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20 Best Retirement Stocks to Buy in 2020

Brian Bollinger, Contributing Writer, Kiplinger.com

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In retirement, investors must figure out how to generate enough income without a job while also ensuring that they don't outlive their income stream. The best retirement stocks to buy in 2020 (or any other year), then, assuredly must be dividend-paying ones.

Receiving regular dividends reduces an investor's dependence on the market's fickle price swings to make ends meet. Whether or not the market rises or falls in 2020, a portfolio of quality businesses can continue delivering predictable, growing dividend income.

Compared to many fixed-income investments, dividend stocks also can generate higher current income in today's low-interest-rate environment, growing their payouts each year to help preserve one's purchasing power. Dividend stocks, like other equities, provide meaningful long-term price appreciation potential as well.

Research firm Simply Safe Dividends published an in-depth guide about living on dividends in retirement here. However, a key component to this strategy is finding the best retirement stocks that can deliver safe dividends and grow in value over time.

On that note, these are the 20 best retirement stocks to buy in 2020. The 20 stocks on this list appear to have safe dividends, yield between 3.5% and 6.9%, and have solid potential to continue growing their payouts in the long term.

SEE ALSO: Kiplinger's 20 Best Stocks for 2020

Flowers Foods

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Market value: $4.6 billion

Dividend yield: 3.5%

Dividend growth streak: 17 years

Sector: Consumer staples

People have to eat, and Flowers Foods (FLO, $21.69) has served this basic need since 1919. The baked goods company sells a variety of breads, buns, snack cakes and rolls. While bread is a very mature product category, Flowers has some of the most relevant brands.

The company's Dave's Killer Bread is the nation's largest organic bread brand, and Canyon Bakehouse is the fastest-growing gluten-free bread brand in the country. Flowers also owns Nature's Own, the No. 1-selling loaf bread brand; Wonder Bread, which enjoys 98% consumer awareness; and TastyKake, among others.

Consumers continue buying these products in good times and bad, making Flowers a recession-resistant business - a common trait among many of the best retirement stocks to buy. The company's sales slipped just 2.6% during the Great Recession. And FLO shares only lost 2% while the S&P 500 slumped 56.8% during the 2007-09 bear market. Add in dividends, and Flowers actually eked out a positive total return of 0.8%.

Flowers' dividend has been reliable, too. The company has raised its payout each year since it began distributing dividends in 2002. With an investment-grade credit rating, excellent cash flow generation, and a reasonable payout ratio of roughly 80%, Flowers' dividend seems likely to remain a safe bet.

SEE ALSO: Every Warren Buffett Stock Ranked: The Berkshire Hathaway Portfolio

Crown Castle International

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Market value: $55.9 billion

Dividend yield: 3.6%

Dividend growth streak: 5 years

Sector: Real estate

Crown Castle International (CCI, $134.53) is the largest provider of shared communications infrastructure in America, with a portfolio of more than 40,000 cell towers, about 70,000 small cell nodes and over 75,000 route miles of fiber.

The real estate investment trust's (REIT) assets are leased to wireless service providers such as Verizon (VZ) and AT&T (T). These firms place their equipment on Crown Castle's towers and small cells so they can beam their signals to mobile devices used by consumers and businesses.

This is a predictable, durable business in part because there are no viable alternatives. Most of Crown Castle's revenue is recurring, too, backed by long-term contracts with embedded growth from rent escalators.

As demand for data continues rising, carriers likely will continue investing in their networks. Crown Castle's towers and small cell networks should enjoy even higher utilization rates and profitability as this plays out.

The firm has grown its payout each year since it converted to the REIT business structure in 2014. Going forward, management believes 7% to 8% annual dividend growth in the long term is a reasonable target. That's more than acceptable for investors seeking out retirement stocks that can provide both current income and dividend growth. It's no wonder why CCI is a holding in Bill Gates' dividend portfolio.

SEE ALSO: 50 Top Stocks That Billionaires Love

Realty Income

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Market value: $24.8 billion

Dividend yield: 3.6%

Dividend growth streak: 30 years

Sector: Real estate

Simply Safe Dividends pegs Realty Income (O, $75.94) as one of the best monthly dividend stocks in the market, and that easily earns it a spot among the best retirement stocks to buy in 2020.

