The focus of a dividend retirement portfolio is to generate enough income to cover expenses, have the income keep up with inflation and avoid depleting the portfolio. Unlike the generalized retirement approach, depleting the portfolio is not the primary strategy but possible at a later stage.
There are definitely stages of retirement based on your health and goals but the main concern remains the same for all retirees and it’s to ensure you do not outlive your money.
If you can plan your retirement without counting on the Canada Pension Plan (CPP) or the Old Age Security (OAS) Pension, you are way ahead of the average retirees and should be comfortable. While you could count on some CPP payments and OAS payments, planning without it gives you a buffer of safety.
Retirement Portfolio & Income Generation
Long ago, the financial industry established what would be considered an acceptable withdrawal rate to ensure you do not outlive your retirement portfolio.
The withdrawal rate was established at 4% but it is very generalized and assumes retirement is not early and it also assumes there would be a certain rate of return on the fixed income portion of your portfolio. Ultimately, you need to have an idea on how much you will need to retire and you can easily estimate it with a simple retirement formula.
Seeing all the variables being challenged in the low interest rate environment we have been in for a relatively long time; the 4% rule can no longer be trusted, and fixed income investments do not provide the safe return it used to provide. The status quo no longer works.
I see DIY investors chasing high yield stocks for the wrong reasons and it’s very dangerous for a retirement portfolio.
Dividend investing is a solid strategy to generate income and avoid depleting your portfolio but it’s not every dividend stock that works. You need to consider the dividend yield for your overall income, you need to have dividend growth and avoid dividend drops.
Dividend yield is an easy data point to access but dividend growth is not easy and assessing the dividend safety of a stock is another story.
Your Retirement Portfolio Must Keep Up with Inflation
To start with, a dividend yield above inflation is not how you keep up with inflation – that’s a misleading thought. The income is what you use for your expenses. To keep up with inflation, you want the income to grow at the same rate as inflation or greater; that comes from dividend growth.
Dividend Yield is for Income Dividend Growth is for Inflation
Take a REIT with no dividend growth, for example, the distribution you received is fixed every year while your expenses increase. After a number of years, you end up needing more and more. If you are not adding more money to the REIT, you are not increasing your income. To keep up with inflation, you need the income to grow through dividend growth.
Since the income comes from cash distributions or dividends, to grow the income, you have 2 options:
Increase your holdings, or
Receive a dividend increase
Option 1 is normally off the table when you are in retirement so that leaves you with option 2. Do note that not all of your holdings need to provide growth in dividend as long as the overall income increases by what you need.
The higher the dividend growth the better but generally there is a relationship between the growth and the yield and it’s an inverse relationship.
Retirement Stock Filters
In the accumulation years, I aimed for a 10% dividend growth and I am satisfied with a low yield since the stock price will have growth but in retirement, we can make some adjustments to optimize income.
I am satisfied with a 3%-4% yield, a Chowder Score of 8% and a market capitalization over 5B. Large cap only – it’s not the time to take a risk on a smaller business.
Using the Dividend Snapshot Screeners, I get the following stocks. First table are Canadian stocks and the second table are US stocks.
NASDAQ:AAPL
AAPL
Apple
Technology
Consumer Electronics
50.68
151.12
2,464.65
29.57
29.57
5.11
0.5800
16.5000
4
0.88
10.6500
6
6
Subscription
NO
NO
NO
NO
USA
1
NASDAQ:ADI
ADI
Analog Devices, Inc.
Technology
Semiconductors
64.10
171.07
62.73
29.60
29.60
5.78
1.6100
60.4000
4
2.76
10.4700
8
6
Durable
YES
YES
NO
NO
USA
1
NASDAQ:ADP
ADP
Automatic Data Processing
Industrials
Staffing & Employment Services
66.93
216.56
91.03
35.97
35.97
6.02
1.7200
60.9000
4
3.72
11.7800
9
6
Tollbooth – Unregulated
YES
YES
YES
NO
USA
1
NASDAQ:AMGN
AMGN
Amgen Inc.
Healthcare
Drug Manufacturers – General
64.03
231.07
130.42
14.21
14.21
16.26
3.0500
85.8000
4
7.04
14.6800
5
6
Consumable – Necessities
NO
NO
NO
NO
USA
1
NASDAQ:AVGO
AVGO
Broadcom Inc.
Technology
Semiconductors
52.75
488.14
199.45
19.54
19.54
24.98
2.9500
100.0000
4
14.40
50.1000
6
4
Durable
NO
NO
NO
NO
USA
1
NASDAQ:CMCSA
CMCSA
Comcast Corporation
Communication Services
Entertainment
63.33
59.25
272.26
21.09
21.09
2.81
1.6900
35.6000
4
1.00
14.6600
9
6
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NASDAQ:CME
CME
CME Group Inc.
