15 Dividend Stocks to Supplement Social Security

15 Dividend Stocks to Supplement Social Security
A valuable component of a diversified investment strategy
Dividend stocks are popular with many investors for a number of reasons. These stocks can provide a key source of additional income or serve as a separate source of cash flow to reinvest into your portfolio. If a company raises its dividend quarterly or annually, as is often the case, your dividend payouts can grow considerably over time and boost your overall assets. Dividend-paying stocks can also help you to reduce the impact of market volatility on your portfolio and protect your broader investments.
If you’re looking to supplement your Social Security income with dividend payments, these are 15 stocks you should consider adding to your investment portfolio.
The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
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1. Apple
Behemoth tech stock Apple (NASDAQ: AAPL) has remained a dominant force in the stock market throughout this year as demand for its products has only increased amid the pandemic. Although the company’s dividend yields just around 0.7% at the time of this writing, it’s important to consider the strength of the company’s core businesses and balance sheet that signal the potential for future growth.
Apple released its financial results for fiscal 2020 on Oct. 29, reporting total net sales of $274.5 billion for the 12-month period. During the final quarter of fiscal 2020 alone, Apple reported record net sales of $64.7 billion driven by exponential growth in its Mac and services revenues.
ALSO READ: Why This Could Be a Huge Holiday Quarter for Apple
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2. AT&T
One of the telecom companies at the forefront of the 5G revolution, AT&T (NYSE: T) hasn’t been immune to the pitfalls of the coronavirus stock market, but its balance sheet and dividend payout have remained resilient. AT&T is a high-yielding stock, with a dividend that currently pays out around 7.6% to shareholders.
During the third quarter, AT&T reported consolidated revenue of $42 billion, and it utilized 45% of its free cash flow to pay out dividends. The company closed the quarter with a free cash flow position of $8.3 billion, more than enough to satisfy its shareholder obligations.
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3. B&G Foods
Consumer staple companies like B&G Foods (NYSE: BGS) have had a particularly good year as demand for these products has surged amid widespread quarantine and lockdown measures. In the third quarter, the company reported a 22% increase in its net sales with diluted earnings per share up by a whopping 50%. B&G reported an impressive gross margin in the third quarter, which represented 27.4% of its total net sales. The stock’s impressive dividend of 6.6% is just the icing on the cake.
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4. Johnson & Johnson
Pharmaceutical giant Johnson & Johnson (NYSE: JNJ) is not only a Dividend Aristocrat but also an even-more-exclusive Dividend King, having raised its dividend for 57 consecutive years in a row. The company’s dividend currently yields 2.8% for shareholders. In the most recent quarter, Johnson & Johnson reported sales up by 1.7% year over year, and it increased its sales guidance for 2020 by a robust $1 billion.
The phase 3 safety and efficacy study for Johnson & Johnson’s COVID-19 vaccine candidate, which is being developed by its subsidiary Janssen Pharmaceuticals, was paused last month after a subject experienced an adverse health event. However, management has since reported that it intends to resume the 60,000-subject trial shortly after receiving the go-ahead from the Data Safety and Monitoring Board.
Although there are many other pharmaceutical companies entrenched in the vaccine race, Johnson & Johnson is one of the few that already has a candidate in late-stage trials. The company has entered into numerous agreements to supply hundreds of millions of doses of the vaccine to the U.S., Canada, and the European Commission if it’s proven to be safe and effective.
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5. Target
Popular retailer Target (NYSE: TGT) has managed to remain above the fray despite the immense financial troubles that have befallen other retail stocks due to the pandemic. The company’s 1.7% dividend yield is slightly below that of the average stock on the S&P 500.
During the second quarter of this year, Target reported double-digit sales growth of 24.3%, which management said was “the strongest the company has ever reported.” Digital comparable sales were up by close to 200% in the quarter, while its comparable-store sales grew by 11% during the three-month period.
The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
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6. McDonald's
Fast-food favorite McDonald’s (NYSE: MCD) has struggled on the road to profitability against some major pandemic headwinds this year. During the second quarter, the company reported a 24% decline in its global comparable sales and a 30% drop in consolidated revenue.
However, when management released financial results for the third quarter on Oct. 8, it reported that the company’s comparable sales were up 5% in the U.S. The company also raised its quarterly cash dividend by 3% in the third quarter, a hopeful sign that its financial situation is improving. Currently, McDonald’s pays a dividend that yields 2.4%.
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7. Procter & Gamble
Given the diversification of Procter & Gamble’s (NYSE: PG) businesses, which include well-known brands such as Pampers, Bounce, Downy, and Tide, it’s not at all surprising that the company has only been minimally impacted by the pandemic. The company is another beloved Dividend King, having raised its dividend every year for close to six decades. The company’s dividend yields 2.2%.
When Procter &Gamble released its financial results for the first fiscal quarter of 2021, management reported net sales up by 9% year over-year, with diluted earnings per share growing 20% compared with the same period in fiscal 2020.
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8. Coca-Cola
During the most recent quarter, Coca-Cola (NYSE: KO) reported a 9% decline in net revenue but an improved operating margin by 0.3% year over year. In 2019, before the pandemic, the company reported robust revenue growth of 9%.
