chips. But Broadcom's diversified business is as stable as they come, and enterprise software will help smooth out those ups and downs along the way.
Plus there's a good chance this dividend will pay more in a few years than it does now. Business is growing, and the payout to shareholders used up less than half of free cash flow generated in the last quarter. Broadcom is a top income stock, and at just 16 times trailing 12-month free cash flow, it's on sale right now too.
3. Apple: The largest stock keeps getting better
Apple may not be the highest yielding of stocks -- its dividend yields just under 0.7% a year as of this writing. But what it lacks in income generation, it makes up for in a big way with sales growth, dividend pay increases, and share repurchases.
The iPhone helped blow away all expectations in the last quarter ended in March 2021. Total sales grew 54% year over year to $89.6 billion. The dividend was increased by 7%, and still only used up 11% of free cash flow generated so far in the 2021 fiscal year. And Apple just added another $90 billion to its share repurchase plan, which equates to 4% of the company's sizable $2.2 trillion market cap. Share repurchases help boost earnings per share, which over time helps support a higher share price.
There's always something new at Apple. Right now, the iPhone 12 -- the first featuring 5G network connectivity -- is responsible for the lion's share of growth. Apple also has a burgeoning health and wellness business powered by the Watch, and there are rumors it's working on an electric car. This company has benefited like no other from the mobile computing secular growth trend, and it doesn't look to be slowing down anytime soon. This makes Apple one of the most valuable blue-chip companies in the world, one that should provide steadily rising income for many years to come.
Best of all, Apple can be purchased for a downright reasonable price right now given its upward momentum in the wake of the pandemic. Shares trade for 25 times trailing 12-month free cash flow. If you somehow haven't purchased Apple stock yet, or already own it and are looking for a place to stash some cash, this tech giant is a timely buy right now.