Financial Services
Financial Data & Stock Exchanges
63.72
207.19
74.35
33.42
33.42
6.20
1.7400
112.2000
4
3.60
10.5400
9
4
Subscription
YES
NO
NO
NO
USA
1
NASDAQ:COST
COST
Costco
Consumer Defensive
Discount Stores
51.99
452.86
197.97
44.27
44.27
10.23
0.7000
120.8000
4
3.16
12.1600
10
3
Subscription
YES
YES
NO
NO
USA
1
NASDAQ:CSCO
CSCO
Cisco Systems Inc.
Technology
Communication Equipment
59.22
56.28
237.98
17.70
17.70
3.18
2.6300
58.9000
4
1.48
11.5100
5
7
Durable
NO
NO
NO
NO
USA
1
NASDAQ:CSX
CSX
CSX
Industrials
Railroads
58.83
33.87
76.36
24.78
24.78
1.37
1.1000
24.4000
4
0.37
9.3400
7
6
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NASDAQ:CTAS
CTAS
Cintas Corp
Industrials
Specialty Business Services
69.87
393.42
40.10
38.42
38.42
10.24
0.9700
14.4000
4
3.80
19.1400
10
7
Consumable – Discretionary
YES
YES
YES
NO
USA
1
NASDAQ:FAST
FAST
Fastenal Company
Industrials
Industrial Distribution
69.43
55.62
31.77
36.83
36.83
1.51
2.0100
96.6000
4
1.12
14.3100
10
5
Durable
YES
YES
NO
NO
USA
1
NASDAQ:GILD
GILD
Gilead Sciences Inc.
Healthcare
Drug Manufacturers – General
51.47
71.71
89.22
8.69
8.69
8.25
3.9600
68.6000
4
2.84
13.3100
4
7
Consumable – Necessities
NO
NO
NO
NO
USA
1
NASDAQ:INTC
INTC
Intel Corporation
Technology
Semiconductors
72.05
53.47
217.01
10.09
10.09
5.30
2.6000
30.1000
4
1.39
9.1800
6
6
Durable
NO
NO
NO
NO
USA
1
NASDAQ:INTU
INTU
Intuit Inc.
Technology
Software – Application
41.87
542.94
147.76
57.15
57.15
9.50
0.4300
29.5000
4
2.36
16.3800
6
4
Subscription
NO
NO
NO
NO
USA
1
NASDAQ:MCHP
MCHP
Microchip Technology Inc.
Technology
Semiconductors
52.03
150.41
41.54
21.46
21.46
7.01
1.1600
85.9000
4
1.75
1.6900
5
6
Durable
NO
YES
NO
NO
USA
1
NASDAQ:MDLZ
MDLZ
Mondelez International Inc
Consumer Defensive
Confectioners
44.13
63.69
88.57
23.33
23.33
2.73
2.2000
41.5000
4
1.40
2.5400
2
6
Consumable – Discretionary
NO
NO
NO
NO
USA
1
NASDAQ:MSFT
MSFT
Microsoft
Technology
Software – Infrastructure
67.54
294.60
2,200.74
36.96
36.96
7.97
0.7600
27.5000
4
2.24
9.9200
10
6
Subscription
YES
YES
NO
NO
USA
1
NASDAQ:NVDA
NVDA
NVIDIA Corporation
Technology
Semiconductors
33.34
199.50
503.08
67.34
67.34
2.96
0.3200
7.4000
4
0.64
4.2600
3
3
Durable
NO
NO
NO
NO
USA
1
NASDAQ:PEP
PEP
Pepsi Co
Consumer Defensive
Beverages – Non-Alcoholic
66.89
158.05
216.33
26.08
26.08
6.06
2.7200
70.0000
4
4.30
10.5100
8
7
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NASDAQ:QCOM
QCOM
QUALCOMM Incorporated
Technology
Semiconductors
70.66
148.13
167.67
19.91
19.91
7.44
1.8400
33.3000
4
2.72
6.7400
7
7
Durable
YES
YES
NO
NO
USA
1
NASDAQ:SBUX
SBUX
Starbucks Corporation
Consumer Cyclical
Restaurants
74.35
117.54
137.67
42.74
42.74
2.75
1.5300
74.9000
4
1.80
17.5600
9
6
Consumable – Discretionary
YES
NO
NO
NO
USA
1
NASDAQ:TROW
TROW
T. Rowe Price Group, Inc.
Financial Services
Asset Management
70.24
216.11
48.76
18.38
18.38
11.76
2.0000
31.8000
4
4.32
13.5900
10
7
Tollbooth – Unregulated
YES
YES
YES
NO
USA
1
NASDAQ:TXN
TXN
Texas Instrument
Technology
Semiconductors
66.65
189.85
174.21
27.16
27.16
6.99
2.1500
54.4000
4
4.08
22.7600
7
6
Durable
YES
YES
NO
NO
USA
1
NASDAQ:WBA
WBA
Walgreens Boots Alliance, Inc.
