You'll no doubt feel a flood of emotions as your working days come to a close. These likely range from glee to trepidation. After all, you will no longer have a regular salary.
If you're eligible, Social Security payments can help. But the average monthly payment is less than $1,700, making it likely that you will also need to rely on your investments to fully enjoy your retirement years. And as recent events have shown, high inflation can creep up on you as well. That makes it important to invest in stocks that pay higher dividends to help offset increasing cost-of-living expenses.
Fortunately, these two stocks have proven their mettle, with one being a Dividend King and the other on pace to become one in a couple of years. This is an elite group of companies that have raised dividends for at least 50 years.
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Walmart
Walmart's (WMT -0.35%) simple focus on keeping prices down continues to resonate with customers. Opening its first discount store 60 years ago, the company is now the world's largest retailer. The chain serves 230 million customers weekly, and management continues to invest in omnichannel and supply-chain initiatives that allow people to buy goods however they want.
With customers clamoring for Walmart's low-priced merchandise, the company generates plenty of free cash flow (FCF), which was $11.1 billion in the latest fiscal year. That left lots of cash to pay the $6.2 billion of dividends. This was for the period that ended on Jan. 31.
The company isn't sparing capital expenditures in a way that will hurt the its competitiveness and profitability later on, either. Last year's FCF came after spending $13.1 billion on items like supply-chain, automation, and customer-facing technology that will allow Walmart to keep up with online companies like Amazon (AMZN -1.35%).
The board of directors has raised the dividend annually since first making a payment in 1974. Last month, the company announced a $0.01 increase to $0.56 a quarter. Walmart's stock has a 1.6% dividend yield, more than the S&P 500's 1.3%.
Procter & Gamble
Procter & Gamble (PG 0.08%) sells goods under popular brands like Head & Shoulders, Old Spice, Gillette, Crest, Downy, and Pampers. People keep buying products like shampoo, deodorant, razors, and diapers, even if they lose their jobs.
The company offers its goods across the globe, providing geographic diversification. And in many places, P&G has the highest market share.
The business generates a healthy amount of FCF too -- to the tune of over $8 billion in the first half of the year. Procter & Gamble's FCF easily covered the $4.4 billion of dividends that it pays shareholders.
Helped by its strong product offerings, the company has raised dividends for 65 straight years. The last time the board of directors boostes the quarterly payment was April 2021 when it announced a $0.07 increase. Given its track record and performance, I expect the company to increase its dividend again soon. Procter & Gamble stock currently has a 2.3% dividend yield.
As you shift your investments to a greater focus on income over growth, ensuring companies can continue making payments should be your priority. Walmart and Procter & Gamble not only have the ability to pay stable dividends, but both have put themselves in a position to continue increasing payments.
