5 Retirement Income Streams Yielding Up to 14.1%

Earn More Retirement Income

Many baby boomers have accepted the blunt new reality of financial planning: the combination of low interest rates, rising life expectancy, and the decline of pension plans has turned retirement into an anxious proposition. With 10,000 boomers hitting retirement age each day nationwide, the level of collective anxiety continues to grow.

In fact, one survey found that 61% of boomers were more afraid of running out of money in retirement than they are of dying! Sure, you could always choose to work a little longer. Most of us, though, can’t work forever. Ultimately, time does not favor the prospective retiree. (Source: “Outliving Your Money Feared More Than Death,” Allianz Life Insurance Company of North America, June 17, 2010.)

One solution? More boomers have turned to dividend stocks to fund their retirements. A $500,000 portfolio that yields five percent, for example, will generate about $25,000 a year—a solid $2,083 a month.

Of course, you can’t call dividend income a guarantee. But if you spread your cash across a group of strong, growing companies, you’ll likely receive steady—and inflation-proof—payments.

To help get you started, I ran a screen for the best retirement income stocks out there. To narrow down the results, I outlined four criteria that should appeal to retirees—and really, anyone looking for safe, high-quality dividend stocks:

• Reasonably large, established businesses ($3.0 billion+ in market cap)
• Pays a respectable yield (at least five percent)
• In a recession-proof industry (a beta of less than 1.0)
• Reasonably priced (at least 25% cheaper than the average stock market 26.5 price-to-earnings (PE) ratio).

Let’s take a look at the results.

(Source: Yahoo! Finance, last accessed June 21, 2018.)

Buckeye Partners, L.P. (NYSE:BPL) and Energy Transfer Partners LP (NYSE:ETP) crank out some of the highest dividend yields around.

Their pipeline networks carry oil, natural gas, and other commodities—connecting supply basins across the United States to refineries and, ultimately, consumers. These partnerships also own a number of related energy businesses, including processing plants, storage facilities, and import/export terminals.

But while these firms work in the energy patch, they’re actually somewhat insulated from the wild price swings in commodities prices. You see, these assets serve as the interstate highway system of the energy industry. Rather than betting on the price of oil themselves, these companies are content to earn a toll on every barrel that flows through their network. This results in a steady stream of cash flow akin to bond coupons.

You have a simple story with AmeriGas Partners, L.P. (NYSE:APU). It’s a well-run propane distributor serving millions of households and businesses nationwide. Customers heat their properties and you get a 9.3% dividend. A dividend, it’s worth pointing out, that has rolled in like clockwork for 18 years.

No, this stock won’t make for the best water cooler talk at the office. But, as a prospective or current retiree, you probably don’t care about that. If the economy stalls or a trade war breaks out, cash cows like AmeriGas will deliver some of the best returns around.

BCE Inc. (NYSE:BCE) represents the ultimate cash cow business. As one of Canada’s three major telecommunication operations, the company provides wireless, Internet, and media services across the Great White North. It would cost billions of dollars to build a viable competitor. And even if you could cough up that kind of dough, government regulators keep rivals out.

As a result, BCE charges Canadians some of the highest cell phone and data prices in the world. Most of these profits get paid out to shareholders in the form of lucrative dividends.

Utility stocks have long served as a refuge for the income-seeking investor. Even during a recession, people still light their homes, wash their clothes, and keep their computers humming. The utility bill tends to be the last one that people skip during hard times. For this reason, power providers like Southern Co (NYSE:SO) offer some of the safest yields around.