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3 Dividend Stocks Perfect for Retirees

The Motley Fool logo The Motley Fool 10/24/2020 Matthew DiLallo
3 Dividend Stocks Perfect for Retirees © Provided by The Motley Fool 3 Dividend Stocks Perfect for Retirees

Dividend stocks can be a great option for retirees looking to generate some supplemental income. One of the benefits of dividend-paying companies is that they'll often increase their payouts each year. That's ideal for retirees, as it can help them offset rising expenses.

While this year has been tough on dividend stocks as many companies opted to reduce or suspend their payouts because of COVID-19, others have continued to thrive. Three of those prospering payouts are from Brookfield Infrastructure (NYSE: BIP)(NYSE: BIPC)Camden Property Trust (NYSE: CPT), and Enbridge (NYSE: ENB). Because of that, they're perfect options for retirees to consider.

A bag of money next to stacks of coins. © Getty Images A bag of money next to stacks of coins.

Insulated from the turmoil

Brookfield Infrastructure built its business to be recession-resistant, which has certainly been the case this year. Despite the impacts of the economic slowdown and foreign-exchange fluctuations, the company expects its cash flow to rise from last-year's level. Add that durability amid this year's economic storm to Brookfield's high-quality balance sheet, and its 4.2%-yielding dividend is as safe as they come.

Meanwhile, the company has plenty of fuel to grow that payout as it has in each year over the last decade. In Brookfield's view, it can expand it at a 5% to 9% annual rate, powered by the organic growth of its existing operations and the upside from acquisitions. Those dual fuel sources have the company's earnings on track to surge in 2021, when it should also benefit from a reversal of this year's economic and foreign-exchange headwinds. Meanwhile, it sees a massive long-term growth opportunity in data, which, along with the growth from its other infrastructure arms, should help power it for decades to come.

Truly passive income from real estate


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Camden Property Trust is a leading apartment real estate investment trust (REIT). The company currently owns more than 56,000 apartment homes in 14 major U.S. markets. In addition to that geographical diversification, the REIT owns a mix of property types in urban and suburban markets.

This diversified portfolio has paid dividends during this year's downturn, as it has less exposure than some of its peers to high-cost rental markets, which have been harder hit by COVID-19. Because of that, its occupancy levels, rental rates, and collection pace have held up better than its peers.

Meanwhile, the REIT complements its diversified portfolio with one of the strongest balance sheets in the sector. That provides further support for its 3.6%-yielding dividend. It also gives it the flexibility to develop and acquire additional apartment communities, which should allow it to keep growing its dividend. That attractive payout makes Camden Property a great way to generate real estate income without the hassles of being a landlord.

A well-fueled dividend

While COVID-19 knocked the energy sector for a loop earlier this year, it hasn't had much impact on energy infrastructure-giant Enbridge. That's because the company's contract structure insulates it from fluctuations in volumes and commodity prices. As a result, the company is still on track to deliver on its full-year cash flow guidance. Add that stable cash flow to its strong balance sheet, and Enbridge's monster 8.5%-yielding dividend is on rock-solid ground.

Meanwhile, the company's financial strength gives it the flexibility to invest in expansion projects. It has billions of dollars of growth-focused investments underway, which should power 5% to 7% earnings and dividend growth for the foreseeable future. While most of those expansions are related to fossil fuels, Enbridge is starting to transition toward renewable energy via a rapidly growing offshore wind platform in Europe. Because of that, it should have plenty of power to keep increasing its dividend as it has done for the last 25 years.

Durable dividend-growth stocks

Brookfield Infrastructure, Camden Property, and Enbridge have all proven the resiliency of their business models this year. The trio continued to generate steady cash flow to support their high-yielding payouts, which have given them the flexibility to keep growing their businesses when combined with their strong balance sheets. Because of that, they should be able to continue delivering dependable income growth, making them perfect options for retirees.

Matthew DiLallo owns shares of Brookfield Infrastructure, Brookfield Infrastructure Partners, and Enbridge. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Brookfield Infrastructure and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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