Many retirees are looking to utilize a well-constructed portfolio to bring an income stream and safety for capital that took many years to build. Part of executing on that plan involves remembering that even at the low levels seen in recent years, inflation can chew away at wealth over time and many people still have decades to navigate in retirement. 

Dividends are never guaranteed and one of the three companies discussed in this article has proven that point in recent years. But being diversified in your dividend holdings means that sometimes a stock will take a short-term hit from outside economic forces. Diversity lets you manage that risk.

With that said, Target (NYSE:TGT), McCormick & Co. (NYSE:MKC), and Kinder Morgan (NYSE:KMI) are three companies that offer a nice diversified balance of yield, growing dividend payments, and businesses that should continue to prosper and help retirees maintain an income stream. 

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1. Target: The newest Dividend King

Target was progressing on its digital strategy prior to the pandemic, and the stars aligned for the company with its omnichannel approach and its role as an essential business throughout the crisis. The retailer said it gained $9 billion in market share over the course of 2020, as its year-over-year sales growth exploded by $15 billion. That figure was higher than the increase in sales the company experienced over the prior 11 years combined. 

Coming off the strong year, Target just announced a 32% increase in its quarterly dividend, which will make 2021 the 50th consecutive year the company has increased the payout. That will put Target on the elite list of fewer than 30 companies known as Dividend Kings. While there's no guarantee that Target's dividend increases or even continues beyond 2021, retirees can feel more secure with a track record from a company like Target.

And that reliable income comes with underlying growth in the business expected to continue. Even after realizing comparable store sales growth of more than 20% in 2020's pandemic-boosted third and fourth quarters, Target says it still expects to see positive comparable sales growth on top of that in this year's final two quarters.

The stock yields about 1.5% after the large dividend increase, and retirees can likely count on that income. Target paid out $340 million in dividends to shareholders in the first quarter, and even with an increased payout from the higher future dividend, the company brought in more than twice what it will need for that payment in free cash flow in the first quarter. For retirees, this is an investment with an appealing combination of both income and growth. 

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2. McCormick: Just spicy enough

McCormick is another growing company with a small, but reliable dividend. Taking share price and dividends together, the company's total return has exceeded that of the S&P 500 over the past three- and 10-year periods. The spice and flavors maker also offers some built-in stability from its business model. That may be even more important to some, making outperformance additional gravy.

McCormick's business model has the advantage of balancing brands aimed for consumer home use and commercial solutions that thrive when people go out for travel and entertainment. That approach proved prescient when the economy shifted dramatically due to the pandemic. But even in more normal times, it creates stability for the company and its shareholders. 

With a strong economy, McCormick can see strength in both segments. For its fiscal 2021 first quarter that ended Feb. 28, overall sales grew 22%, with positive contributions from both sides of the business. The current environment allowed the company to boost its sales outlook for full-year 2021 to an estimated growth rate of 8% to 10%, and it also raised its operating profit and earnings-per-share growth outlook.

McCormick also announced a 10% dividend increase over the 2020 level. The 132-year-old company has now paid dividends to shareholders for 97 consecutive years. The stock's previous performance shows it can beat the market while also growing the income it provides shareholders through an increasing dividend. That is exactly what retirees want to hear.

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3. Kinder Morgan: Diversify your cash flow

Rounding out this group of solid stocks for retirees is Kinder Morgan, owner and operator of oil and natural gas pipelines and other industrial infrastructure. The recent and medium-term history of this stock is a good lesson and reminder for income investors. The company -- and its investors -- assumed a steady flow of recurring income from its network of pipelines. Most of its customers agree to take-or-pay or fee-based contracts, bringing utility-like income. In addition, as long as fuel flowed through the pipelines, Kinder Morgan theoretically wouldn't be affected by the price movements of energy fuels. 

But management grew the company too fast, taking on too much debt in the process. After long-term debt grew to over $40 billion, the company cut its dividend by 75% beginning in 2016. The stock price plummeted as investors looking for income needed to reallocate, taking heavy capital losses by selling their shares. The lesson there is to acknowledge risks that come with all equities, including income names. 

But having a diversified mix including Kinder Morgan makes sense now. After having put effort into better managing debt in 2017, the company ended that year with a net debt-to-adjusted-EBITDA ratio of 5.1 times against a goal of 5.0 times. Fast forward to 2021 and the goal had been lowered to 4.5 times net debt-to-adjusted-EBITDA, and the company now expects to close the year below 4.0.

It has also raised its dividend along the way, giving investors a yield of almost 6% on the recent share price. 

KMI Dividend ChartKMI Dividend data by YCharts

Kinder Morgan has generated $1.9 billion of free cash flow after dividends over the last five years, currently holds $1.3 billion in cash, and has almost its full $4 billion credit facility still available. Investors looking for income today could add this stock to a diversified portfolio and should be able to look for steady and growing dividend income going forward from here. 

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.