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In this article, we discuss the 10 best safe dividend stocks for retirement portfolios. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Safe Dividend Stocks For Retirement Portfolios.
Retirement portfolios in the US are got hammered in 2022 amid rising inflation, Russia-Ukraine war and rising interest rates. Americans were already notorious for their limited savings. The stock market crash of 2022 made things worse for them. A Bloomberg report cited Alicia Munnell, director of Boston College’s Center for Retirement Research, who said that in the first half of 2022 alone, a whopping $3.4 trillion from 401(k)s and IRAs was erased due to the economic crisis. The same report also quoted Richard Johnson, a retirement expert at the Urban Institute, who thinks that a “large portion of the population” in the retirement age group will see a decline in their living standards because of this crisis. The effects of the 2022 market crash will be huge because millions of Americans are fast approaching the age of retirement.
A Georgetown University report says that 10,000 people from the baby boomer generation will be turning 65 every day between now and 2030. By 2030, there will be 74 million Americans aged 65.
That's why investors are flocking to safe dividend stocks in 2022. They want to invest their money in companies that have a history of surviving economic volatility and difficult times. We also prefer dividend stocks that are on sale to Treasury bonds that yield north of 4%. The stock market will recover from its lows in the next 12 to 18 months and some of the dividend stocks will deliver significant capital gains on top of the dividend payments. We covered some of these stocks in our article about the best financial dividend stocks to buy. These aren't the safest dividend stocks but they are likely to outperform the safer dividend stocks over the long-term.
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In this article we picked some of the safest dividend stocks suitable for retirement portfolios. These companies have a history of dividend increases, decent yields and they are trusted by elite investors, especially elite hedge funds.
Best Safe Dividend Stocks For Retirement Portfolios
10. AbbVie Inc. (NYSE:ABBV)
AbbVie Inc. (NYSE:ABBV) is one of the safest dividend stocks available in the market for retirement portfolios. The company has increased its dividend for 51 years in a row, which shows its commitment to its dividend policy. AbbVie Inc. (NYSE:ABBV) recently announced mixed Q3 results and had to narrow its outlook. Despite this, AbbVie Inc. (NYSE:ABBV) increased its divided by 5%. It has declared a $1.48/share quarterly dividend, as compared to its prior dividend of $1.41. On a year-to-date basis AbbVie Inc. (NYSE:ABBV) has gained 9% and analysts believe the company has several growth catalysts for future growth. As of the end of the second quarter of this year, 71 hedge funds had stakes in the company.
Here is what Baron Funds specifically said about AbbVie Inc. (NYSE:ABBV) in its Q3 2022 investor letter:
“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”
9. Abbott Laboratories (NYSE:ABT)
Abbott Laboratories (NYSE:ABT) recently joined the list of dividend kings as it increased its dividend for the 50th year in a row. The Illinois-based medical device company also stands out because of its dividend safety as its projected dividend payout ratio stands at 38% for 2022. Recently, a team of Morgan Stanley analysts led by Michael Wilson counted Abbott Laboratories (NYSE:ABT) among the large-cap stocks which they believe are defensive despite the current macroeconomic weakness.
As of the end of the second quarter this year, 61 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), as compared to 68 funds in the previous quarter.
Diamond Hill Capital made the following comment about Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter:
“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).
Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”
8. American Electric Power Company, Inc. (NYSE:AEP)
American Electric Power Company, Inc. (NYSE:AEP) is a relatively high-yield dividend payer in the utilities sector with its yield standing at 3.7% as of October 29. American Electric Power Company, Inc. (NYSE:AEP) has increased its dividend for 18 straight years. In October, the company declared a $0.83/share quarterly dividend, representing a 6.4% increase from the previous dividend. American Electric Power Company, Inc. (NYSE:AEP) operates in 11 states in the US, serving 5.5 million customers. American Electric Power Company, Inc. (NYSE:AEP) is actively making efforts to shrink its carbon footprint.
As of the end of the second quarter, 30 hedge funds tracked by Insider Monkey had stakes in American Electric Power Company, Inc. (NYSE:AEP), compared to 33 funds in the previous quarter. Quant billionaire Jim Simons’s Renaissance Technologies had a $99 million stake in the company at the end of the second quarter.
7. ALLETE, Inc. (NYSE:ALE)
ALLETE, Inc. (NYSE:ALE) is an electric utilities company. The stock’s dividend yield stands at 4.55% as of October 29. ALLETE, Inc. (NYSE:ALE) has upped its dividend for 11 consecutive years. On October 28, ALLETE, Inc. (NYSE:ALE) announced a quarterly dividend of $0.65 per share, in line with the previous dividend. The company is investing heavily to diversify its energy sourcing. It is refining its transmission infrastructure to optimize its investments in wind and hydro power.
Hedge funds are increasing their stakes in ALLETE, Inc. (NYSE:ALE). As of the end of the second quarter, 22 funds had stakes in the company, compared to 16 in the previous quarter. Billionaire Israel Englander upped his stake in the company by about 250% in the second quarter, ending the period with a $43 million stake.
6. Amcor plc (NYSE:AMCR)
Amcor plc (NYSE:AMCR) is a major player in the packaging industry. Amcor plc (NYSE:AMCR) is one of the dividend aristocrats, a select group of stocks that have increased their dividends consistently for 25 years. Recently, BofA analyst George Staphos double upgraded Amcor plc (NYSE:AMCR) to Buy from Underperform. The analyst said that Amcor belongs to packaging, paper and forest products segment, which he said is a “cheap” group. The analyst said that investors should buy these defensive and quality stocks. Amcor plc (NYSE:AMCR), which is trading at $11.75 as of October 29, presents an attractive buying opportunity.
The biggest shareholder of Amcor plc (NYSE:AMCR) as of the end of the second quarter was Bernard Horn’s Polaris Capital Management, which owns a $199.4 million stake in the company. A total of 20 funds tracked by Insider Monkey have stakes in the company as of the end of June.
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Disclosure: None. 10 Best Safe Dividend Stocks For Retirement Portfolios is originally published on Insider Monkey.
