The words "risk" and "inflation" are two words no retiree (or almost-retiree) wants to hear. Retirement is all about preserving what you've spent your working years building, and you want to feel confident that your money will be there for you until you no longer need it.
Blue-chip dividend stocks can be great investments -- these companies have demonstrated decades of operating excellence, and pay dividends that give you income to live off.
Don't worry if you're new here or unsure where to start looking. I've highlighted five bona fide winners below that you can consider for your retirement portfolio.
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1. McDonald's Corporation
Fast-food restaurant chain McDonald's Corporation (MCD 0.37%) has revolutionized the quick-service food industry since the company's founding in the 1950s. Today McDonald's has more than 38,000 locations across the world. The company operates a franchise model, making its money from rent and sales royalties, while restaurant owners (franchisees) pay for maintenance and store operations.
The company is a historic dividend stock; McDonald's has paid and raised a dividend for 46 years. Investors can enjoy a 2.2% dividend yield and a business that's grown earnings per share by nearly 7% on average each year over the past decade.
2. Lowe's Companies
Home improvement retailer Lowe's Companies (LOW 0.63%) dominates the home retail category across the United States along with arch-rival Home Depot. It sells appliances, materials, tools, and hardware to homeowners and professional contractors. Housing is the largest purchase most consumers make in their lifetimes, and they often spend money improving and maintaining their homes.
Lowe's has benefited from this consistent demand over the years, and the company is a Dividend King, with a dividend growth spanning 59 years. The hot housing market has been great for business -- Lowe's has grown EPS by an average of 24% annually over the past ten years.
3. Procter & Gamble
If you look closely at the soaps, lotions, laundry detergents, and other household staples you buy each month, you may see Procter & Gamble (PG 0.54%) on the label. The company sells thousands of products under hundreds of brand names, including Crest, Tide, Pampers, and Gillette. The business has been around since the early 1800s because consumers buy its products often, regardless of whether the economy is doing good or bad.
Steady businesses make great dividend stocks, and Procter & Gamble is no exception. The stock is also a Dividend King and carries one of the longest dividend growth streaks at 65 years. The company isn't rapidly growing -- EPS has averaged just 3% annual growth over the past decade -- but finding a more reliable business to own could prove a challenge.
4. Altria Group
Smoking rates have been declining in the United States for decades, but that hasn't stopped Altria Group (MO 1.91%) from performing well for shareholders. The company owns and sells leading tobacco brands in the United States, most famously its Marlboro brand of cigarettes. Pricing power has enabled Altria to raise its prices to offset declining cigarette volumes and eke out enough growth to increase the dividend for the past 52 years.
The company made a blunder in overpaying for embattled electronic cigarette maker Juul, which included write-downs that hurt bottom-line profits. However, the company's operating profits have grown 6% annually over the past decade. Altria offers a generous dividend that yields 6.7% at the current share price.
5. UnitedHealth Group
Healthcare is a multi-trillion dollar industry worldwide and a pillar of society. UnitedHealth Group (UNH 1.61%) provides care to 148 million people through health insurance, professional services, and products through various partnerships with government bodies, employers, and consumers themselves. It's a massive company that did $285 billion in revenue in 2021 and has a market cap of $455 billion.
Firmly wedged into the healthcare system, UnitedHealth benefits from increased spending over time. For example, total healthcare spending in the United States increased 4% annually from 2010 to 2019. UnitedHealth has grown revenue by 11% per year over the past decade and EPS by 14% per year over the same time. Investors also can enjoy a dividend that yields 1.2% at the current share price.
Wrapping up
Each company on this list has a decades-long record of steady growth and profits that enable management to pay shareholders a reliable dividend. These stocks can preserve and grow your nest egg while providing usable income to cover living expenses if you're about to enter your retirement.
These businesses are deeply entrenched in stable industries, and have thrived through good and bad times. This list could be a great starting point for building a retirement that delivers profits and peace of mind.
