Most Americans hope to have enough income to make it through their retirement. Ideally, Social Security won't expire before they doand their retirement accounts will provide a bit extra so they won't have to move in with their kids. Sadly, the dream of sufficient retirement income is just that for most Americans: a dream. However, what if we told you that adequate retirement income doesn't have to be a dream?
We asked our analysts for their favorite income stocks for retirement. Here are three dividend stocks they believe could turn their dream retirement into a reality.
Matt DiLallo: Enterprise Products Partners (NYSE:EPD) won't win any awards for being a cool company to own. However, the oil and gas pipeline and processing company has been an investment fit to convert retirement dreams into reality for several years now. Just look at the company's long-term stock chart:
As we can see in that chart, this compounding machine's total return is 1,800% over the past two decades when dividends are reinvested, turning a $1,000 investment into $18,000 over that time frame. Even without reinvesting dividends the initial investment still grew to over $5,000 as the quarterly income stream grew. In fact, the company has raised its payout to investors for 42 straight quarters and still has plenty of growth ahead.
With a current yield just under 4.2% Enterprise Products Partners can provide current retirees with solid income for years to come. Meanwhile, it can also provide those of us with dreams of an eventual retirement with quite a compounding machine. This is why it is one of the bedrock stocks in my own portfolio as I dream of a nicer retirement than the one the Social Security Administration is offering.
- It has the most complex refineries among U.S. independent refiners, which means it can buy heavy crude oil, which is cheaper but harder to work with than light crude, and transform it into a high percentage of desirable products, such as gasoline.
- It has developed a strong crude supply infrastructure to ensure those disadvantaged crudes reach its refineries.
- It has been a disciplined in its capital allocation and has looked to make acquisitions when the market is down and its peers are in financial distress.
Matt DiLallo owns shares of ConocoPhillips, Enterprise Products Partners, Phillips 66, and Seadrill. He and his wife currently have to drive 30 minutes to go for a walk on the beach. In retirement, they hope to shorten the trip to a walk out the back door.
Tyler Crowe owns shares of Enterprise Products Partners and Seadrill and wants to buy a vineyard in retirement, where he will probably spend his golden years trying to figure why all his wines taste like vinegar.
Jason Hall owns shares of Seadrill and his dream retirement involves lots of travel. He's sure to visit Tyler's vineyard, even if he has to say the wine is good.
The Motley Fool recommends Enterprise Products Partners and Seadrill. The Motley Fool owns shares of Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.