Dividend Investing for Retirement Income

Dividend Stocks Beat Bonds for Retirement Income 


Your goal isn’t only to save enough, but also to buy assets that match your future liability—which is your need for retirement income. Traditionally, bonds have been viewed as a pension plan’s surest bet. But with bond yields so low, here is why stocks could prove to be the better choice—even if share prices plunge. ... Mr. Farrell’s suggestion: Buy stocks instead. He isn’t focused on price appreciation, which is always iffy. Instead, he suggests purchasing stocks for their dividends. “If you put together a portfolio of good blue chips, you might start with a yield of 3%,” he says. “You have to train your brain to ignore the price movement. You want to focus on the income production and the growth of that income.” Over the past 50 years, the S&P 500’s dividends have grown an average 5.7% a year, somewhat ahead of the average 4.1% inflation rate. If we continue to see that sort of 1.6 percentage-point gap, retirees who have a big enough portfolio to live solely off dividends would potentially be in great shape, because they would be collecting a stream of income that is rising faster than inflation.
Comment: My strategy is just this! An example is Glaxo Smith Kline (GSK). Our portfolio has a 3% dividend yield overall. I am counting on it growing with inflation AND producing a 3% yield. See also Top Dividend Stocks for 2015

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