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How to Maximize Your Retirement Portfolio with These Top-Ranked Dividend Stocks

Here's a revealing data point: older Americans are scared more of outliving wealth than of death itself.

And retirees have good reason to be worried about making their assets last. People are living longer, so that money has to cover a longer period. Making matters worse, income generated using tried-and-true retirement planning approaches may not cover expenses these days. That means seniors must dip into principal to meet living expenses.

Your parents' retirement investing plan won't cut it today.

Years ago, investors at or close to retirement could put money into fixed-income assets and depend on appealing yields to generate consistent, solid pay streams to fund a comfortable retirement. 10-year Treasury bond rates in the late 1990s floated around 6.50%, but unfortunately, those days of being able to exclusively rely on Treasury yields to fund retirement income are over.

The impact of this rate decline is sizable: over 20 years, the difference in yield for a $1 million investment in 10-year Treasuries is more than $1 million.

Today's retirees are getting hit hard by reduced bond yields - and the Social Security picture isn't too rosy either. Right now and for the near future, Social Security benefits are still being paid, but it has been estimated that the Social Security funds will be depleted as soon as 2035.

How can you avoid dipping into your principal when the investments you counted on in retirement aren't producing income? You can only cut your expenses so far, and the only other option is to find a different investment vehicle to generate income.

Invest in Dividend Stocks

Dividend-paying stocks from low-risk, high-quality companies are a smart way to generate steady and reliable attractive income streams to replace low risk, low yielding Treasury and bond options.

Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.

One approach to recognizing appropriate stocks is to look for companies with an average dividend yield of 3% and positive average annual dividend growth. Numerous stocks hike dividends over time, counterbalancing inflation risks.

Here are three dividend-paying stocks retirees should consider for their nest egg portfolio.

Agree Realty (ADC) is currently shelling out a dividend of $0.23 per share, with a dividend yield of 4.16%. This compares to the REIT and Equity Trust - Retail industry's yield of 4.87% and the S&P 500's yield of 1.87%. The company's annualized dividend growth in the past year was 7.83%. Check Agree Realty (ADC) dividend history here>>>

Acadia Realty Trust (AKR) is paying out a dividend of $0.18 per share at the moment, with a dividend yield of 5.71% compared to the REIT and Equity Trust - Retail industry's yield of 4.87% and the S&P 500's yield. The annualized dividend growth of the company was 20% over the past year. Check Acadia Realty Trust (AKR) dividend history here>>>

Currently paying a dividend of $0.03 per share, Ares Capital (ARCC) has a dividend yield of 10.19%. This is compared to the Financial - SBIC & Commercial Industry industry's yield of 10.55% and the S&P 500's current yield. Annualized dividend growth for the company in the past year was 5%. Check Ares Capital (ARCC) dividend history here>>>

But aren't stocks generally more risky than bonds?

Overall, that is true. But stocks are a broad class, and you can reduce the risks significantly by selecting high-quality dividend stocks that can generate regular, predictable income and can also decrease the volatility of your portfolio compared to the overall stock market.

An advantage of owning dividend stocks for your retirement nest egg is that numerous companies, particularly blue chip stocks, raise their dividends over time, helping alleviate the impact of inflation on your potential retirement income.

Thinking about dividend-focused mutual funds or ETFs? Watch out for fees.

If you're interested in investing in dividends, but are thinking about mutual funds or ETFs rather than stocks, beware of fees. Mutual funds and specialized ETFs may carry high fees, which could lower the overall gains you earn from dividends, undercutting your dividend income strategy. Be sure to look for funds with low fees if you decide on this approach.

Bottom Line

Whether you select high-quality, low-fee funds or stocks, seeking the steady income of dividend-paying equities can potentially offer you a path to a better and more stress-free retirement.


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Agree Realty Corporation (ADC) : Free Stock Analysis Report
 
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
Acadia Realty Trust (AKR) : Free Stock Analysis Report
 
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