The retail REIT - which goes so far as to call itself "The Monthly Dividend Company" - has a track record of paying uninterrupted monthly dividends for nearly 50 consecutive years. Just as impressively, Realty Income is one of just two S&P 500 REITs to have recorded positive earnings growth, dividend growth and total returns during the financial crisis.

This has historically been a durable business. Kevin Brown, equity analyst at Morningstar, writes that Realty's "line of business and operating metrics make its dividend one of the most stable sources of income for investors."

Brown also notes that even though more than 80% Realty's tenants are in retail, more operate in defensive, service-focused industries that are buffered from e-commerce headwinds.

Combined with Realty's investment-grade credit rating and impressive diversification - which includes exposure to nearly 50 industries and over 270 tenants - Realty Income's dividend should remain a dependable bet for income and growth in the years ahead.

SEE ALSO: 10 High-Yield Monthly Dividend Stocks to Buy in 2020

National Retail Properties

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Market value: $9.5 billion

Dividend yield: 3.7%

Dividend growth streak: 30 years

Sector: Real estate

National Retail Properties (NNN, $55.11) boasts 30 consecutive years of annual dividend increases, an investment-grade balance sheet and an average annual total return of 14% across the past 25 years.

It's no wonder why the retail REIT is appealing for retirement portfolios.

National Retail is, like Realty Income, a triple-net-lease REIT, which means it's not responsible for taxes, insurance and maintenance costs - the tenants are. NNN simply collects the rent. The REIT owns more than 3,000 properties that it rents out under long-term lease contracts to 400-plus tenants operating across nearly 40 industries.

Management has been careful to diversify National Retail's business to protect its cash flow over a full economic cycle. The firm's largest exposure is to convenience stores, which account for 17.5% of rent, then full-service restaurants (11.3%) and automotive service stores (9.3%).

Unlike parts of brick-and-mortar retail that are under pressure, National Retail's properties remain resilient. The firm's occupancy rate stands at 99.1%. And as CFRA equity analyst Chris Kuiper writes, the firm's portfolio appears resistant to e-commerce.

"We think NNN is more insulated from retailer woes compared to peers as most of NNN's tenants are either restaurants or retailers focused on necessity-based shopping such as convenience stores, auto parts/service centers and banks," he writes.

Given National Retail's diversified portfolio, strong balance sheet, online-resistant locations and reasonable payout ratio, this top-flight retirement stock should have no trouble extending its dividend growth streak for the foreseeable future.

SEE ALSO: The 30 Best Mutual Funds in 401(k) Retirement Plans

SEE ALSO: How to Retire on $500,000

Public Storage

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Market value: $37.2 billion

Dividend yield: 3.8%

Dividend growth streak: 0 years

Sector: Real estate

Public Storage (PSA, $212.95) has paid dividends without interruption for more than 25 consecutive years, and the self-storage REIT continues to rank among the best retirement stocks today.

With over 2,400 properties in America, Public Storage is the largest owner and operator of self-storage facilities in the country. The company also is bigger than its next three public competitors combined.

Thanks to its large size, Public Storage can maximize its operating efficiency and the benefit of branding across its portfolio since most of its properties are in major metropolitan centers.

Storage is a defensive industry, too, making it an appealing place to invest part of a retirement portfolio. While there are few barriers to entry, the overall economics still support dependable cash flow for Public Storage.

Besides sporting an occupancy rate in excess of 90%, Public Storage benefits from raising customers' rent over time. Morningstar equity analyst Yousuf Hafuda notes that the "average customer receiving a rent increase letter for 8%-10% will rarely find it beneficial to research a new facility, rent a moving truck, and spend a day relocating to a different facility to save $10-$15 per month."

Coupled with storage facilities' low maintenance needs and the recession-resistant nature of demand, Public Storage is a durable cash cow. The firm's "A" credit rating from Standard & Poor's and healthy payout ratio of less than 80% of funds from operations (FFO, an important REIT profitability metric) should ensure that its dividend remains safe, regardless of how industry supply and demand trend.

