2024-04-09 07:15:00 ET
Summary
- We share the four key qualities that retirees looking to live off of dividends should look for.
- We also share three very attractive dividend stocks that meet these four criteria.
- We detail why they are good picks right now.
When building a portfolio of stocks and funds to retire on dividends with, there are four key qualities to look for:
- The dividends should come from defensive and durable business models so that the companies can support their dividends with cash flow throughout the business cycle and are unlikely to face existential threats from disruptive technologies.
- The dividends should be backed by strong balance sheets so that rising interest rates and/or challenging periods for the industry and/or economy do not force companies to slash their dividend in order to protect their balance sheets.
- The dividends should be comfortably covered by cash flow and the payouts should ideally be growing over time at a pace that at least matches inflation.
- The dividend yields should be high enough to cover projected retirement living expenses within the timeframe you plan to retire by. As the chart below illustrates, the higher your starting yield, the sooner you will achieve a high yield on cost in order to be able to support your desired retirement lifestyle.
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For further details see:
3 Big Fat Dividends For Retirement In April 2024