If you feel like inflation is outpacing the cost-of-living adjustment (COLA) planned for everyone's Social Security checks beginning in January, you're not being unreasonable. It's a fact of life that too many must-have things rose in price more than the 5.9% COLA increase scheduled for 2022.
The good news is, having a stake in the right dividend stocks can help many investors more than offset this likely shortfall.
Let's take a look at four great dividend stocks that can supplement Social Security and compensate for the loss, paying special consideration to things like current payouts and dividend reliability.
1. Crown Castle
Dividend yield: 3%
Crown Castle International (CCI -0.93%) isn't a household name. But there's a good chance you or someone in your household relies on Crown Castle's service without even knowing it.
This company owns more than 40,000 cellphone towers and around 80,000 miles worth of fiberoptic cable, leasing access to its infrastructure to more familiar outfits like AT&T and Verizon. As long as you and other consumers need to remain connected to the rest of the world, the telco industry will need a means of keeping those connections in place. This makes for very reliable recurring revenue for Crown Castle.
That reliable revenue has allowed Crown Castle to dish out a dividend in every quarter since 2014 and to raise its annual payout every year since 2018. The yield of 3% may not be thrilling, but given its relatively low risk and secure future, that's a fair payout.
Dividend yield: 3.8%
Investors keeping close tabs on consumer staples stocks likely know that these companies just aren't paying much these days. Procter & Gamble, for instance, currently sports a lackluster yield of 2.2%, while Clorox's yield of 2.7% isn't all that much better. Neither outfit has beefed up its dividends much recently either.
There are some stocks within the ultra-reliable consumer goods sector, however, that are worth owning for income-minded investors. Chief among them right now is the U.K.'s Unilever PLC (UL 0.36%), sporting a dividend yield of more than 3.8%.
You may be more familiar with the organization than you realize. Unilever is parent to well-known brands including Hellmann's mayonnaise, Dove soap, and Vaseline, just to name a few, as well as a slew of foreign brands most North American investors probably haven't heard of. Unilever's international reach, in fact, is a big part of why it should be so attractive to North American investors.
The company's top line has been shrinking in recent years, but that's mostly the result of divestitures intended to clean up its portfolio so it can operate more efficiently and cost-effectively. It hasn't hurt Unilever's ability to pay its quarterly dividend, which has nearly doubled over the course of the past 12 years.
Dividend yield: 3.4%
Citigroup (C 1.17%) isn't just a big bank. It's one of the country's biggest, boasting an asset base of $1.7 trillion. It's also one of the highest-yielding big banking stocks, with a current dividend yield 3.4%.
It's been an uncomfortable industry for investors to get behind of late. Ultra-low interest rates have minimized profit margins on lending, yet the rate increases the Federal Reserve's governors are calling for between now and the end of 2024 may be paired with an economic headwind that crimps demand for new loans.
This concern, however, isn't exactly merited. While the firm inflation prompting those rate increases is expected to persist for the foreseeable future, banks more often than not fare better than expected when inflation remains reasonably tamed. There's little doubt the Fed is going to take whatever action is needed to tamp down the lingering impact of all the ultra-cheap dollars printed out over the course of the past couple of years.
In other words, banks are going to be fine. You may even see their dividend payment growth accelerate just a bit. Citigroup's certainly got some room to make this happen. The bank's third-quarter income of $2.15 per share easily covers the current quarterly payment of $0.51 per share.
Dividend yield: 2.7%
Finally, add drugmaker Pfizer (PFE) to your list of top stocks to help supplement your Social Security income in 2022.
Most of Pfizer's recent media coverage has focused on its COVID-19 vaccine, and rightfully so. The company anticipates roughly 1 billion total doses of the drug will be administered in 2021, with another 1 billion expected in the coming year. And, with the pandemic still going strong, it remains the top-of-mind consideration for pretty much everything companies and consumers need to do.
The coronavirus pandemic will hopefully wind down eventually, however, and this pharmaceutical giant is no less prepared for that environment than it was back in 2019 before the pandemic took hold. Blockbuster drugs like pneumonia vaccine Prevnar, cancer-fighting Ibrance, blood thinner Eliquis, and arthritis treatment Xeljanz are all part of Pfizer's portfolio. Then there are the 94 different drug trials currently underway, 29 of which are in phase 3, nearing their submission to the FDA for final approval. This depth of revenue-bearing pharmaceuticals sets the stage for long-lived earnings that support continued dividend payments.
To this end, the current quarterly dividend of $0.40 a share is only a fraction of the fairly typical $1.34 per share the company earned in Q3. Pfizer has also faithfully paid a dividend every quarter since 1980, and doubled its payout in just the past decade.