SEE ALSO: 13 Best Stocks to Buy for the Next Stock Market Correction

Brookfield Infrastructure Partners LP

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Market value: $15.4 billion

Distribution yield: 3.8%*

Distribution growth streak: 11 years

Sector: Utilities

Brookfield Infrastructure Partners LP (BIP, $52.56), a master limited partnership (MLP), is listed as a utility stock but is much different than the sector's typical electricity and gas providers. BIP owns numerous infrastructure assets, including railroads, natural gas pipelines, telecom towers, electrical transmission lines and toll roads.

These long-life assets provide critical services and are often difficult to replicate. Most importantly, they generate reliable cash flow, with 95% of the firm's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) generated by regulated or long-term contracts.

Management expects FFO per unit (the master limited partnership equivalent of shares) to grow 6% to 9% going forward, driven by volume upside from GDP growth, inflationary price increases (75% of the firm's EBITDA is indexed to inflation) and a large backlog of projects.

Combined with the firm's investment-grade credit rating and conservative payout ratio target of 60% to 70% of funds from operations, Brookfield Infrastructure Partners' distribution should remain a solid bet with decent growth prospects. Indeed, management has upgraded the distribution each year since the firm went public in 2008.

Management has increased the distribution each year since the firm went public in 2008, and long-term growth opportunities should be plentiful as countries worldwide continue investing in their infrastructure.

It's also worth noting the partnership structures its activities to avoid generating unrelated business taxable income. Therefore, unlike most limited partnerships that can have more complicated taxes, Brookfield's units are suitable for owning in retirement accounts.

One final note that investors should be aware of: The firm will split its shares to launch Brookfield Infrastructure Corporation, which is being structured with the intention of being economically equivalent to BIP units. The difference? The corporation will not deal with partnership taxes, as investors will instead receive common dividend reporting slips. Regardless of which entity investors choose, as a Canadian company, Brookfield will withhold 15% of its distribution to U.S. investors. But because of a tax treaty with Canada, U.S. investors can deduct this amount dollar-for-dollar as part of the foreign withholding tax credit.

* Distribution yields are calculated by annualizing the most recent distribution and dividing by the share price. Distributions are similar to dividends but are treated as tax-deferred returns of capital and require different paperwork come tax time.

SEE ALSO: 20 Large-Cap Dividend Stocks With More Cash Than Debt


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Market value: $250.3 billion

Dividend yield: 4.1%

Dividend growth streak: 13 years

Sector: Communications

Rather than follow AT&T into the media and entertainment industries with splashy acquisitions, Verizon (VZ, $60.53) has remained mostly true to its core competency: wireless networks, which generate virtually all of its profits today.

The largest wireless service provider in America, Verizon has invested more than $126 billion since 2000 to not only meet rising demand for wireless data and video, but also to prepare its network for 5G technology. As a result of these investments, the telecom giant has been rated by RootMetrics as the best overall network in terms of reliability, data and call performance for 12 years in a row.

Verizon's leading network performance and vast subscriber base, coupled with the industry's mature nature and the high costs required to maintain a nationwide network, make it impractical for smaller upstarts to gain a foothold in the market.

As a result, Verizon generates predictable cash flow to continue funding its dividend, which it and its predecessors have paid without interruption for more than 30 consecutive years.

Combined with Verizon's investment-grade balance sheet and payout ratio near 50%, the firm's dividend should remain a safe bet going forward. In fact, Simply Safe Dividends even lists the firm as one of the best high-dividend stocks.

SEE ALSO: The 25 Best Mutual Funds of All Time

Healthcare Trust of America

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Market value: $6.3 billion

Dividend yield: 4.2%

Dividend growth streak: 5 years

Sector: Real estate

Healthcare Trust of America (HTA, $30.19) is one of the younger companies to make this list of the best retirement stocks to buy. The REIT was founded in 2006 and only went public in 2012, but Healthcare Trust of America is no slouch; the firm is the largest dedicated owner of medical office buildings in the U.S.

