8 dividend-paying stocks for our longer lives
Companies that pay out a healthy yield without eating into profits can help investors keep ahead of inflation over the long haul.
By Oliver Pursche
In 1900, the life expectancy for Americans was 49 years. When the Social Security Act was passed in 1935, the life expectancy was less than 63 years. This is an interesting data point considering the fact that Social Security more or less codified the retirement age at 65. Taken literally then, the expected duration of retirement was negative two years.
This made retirement planning, from a financial perspective, rather easy. Technically, no planning was required.
Today, with life expectancies pushing 80 years (higher for females, lower for males), planning is trickier. Specifically, two burning questions have emerged: How can a retiree not make sure not to outlive his or her savings? And how can a retiree keep ahead of inflation? This article speaks to the latter concern.
Inflation is not the raging topic it was in the 1970s and early 1980s. But even at today's somewhat mild rates -- 1.5% over the last 12 months ended March 2013, according to the Bureau of Labor Statistics -- inflation can hurt and undermine your standard of living. Over a span of 20 years, inflation of 1.5% will reduce the purchasing power of $1.00 to $0.74.
There are many ways to skin a cat when trying to outstrip inflation, but one that I like is investing in stocks that grow their dividend at rates faster than inflation. Here are eight such stocks that I really like. As you can tell from the growth in the dividends, they all handily beat the undermining effects of inflation.
It's take a good mixture to get much above 6%(average), not reinvested, nor counting growth..
If you are serious and want to ride out "downturns" you have to have diversity in many Sectors.imo.
Anyone can earn 10-15%, but you might also be locking yourself in for other troubles...?
To each, his/her own.
If the mix is good, reinvesting and growth can be fantastic, and much more then 10-12% on a long term basis, and yes it does best inflation quite well..
Exxon, Deere and Caterpillar are remarkable for paying out 2.9%, 2.4% and 2.5% dividend yields (even though Catepillar's dividend is less now than in 2010) , but just as important is the fact they have a steady increase in earnings and revenues for over a decade -with an understandable blip in 2008-9.
I haven't checked the 5 2.2% div. or less stocks, looking for better yield, but they're only good choices if they're numbers grew steadily.
I don't own any of those companies and I never will! I don't care how quickly a company increases its dividends, a dividend of 1.4% to 2.20% will never increase enough to provide the kind of income that I need, and will need for the rest of my life! Even with a portfolio of $500,000, 2.2% will only produce $11,000 a year, and it would take many years of increases to produce $50,000 annually.
You are barely staying ahead of inflation that way with those low dividends, and certainly NOT accruing cash for later years. Come back and see me some time when you can provide me with dividends of 6% to 15%.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.