Coca-Cola may be facing some near-term headwinds, but the 128-year-old company’s status as a Dividend King with 57 consecutive years of dividend growth will be of particular interest to long-term investors. Coca-Cola pays a higher-than-average dividend that yields 3.3%.
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9. Home Depot
Shares of Home Depot (NYSE: HD) have gained approximately 29% year to date, while the company pays a dividend that yields 2.1%. It’s no shock that the home-improvement retailer saw a significant uptick in sales as more and more consumers found themselves at home with plenty of time to work on renovation projects. During the second quarter of this year, Home Depot reported a notable 23% surge in sales compared with the same three-month period in 2019. At the conclusion of the quarter, the company had $14.1 billion in cash and cash equivalents on its balance sheet.
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10. Gilead Sciences
Gilead Sciences (NASDAQ: GILD) has been at the forefront of the race to find a coronavirus cure. The company’s drug Veklury, also known as remdesivir, is the very first coronavirus treatment to win full approval from the U.S. Food and Drug Administration. Sales of Veklury alone contributed $873 million in revenue to Gilead’s balance sheet during the third quarter of this year. The company’s total third-quarter revenue increased 17% year over year, largely due to Veklury-related earnings and its blockbuster HIV medicines. The company’s dividend yield (4.6%) is a particularly attractive aspect of this stock.
The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
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11. Lowe’s
Lowe’s (NYSE: LOW) is one of the companies that has benefited significantly from the stay-at-home trend. The company’s second-quarter financial results were stellar, with digital sales up 135% year over year and comparable sales in the U.S. growing 35.1% from the second quarter of 2019. Lowe’s also boosted its diluted earnings per share by a staggering 75% in the second quarter of this year.
The company is a Dividend Aristocrat and has raised its dividend every year for 45 years in a row. Lowe's dividend currently yields 1.4%.
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12. Brookfield Renewable Partners
Popular energy stock Brookfield Renewable Partners (NYSE: BEP) yields more than 3.3% in dividend payouts for investors. In the third quarter, which ended Sept. 30, the company reported a 12% year-over-year increase in funds from operations.
Regarding future growth, Chief Executive Officer Connor Teskey said that the company’s “strategy going forward is unchanged. We remain focused on growing our business, while continuing to deliver on our target of 12-15% long term returns to equity holders, by leveraging our scale and operational expertise to help governments and businesses around the world transition to a greener future.”
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13. PepsiCo
PepsiCo (NASDAQ: PEP) is another Dividend Aristocrat and has grown its dividend every year for 47 years in a row. The company’s dividend yields close to 3%, and its shares have largely stabilized from the extreme dip they took in the March crash.
PepsiCo’s third-quarter results represented 5.3% year-over-year revenue growth. The company’s earnings per share grew by 10% during the quarter. Looking at PepsiCo’s financial performance during the first three quarters of 2020, the company has grown its net revenue by 3% compared with the same period last year.
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14. Starbucks
Shares of Starbucks (NASDAQ: SBUX) are trading close to the company’s January share price following some notable volatility in the spring. The company’s dividend yield of 2% is right in line with the average payout of a stock on the S&P 500.
Starbucks recently reported its financial earnings for fiscal 2020. Worldwide comparable-store sales were down 14% in fiscal 2020. Although comparable-store sales in the U.S. and Americas dropped by 12% during the fiscal year, management reported that there was an 11% boost in the average ticket.
Starbucks made considerable improvements to its cash position during the fiscal year, closing the 12-month period with $4.4 billion in cash and cash equivalents compared with its $2.7 billion cash position at the end of fiscal 2019. The company currently has $14.7 billion in long-term debt.
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15. Kraft Heinz
Not only does Kraft Heinz (NASDAQ: KHC) trade supercheap (around $30 per share), but it also pays a meaty dividend that yields 5.1%. The company released its third-quarter earnings on Oct. 29, reporting a 6% year-over-year increase in its net sales and a 20% increase in gross profits. During the first three quarters of 2020, it reported a 67% increase in net cash from operations compared with the first three quarters of 2019. Management is anticipating “mid-single-digit organic net sales growth” for the whole of 2020.
The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
Previous
Next

Preparing for the next market crash
As the stock market continues to trend upward, some investors are concerned that it’s only a matter of time before the bottom falls out again. As optimism grows that a viable vaccine will hit the market later this year or early next, the market has responded in kind. That said, there’s no way to know for sure if or when another market crash will come our way.
A well-diversified portfolio that contains a combination of stocks from various sectors, including dividend stocks, can help you prepare for any irregularities in the broader market. When choosing dividend-paying stocks, it’s wise to avoid the pitfall of using high yield alone as a measure of a solid investment. Instead, it’s important to ensure that the company’s balance sheet can support its payout and is indicative of ongoing, future growth.
Rachel Warren has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Gilead Sciences, Home Depot, and Starbucks. The Motley Fool recommends Johnson & Johnson and Lowe's and recommends the following options: short November 2020 $85 calls on Starbucks. The Motley Fool has a disclosure policy.
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