The firm focuses on owning properties that are located on or adjacent to the campuses of major healthcare systems. Medical practices have high demand for these locations because of their location and the high volume of patients that come through.

As a physician group becomes established in an area and builds a client base, it often grows more reluctant to relocate. As a result, HTA's medical office buildings target tenant retention rates in excess of 80%, as well as annual escalators above 2.5% to support organic growth. No tenant accounts for more than 5% of rent either, providing nice diversification.

Looking ahead, Healthcare Trust's cash flow should continue growing as U.S. healthcare expenditures increase with the aging population, creating higher demand for medical office buildings.

Coupled with the firm's investment-grade balance sheet and reasonable adjusted funds from operations payout ratio just below 90%, the REIT's dividend should remain safe for the foreseeable future.

Duke Energy

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Market value: $64.8 billion

Dividend yield: 4.3%

Dividend growth streak: 15 years

Sector: Utilities

Regulated utility stocks often serve as a foundation in many retirement portfolios due to their defensive qualities, high dividends, and steady earnings. In fact, a number of utilities are included in the best recession-proof stocks highlighted by Simply Safe Dividends.

Duke Energy (DUK, $88.95) is no exception. The regulated utility provides electricity to 7.7 million customers and gas to 1.6 million customers throughout America's Southeast and Midwest. DUK is an attractive utility in part because the areas it operates in have favorable regulatory and economic traits.

Morningstar senior equity analyst Andrew Bischof writes that Duke's regulatory environment is supported by "better-than-average economic fundamentals in its key regions." This helps the utility have constructive relationships with regulators, providing a healthy foundation for rate negotiations.

As a result of these strengths, Duke has profitably grown its business over the years. Based on the current slate of projects, management expects the company to generate 4% to 6% annual earnings growth through 2023.

Assuming everything goes as planned, Duke's dividend likely will grow at a low-single-digit pace during this period and should remain secure given the firm's reasonable payout ratio below 80% and its investment-grade credit profile.

The utility has paid dividends for 93 consecutive years - a track record that stands out among even the best retirement stocks. And Duke should have no problem continuing its impressive run.

SEE ALSO: The Kiplinger Dividend 15: Our Favorite Dividend-Paying Stocks

Dominion Energy

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Market value: $67.7 billion

Dividend yield: 4.5%

Dividend growth streak: 16 years

Sector: Utilities

Dominion Energy (D, $81.33) is a large regulated utility serving 3.4 million electric customers and 3.3 million gas customers across 18 states, primarily in Virginia, North Carolina and South Carolina.

Approximately 95% of Dominion's operating income is generated from regulated or "regulated-like" activities, which provides more predictable earnings and reduces the company's risk profile. Those qualities alone put Dominion among the best retirement stocks to buy in 2020 - the stock may provide stability in what could be a topsy-turvy election year.

Morningstar analyst Charles Fishman estimates that "wide-moat" businesses generate about 45% of the firm's operating earnings. He also writes that the balance of earnings comes from regulated utilities that possess "some of the most constructive regulation and attractive growth potential in the country."

Along with an investment-grade credit rating and $26 billion of growth capital planned to be deployed between 2019 and 2023, Dominion's dividend should remain in good shape with potential to keep growing. In fact, Fishman expects D shares to deliver low single-digit annual dividend increases through 2023, which would mark 20 consecutive years of payout raises.


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Market value: $22.9 billion

Dividend yield: 4.7%

Dividend growth streak: 17 years

Sector: Communications

Telus (TU, $37.99) is a rather unique telecom company in that it provides investors with both high current income and the potential to grow its dividend relatively quickly in the years ahead. Telus is a Canadian Dividend Aristocrat with 17 years of dividend growth under its belt, and management targets 7% to 10% annual payout hikes through 2022.

One of the largest telecom businesses in Canada, Telus generates about two-thirds of its EBITDA from providing wireless services. Wireline accounts for the rest of the business and includes high-speed internet, home phone and cable TV services.

