When you're investing to boost your Social Security income in retirement, it makes the most sense to invest in companies that are capable of performing consistently and paying out for years and years, so that you don't need to worry about managing your positions. In this vein, fast growth is less important than being able to keep paying out dividends regardless of how good or bad the economy is doing.
But you'll probably want to pick a few businesses that pay a large enough dividend to make an appreciable difference to your life given the amount of money that you can invest, so low-yield stocks might not be a great fit. Let's look at a pair of passive income stocks that have the stability and decent yields you'll need to bolster your retirement benefits without putting too much at risk.
Viatris (VTRS 1.27%) makes a cornucopia of generic medicines like Zoloft, Xanax, Lipitor, and Viagra. Because people need their medications for many years on end, it generates relatively stable revenue over time, and in 2021 it brought in more than $17.8 billion in revenue.
Plus, it's constantly working to commercialize generic versions of drugs that are newly off-patent, and by 2026 it'll likely have around nine new products in play. This should ensure that its top line keeps growing through the end of the decade and beyond -- and it'll also pave the way for its dividend to grow.
At the moment, its forward dividend yield of 4.3% is quite attractive, and its payment is likely to keep rising alongside its cash flow. Investors should also expect its share repurchasing program to continue, driving up their returns in the process. But it's important to recognize that Viatris is still a company that's finding its footing in the world.
As it's originally a spinoff of Pfizer, the company is still realizing cost synergies and reducing redundancies from the separation, which could make for $1 billion in savings by 2023. Aside from that, the current macroeconomic situation isn't doing Viatris any favors, especially in emerging markets, where its quarterly net sales dropped by 10% year over year in Q2.
Nonetheless, its recent growing pains and economic struggles are unlikely to stick around forever, and both contribute to its high dividend yield at the moment. So it's attractive time to buy for the purpose of its passive income potential.
AbbVie (ABBV 0.76%) develops new medicines for applications in immunology, neurology, cancer, and aesthetics, and it's also a dividend stock par excellence. Thanks to sales of its drugs, it brought in nearly $56.2 billion in revenue last year, and from 2013 to 2021, its diluted and adjusted earnings per share (EPS) rose at a compound annual growth rate of 19%, which is quite good.
Next year, the company plans to commercialize eight of its medicines while advancing many more through clinical trials and submitting a handful of data packages to regulators for consideration. And all of the above is more or less AbbVie's long-term norm, so it's a fairly stable business despite the ongoing need to develop new drugs and go through the expensive clinical trial process.
At the moment, its forward dividend yield is near 4%. Dividend growth is a priority for management, and its payout has risen by 120% in the past five years thanks to annual hikes. What's more, its yield may soon rise further, depending on what happens in 2023, when its arthritis medicine Humira will lose its patent protection.
Given that Humira was responsible for more than $5.3 billion in Q2 alone, losing some of its contribution to competition from generics is going to hurt AbbVie's share price. That'll be (temporarily) painful for shareholders, but it'll also present an opportunity to buy shares at a higher yield and lower price than would be available otherwise.
Management expects the company to return to growth thanks to newly commercialized medicines coming online by 2025 -- and people who bought shares for the passive income potential in 2022 and 2023 will be the biggest beneficiaries when it does. Though there is a risk that revenue growth takes longer to return than what management hopes, so long as AbbVie keeps making new medicines -- and it will -- it'll eventually recover.