Retirees Rely On These 5 Safe High Yield Monthly Pay Dividend Stocks

Summary:

During a recent discussion, 24/7 Wall St. Analysts Doug McIntyre and Lee Jackson discussed what income-focused investment options might be appropriate for boomers who no longer want to trade high-growth stocks like Nvidia.

As Jackson explained, many Gen X and boomer investors are seeking steady, dependable income without risking significant capital loss.

“The boomers, of course, the oldest boomers are turning 80 this year. They do not have any interest in seeing everything go up in smoke in the stock market.”

Jackson discussed five dividend-focused ETFs which are designed to provide retirement income and relative safety. These funds prioritize stability and modest yields rather than high payouts.

“One we really like a lot, and we write about frequently, is the ProShares S&P 500 Dividend Aristocrats ETF,” says Jackson. “This is a group of stocks we have written about for years. They are quality companies in the S&P 500 that have raised their dividends at least 25 years in a row. That is something all boomers and older investors can feel good about because even if it dips a little bit, you know your dividend is going to go up every year, sometimes a little and sometimes a lot.”

Jackson emphasizes that achieving a total return of 5% to 8% annually through dividends and price appreciation can help retirees stay ahead of inflation. This strategy aims to balance passive income with moderate growth while minimizing risk for retirement investors.

Transcript:

Doug McIntyre: So if I’m a boomer and I’m looking for income, I’m at this point no longer in the stage of life where I’m trading Nvidia stock. I want something that’s steady that I can virtually count on. So what do you have if you’re in my shoes? What are you going to do?

Lee Jackson: We have a big audience at 24/7 that are Gen X, and the oldest Gen X people are just now turning 60. The boomers, of course, the oldest boomers are turning 80 this year. They do not have any interest in seeing everything go up in smoke in the stock market. What we’ve done is I wrote a piece for us on the safest dividend exchange-traded funds for boomers who need retirement income and passive income, which can supplement either your Social Security distribution, a 401(k) distribution, or a pension distribution from work.

We have put together a portfolio of funds that we like. They do not pay huge dividends, and the reason is they are safe. Most of the fixed income they’re in is short Treasuries. We have five that we feel are the safest for boomer retirement income this year.

Number one is the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD). It does not have a huge yield, but it is one you can count on.

Another one we like a lot is the Vanguard High Dividend Yield ETF (NYSEARCA: VYM). The good thing about all the Vanguard funds is they have very tiny expense fees. A typical Vanguard fund will have four basis points of an expense fee. Do not be fooled—the dividend is not very big. It is in the high 2% range.

One we really like a lot, and we write about frequently, is the ProShares S&P 500 Dividend Aristocrats ETF (NASDAQ: NOBL). This is a group of stocks we have written about for years.

Doug McIntyre: Yeah.

Lee Jackson: They are quality companies in the S&P 500 that have raised their dividends at least 25 years in a row.

Doug McIntyre: Yeah.

Lee Jackson: That is something all boomers and older investors can feel good about because even if it dips a little bit, you know your dividend is going to go up every year, sometimes a little and sometimes a lot.

Number four that we really like is from iShares, one of the biggest companies in the business. We like the iShares Core Dividend Growth ETF (NYSEARCA: DGRO). It is not a 5%, 6%, or 7% dividend because it is safe. It is around 2.35% or in that ballpark.

Last but not least is another huge fund from State Street, one of the biggest companies in the business. This is the SPDR S&P Dividend ETF (NYSEARCA: SDY). These are quality S&P companies, and you can feel good buying this because you can get some growth. The whole point is you can get growth along with the passive income kicker of 2.5% to 3% or more. If you can get total return—the increase in stock price plus any dividends paid—of three, four, or 5% a year, then you will stay ahead of inflation and your money will be somewhat safe.

All of these funds are ones we research constantly because that is what we do. I wrote the piece on this myself and spent hours looking for funds with low costs, low expenses, and low risk.

Doug McIntyre: Good. I know a lot of people our age for whom this is exactly what they need or want, or already own.

Lee Jackson: The principal point is that if you have a high-yield money market, which we are big fans of because they are insured to $250,000, all you are going to get is the coupon. That is fine, but if you want to keep a little bit of growth without Nvidia-type growth, then these are the perfect funds to own. They will move up three, four, or 5% each year and pay that 2.5% to 3% dividend. That can get you close to an 8% total return to address dividend concerns and inflation concerns.

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