Outside of home phones and cable TV, which is under pressure from cord-cutting, demand for telecom services is typically inelastic. For example, during the Great Recession, Telus's revenue fell only 1%, according to data from Simply Safe Dividends.

Besides its defensive qualities, the telecom industry is also a good one for dividends due to its mature nature and high capital intensity, which makes it more difficult for new competitors to enter the market and steal subscribers.

That's especially true in the company's core wireless services market. Matthew Dolgin, an equity analyst at Morningstar, writes that Telus is one of only three major national competitors in wireless. He thinks "these three firms have solid moats that protect them from any current or future competition." Combined, Telus, Rogers Communications (RCI) and BCE Inc. (BCE) are estimated to dominate about 90% of the market.

Simply put, Telus seems positioned to remain a solid cash generator and a dependable dividend payer. With an investment-grade balance sheet and a conservative payout ratio target of between 60% and 75% of free cash flow, Telus seems likely to remain high on most short lists of retirement stocks to buy.

SEE ALSO: 14 High-Yield Dividend Stocks to Buy for the 4% Rule

Exxon Mobil

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Market value: $290.5 billion

Dividend yield: 5.1%

Dividend growth streak: 37 years

Sector: Energy

Exxon Mobil (XOM, $68.65) boasts one of the most impressive track records in the energy sector. It has paid uninterrupted dividends for more than a century and increased its dividend for 37 consecutive years.

Argus analyst Bill Selesky notes that the energy giant continues to benefit from its diverse asset base and low cost structure, which has helped preserve the dividend despite volatile oil and gas prices over the years.

With a mix of oil & gas production, refining and downstream chemical businesses, Exxon's integrated operations help stabilize the company's overall results; when one division is weak, another is usually on more solid ground.

Exxon hopes to double down on its scale and efficiency advantages in the years ahead. Unlike other oil majors, the company plans to invest well more than $200 billion between 2019 and 2025 to potentially more than double its operating cash flow. Even if the price of oil falls to $40 per barrel, management expects cash flow to rise 50%.

Exxon's ambitious capital spending plans have been met with skepticism by some investors, but management deserves the benefit of the doubt for now given the firm's solid capital allocation track record. XOM's dividend should remain safe, too, and the payout's growth potential should improve if everything goes well.

W.P. Carey

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Market value: $14.0 billion

Dividend yield: 5.1%

Dividend growth streak: 20 years

Sector: Real estate

W.P. Carey (WPC, $81.44) has amassed a portfolio of more than 1,200 properties spanning industrial, warehouse, office, retail and self-storage markets across America and Europe, making it one of the most diversified REITs.

More than 300 tenants across America and Europe rent the firm's properties under long-term lease agreements.

WPC enjoys stable cash flow as a result of its diversification (top 10 tenants only generate about 23% of rent; no industry greater than 20%), long-term lease agreements (average length remaining of 10.3 years), ownership of properties that are essential to tenants' operations (occupancy above 96% since 2007) and contractual rent increases (present in 99% of leases).

Coupled with an investment-grade credit rating and a reasonable payout ratio near 80%, W.P. Carey has strong potential to continue increasing its dividend, which it has done every year since 1998.

SEE ALSO: 9 Ways You Can Own Famous Landmarks


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Market value: $29.3 billion

Dividend yield: 5.2%

Dividend growth streak: 17 years

Sector: Energy

Oneok (OKE, $70.83) owns nearly 40,000 miles of pipelines moving natural gas and natural gas liquids for energy producers, processors and end users. The company's footprint spans some of the biggest and most critical shale formations in the country, such as the Permian Basin in Texas and Bakken Shale in North Dakota.

Oneok's infrastructure basically connects America's energy supply with worldwide demand, benefiting from growth in U.S. gas production. However, only about 15% of the company's earnings are directly affected by commodity prices. About 85% of the firm's profits are from fee-based contracts, resulting in stable cash flows. That's what separates companies such as Oneok from other energy plays like exploration-and-production companies and oil-services firms, which can sway based on the direction of oil and gas prices. And that's why OKE and other pipeline companies are among the best retirement stocks to buy in 2020.

