There has been a move in recent times for companies to do away with paying traditional benefits, according to an article in Fortune magazine. The emphasis now is for workers to provide for their own retirement income with a 401K, individual retirement account, or some other type of plan. Stocks that pay dividends with a history of increases such as Exxon Mobil (NYSE: XOM), Wal-Mart (NYSE: WMT), and Coca-Cola (NYSE: KO) are ideal for providing retirement income.
No matter what the investment, it should provide income to the owner.
If it is real estate, it should kick off rental income. If it is a business, it should produce profits. If it is a stock, it should pay dividends. That should be a fundamental core for all investing, no matter what the asset class.
What makes Exxon Mobil, Coca-Cola, and Wal-Mart appealing is that not only are dividends paid by each, there is a history of increasing the amount each year. For that, these are “Dividend Aristocrat” stocks as dividends have grown annually for more than 25 years. Dividend growth like that can do much to pay for retirement needs.
In addition, Wal-Mart, Coca-Cola, and Exxon Mobil all have dividend yields well above the average of around 1.9 percent for a member of the Standard & Poor’s 500 Index.
For investors, the sooner these stocks are bought the better. That starts the dividend growth early. From that, the yield compounds over time for the dividend income received from the stock. Shareholders of companies that increase the dividend get a raise each year just for owning the stock. That is a great way to increase retirement income!