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Retired? 5 Stocks Yielding 5% to Buy in 2022

By Justin Pope – Jan 13, 2022 at 10:32AM

Key Points

  • High-yield dividend stocks are an excellent income tool for retirees.
  • You can find 5% yields in pipeline, tobacco, and REIT stocks.
  • These five stocks can afford the big dividends they dish out.

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Retirement is about protecting your nest egg, and living off it. These high-yield dividend stocks can help you.

Your golden years are about enjoying life, not stressing about living. Building passive income is the name of the game, and traditional tools like savings accounts don't pay the type of yield they used to.

Fortunately, investors can use a diversified mix of high-yielding dividend stocks to help put some money in their pockets. Here are five stocks that yield more than 5%, making them income-producing ideas worth considering.


Oil and gas may be hot right now, but Canadian energy infrastructure company Enbridge (ENB 0.18%) has excelled for years. The company is a Dividend Aristocrat, having raised its dividend for 26 years while offering a generous 6.7% yield. Enbridge's primary business is the transportation and distribution of oil and natural gas across North America. In other words, it moves these extracted resources to refineries, storage, and exports. 

Mature couple enjoying the outdoors.

 Image source: Getty Images. 

Oil prices can significantly impact the profits of many oil and gas companies, but Enbridge is a pipeline, or "midstream," company because it transports oil and gas. The company is paid based on the volume that flows through its pipes, much like cars through a toll booth.

A volume-based business model makes Enbridge more stable than many oil and gas companies; people need these resources, whether prices are up or down. Management is guiding for $4.70 to $5 per share in cash flow for the full 2021 year, and the resulting dividend payout ratio is manageable at 67%.

Kinder Morgan

Staying in the energy infrastructure space a little longer, Kinder Morgan's (KMI 1.21%) 83,000 miles of pipelines carry natural gas, gasoline, crude oil, and carbon dioxide all over the U.S. The dividend currently yields a robust 6.3%, making it an excellent passive income asset for retirees.

Investors might notice that Kinder Morgan's dividend history isn't as clean as Enbridge's. The company had a heavy debt load in 2016 that forced management to cut the dividend to invest money into the business.

Fortunately, Kinder Morgan's balance sheet is a lot healthier today than back then. Its cash flow covers the dividend; a payout of 80% leaves about $900 million left over, which management uses to buy back shares.

Altria Group

Tobacco stocks are a staple for many dividend investors, and Altria Group (MO 0.27%) is arguably the king of the mountain. It owns and sells the Marlboro brand of cigarettes throughout the U.S. The company is a Dividend King, having raised its dividend for 51 consecutive years, and it offers a generous dividend yield of 7.2%.

Investors could be skeptical of Altria's ability to continue funding its dividend. The smoking rate in the U.S. has significantly declined for decades, and the company's cigarette volumes decrease each year.

However, tobacco is an addictive product, and Altria capitalizes by slowly raising cigarette prices each year, just enough to offset the declines in volume. The company also has a growing stable of non-cigarette business segments, including leading brands in chewing tobacco, a nicotine pouch product line, as well as minority investments in Cronos Group and Anheuser-Busch InBev. It should be noted though that the majority of Altria's income currently comes from cigarette sales. 

Altria will not knock your socks off with growth, but it squeaks out just enough to raise the payout each year. Its dividend payout ratio is a comfortable 78% of cash flow, which Altria can afford because its business doesn't require a lot of money to maintain itself.

Iron Mountain

The world continues to go digital, and businesses no longer refer to filing cabinets of data, they search their computer databases for it. However, the actual paper copies still exist in many cases, which is where Iron Mountain (IRM 2.16%) comes in. Iron Mountain is a real estate investment trust (REIT) that owns and manages facilities where customers store data, including physical records, data centers, and more.

Iron Mountain is the de facto leader in physical file storage, serving 95% of Fortune 1000 companies, and has a 98% customer retention rate. Management has raised the dividend for the past nine years, which currently yields 5.3% on the current share price.

Iron Mountain's legacy business could slowly crumble over time with digital and cloud storage quickly growing. However, management has proactively invested in Iron Mountain's transition to data centers, so investors should know that the company is working toward a digital future. The dividend payout ratio is roughly 50% of cash flow (called "funds from operations" for REITs), so retirees can count on payments to keep coming.

Omega Healthcare Investors

There are currently 46 million elderly adults (aged 65 or older) living in the U.S., a number that could almost double to 90 million by 2050. Omega Healthcare Investors (OHI 0.96%) is a REIT that focuses on skilled nursing facilities, like retirement homes and assisted living.

The company has a strong dividend track record, having raised its payout for 18 years. The dividend currently yields 8.6%. Even though skilled nursing is expensive, most occupants receive government funding through Medicare or Medicaid. 

Unfortunately, the COVID-19 pandemic has lowered occupancy for many of Omega's tenants. Almost 9% of Omega's tenants are struggling to meet rent as a result. This could negatively impact the company in the short term, though an aging U.S. population should be a long-term growth opportunity. The dividend payout ratio is 82% right now, so investors will want to monitor this if COVID-19 continues to create challenges for Omega Healthcare.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool owns and recommends Enbridge, Iron Mountain, and Kinder Morgan. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.

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