Oneok also boasts an investment-grade credit rating, double-digit EBITDA growth expected in 2020, and a nearly 70% payout ratio of its distributable cash flow (DCF, a frequently used profitability metric for pipeline companies). Thus, the dividend looks secure, and it should continue rising as management executes on growth projects. In fact, ONEOK targets annual dividend growth of 9% to 11% through 2021 with expectations to maintain dividend coverage of at least 1.2 times while also further strengthening its balance sheet.

And since ONEOK is a corporation rather than an MLP, income investors can own the stock without extra tax complexities or organizational risks such as simplification transactions.

National Health Investors

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Market value: $3.6 billion

Dividend yield: 5.2%

Dividend growth streak: 10 years

Sector: Real estate

National Health Investors (NHI, $81.27), which incorporated in 1991, is a diversified healthcare REIT with more than 200 properties. Senior housing generates about two-thirds of the firm's revenue, with skilled nursing and medical office buildings accounting for the remainder. A group of 36 operators use these properties, and none account for more than 20% of revenue.

Senior housing's main appeal among investors seeking out retirement stocks is the long-term demand growth expected from America's aging population. People need a place to live as they age out of their homes, and National Health's facilities provide a solution for care.

In these markets, however, tenants often have lower coverage ratios compared to other parts of healthcare, and skilled nursing service providers usually earn a lot of their revenue from government-funded reimbursement programs such as Medicare.

National Health Investors has navigated these challenges by diversifying its portfolio and focusing on private-pay senior housing properties. By focusing on higher-quality tenants, the firm has grown its FFO per share faster than its peers over the last five years.

Management also maintains low leverage on the balance sheet and a conservative payout ratio below 80% of FFO, helping ensure that the dividend remains safe no matter how the senior housing and skilled nursing industries trend in the short term.

SEE ALSO: The 13 Best Health-Care Stocks to Buy for 2020

Pembina Pipeline

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Market value: $17.7 billion

Dividend yield: 5.2%

Dividend growth streak: 3 years

Sector: Energy

Pembina Pipeline (PBA, $34.51) has rewarded income investors with uninterrupted monthly dividends since its IPO in 1997. The Canadian transportation and midstream service provider has served North America's energy industry for 65 years.

Pembina's pipelines, processing plants, storage facilities and other energy infrastructure are concentrated in western Canada and span several basins. And it ranks among the best retirement stocks for 2020 for much the same reason as Oneok: While the energy industry is known for its volatility, Pembina generates nearly 90% of its adjusted EBITDA from fee-based contracts, resulting in predictable cash flow.

In 2019, the firm's dividend consumed less than 80% of its fee-based distributable cash flow, providing a healthy margin of safety. The dividend also is protected by management's focus on quality energy producers; about 85% of Pembina's credit exposure is from investment-grade and secured counterparties.

Combined with Pembina's BBB credit rating and ability to self-fund its growth projects rather than rely on fickle equity markets, PBA seems poised to continue delivering safe, growing dividends for years to come.


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Market value: $278.3 billion

Dividend yield: 5.4%

Dividend growth streak: 35 years

Sector: Communications

AT&T (T, $38.10) has long been a favorite among retirement stocks because of its stable telecom business. But over the past few years, it transformed its business into a media conglomerate by acquiring DirecTV and Time Warner. The company now boasts more than 370 million direct-to-consumer relationships across its wireless, video and broadband businesses.

Management sees potential to leverage the firm's media and telecom assets to create more valuable customer relationships, improve churn, develop successful streaming services and build a sizable advertising marketplace.

What's more certain is that AT&T's various businesses generate excellent cash flow thanks to their large subscriber bases, recurring revenue and economies of scale. In fact, AT&T expects to generate $28 billion of free cash flow in 2020 and expects its dividend to consume less than 50% of free cash flow in 2022.

The company's net-debt-to-adjusted-EBITDA leverage ratio should fall to 2.5 by the end of 2019 - a healthy improvement that should help AT&T maintain its investment-grade credit rating. The dividend should remain on solid ground as a result.

That payout, by the way, has grown without interruption for 35 years. However, the pace of those hikes has been moderate. Nonetheless, this Dividend Aristocrat should provide high-yield investors with steady income as it continues evolving its business for the future.

SEE ALSO: 7 Dow Stocks That Didn't Survive the Decade

Main Street Capital

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Market value: $2.7 billion

Dividend yield: 5.8%

Dividend growth streak: 9 years

Sector: Financials

An internally managed business development company (BDC), Main Street Capital (MAIN, $42.81) invests in private debt and equity issued by lower middle market companies that typically have revenues between $10 million and $150 million.

Investment performance often is tied to the health of the economy, so managing risk is critical to Main Street's ability to generate reliable cash flow over a full economic cycle.

Fortunately, management has proven to run the business conservatively, as demonstrated by Main Street's BBB investment-grade rating from Standard & Poor's and the firm's track record of paying uninterrupted dividends since its IPO in 2007.

The company employs conservative diversification practices to improve the stability of its cash flow. For example, no portfolio company represents more than 5% of the firm's total investment income nor exceeds 3% of its total portfolio fair value. Similarly, no industry is greater than 10% of the portfolio's cost basis.

BDCs can be riskier investments during recessions - as explained in Simply Safe Dividends' guide to investing in business development companies. Nonetheless, Main Street's discipline and conservatism seem likely to keep the stock a safe bet for retirement income.

Enterprise Products Partners LP

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Market value: $57.2 billion

Distribution yield: 6.8%

Distribution growth streak: 22 years

Sector: Energy

Enterprise Products Partners LP (EPD, $26.13) has long been one of the most reliable master limited partnerships (MLPs) and one of the best retirement stocks you can buy. The owner and operator of gas and oil pipelines, storage facilities and processing plants has increased its distribution for more than two decades thanks to the steady nature of its business model and management's conservatism.

About 85% of Enterprise's gross operating margin is derived from fee-based activities rather than volatile commodity prices. Meanwhile, the firm eliminated its incentive distribution rights in 2002, enjoys one of the highest credit ratings of any midstream business, and maintains a very conservative distribution coverage ratio of 1.7.

While some MLPs have gotten tripped up financing their capital-intensive growth projects and generous payouts, Enterprise has taken steps to de-risk its funding. Specifically, rather than rely on issuing new units to raise capital, the firm in 2019 began self-funding the equity portion of its capital investments. It did this by retaining more internally generated cash flow and running the business with less leverage.

For income investors who are willing to accept some of the complexities that come with investing in MLPs, Enterprise appears to be one of the better bets.

SEE ALSO: 12 Dividend Stocks to Build a Monthly Income Calendar

Magellan Midstream Partners LP

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Market value: $13.4 billion

Dividend yield: 6.9%

Dividend growth streak: 18 years

Sector: Energy

Magellan Midstream Partners LP (MMP, $58.88) owns and operates midstream infrastructure in America, transporting, storing, and distributing petroleum products. The partnership's profits are derived from refined products (59% of 2018 operating margin), crude oil (34%), and marine storage (7%).

With nearly 10,000 miles of pipelines, more than 50 terminals, as well as various storage facilities, Magellan boasts the longest refined petroleum products pipeline system in the country.

This business model generates reliable cash flow. Fee-based activities that are insensitive to volatile commodity prices comprise about 85% of Magellan's operating margin. As a result, the partnership has paid higher distributions every year since 2001.

Management's conservatism should ensure the distribution remains safe and growing. In addition to maintaining one of the highest credit ratings (BBB+) of any MLP, Magellan has minimal dependence on equity markets to fund its growth projects. Impressively, Magellan has issued equity just once in the last decade.

As domestic energy production rises and creates a long-term need for more infrastructure, Magellan seems likely to have profitable opportunities to expand. As cash flow rises and firm lives within its conservative 1.2x coverage ratio target, Magellan's distribution should see continued growth as well. That should keep it among the highest-yielding retirement stocks to buy in 2020 and beyond.

Brian Bollinger was long CCI, D, DUK, NNN, PSA, T, VZ, WPC and XOM as of this writing.

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