Healthcare
Pharmaceutical Retailers
72.41
49.14
42.64
10.07
10.07
4.88
3.8900
80.8000
4
1.91
9.9200
8
8
Consumable – Necessities
YES
YES
YES
NO
USA
1
NASDAQ:XEL
XEL
Xcel Energy Inc.
Utilities
Utilities – Regulated Electric
57.04
69.77
37.17
23.81
23.81
2.93
2.6200
60.6000
4
1.83
8.1700
6
7
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NASDAQ:XLNX
XLNX
Xilinx Inc.
Technology
Semiconductors
57.31
142.64
36.29
46.61
46.61
3.06
1.0700
24.5000
4
1.52
3.4200
7
7
Durable
NO
YES
NO
NO
USA
1
NYSE:ABBV
ABBV
AbbVie Inc
Healthcare
Drug Manufacturers – General
51.10
118.41
205.84
10.04
10.04
11.79
4.3900
137.2000
4
5.20
5.0900
5
5
Consumable – Necessities
NO
NO
YES
NO
USA
1
NYSE:ACN
ACN
Accenture plc
Technology
Information Technology Services
59.52
328.25
215.56
38.85
38.85
8.45
1.0700
37.8000
4
3.52
9.0800
8
6
Subscription
YES
YES
NO
NO
USA
1
NYSE:ADM
ADM
Archer-Daniels-Midland Co
Consumer Defensive
Farm Products
66.66
62.68
34.90
13.00
13.00
4.82
2.3600
35.5000
4
1.48
6.3700
7
7
Consumable – Necessities
NO
YES
YES
NO
USA
1
NYSE:AEP
AEP
American Electric Power Co.
Utilities
Utilities – Regulated Electric
58.89
90.30
44.87
19.34
19.34
4.67
3.2800
63.8000
4
2.96
8.4800
5
8
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:AFL
AFL
Aflac
Financial Services
Insurance – Life
55.51
57.52
38.41
10.31
10.31
5.58
2.2900
18.5000
4
1.32
9.2800
6
6
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:ALB
ALB
Albemarle Corporation
Basic Materials
Specialty Chemicals
51.18
225.90
27.51
53.15
53.15
4.25
0.6900
24.6000
4
1.56
6.5200
7
6
Intermediate
YES
YES
NO
NO
USA
1
NYSE:AMP
AMP
Ameriprise Financial, Inc.
Financial Services
Asset Management
55.82
271.26
30.96
13.91
13.91
19.50
1.6700
48.1000
4
4.52
9.7400
7
5
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NYSE:AMT
AMT
American Tower Corporation
Real Estate
REIT – Specialty
51.97
283.20
128.77
57.10
57.10
4.96
1.7900
98.2000
4
5.08
21.8200
5
6
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:ANTM
ANTM
Anthem Inc.
Healthcare
Healthcare Plans
55.14
376.39
89.60
18.11
18.11
20.78
1.2000
24.5000
4
4.52
9.9400
6
5
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:APD
APD
Air Products & Chemicals
Basic Materials
Chemicals
63.70
281.55
61.92
32.36
32.36
8.70
2.1300
64.2000
4
6.00
12.2400
7
6
Intermediate
YES
YES
YES
NO
USA
1
NYSE:AXP
AXP
American Express
Financial Services
Credit Services
60.20
165.75
131.94
19.27
19.27
8.60
1.0400
20.7000
4
1.72
9.7200
6
6
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:BAC
BAC
Bank of America
Financial Services
Banks – Diversified
59.10
41.29
350.31
14.96
14.96
2.76
2.0300
23.9000
4
0.84
24.7100
7
5
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:BBY
BBY
Best Buy Co., Inc.
Consumer Cyclical
Specialty Retail
75.17
115.36
28.50
12.17
12.17
9.48
2.4300
27.6000
4
2.80
16.8100
8
5
Consumable – Discretionary
NO
YES
NO
NO
USA
1
NYSE:BDX
BDX
Becton Dickinson & Co
Healthcare
Medical Instruments & Supplies
61.53
249.61
70.88
18.81
18.81
13.27
1.3300
51.0000
4
3.32
4.0000
7
7
Durable
NO
YES
YES
NO
USA
1
NYSE:BF.B
BF.B
Brown-Forman Corporation
Consumer Defensive
Beverages – Wineries & Distilleries
58.13
69.89
32.52
43.68
43.68
1.60
1.0300
37.5000
4
0.72
7.4600
7
5
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NYSE:BK
BK
Bank of New York Mellon Corporation
Financial Services
Asset Management
61.62
54.27
46.50
13.43
13.43
4.04
2.5100
32.3000
4
1.36
15.2700
7
6
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:BLK
BLK
BlackRock
Financial Services
Asset Management
66.08
924.89
139.54
24.86
24.86
37.20
1.7900
43.7000
4
16.52
12.5200
9
6
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:BMY
BMY
Bristol Myers Squibb Co.
Healthcare
Drug Manufacturers – General
59.00
68.68
150.01
10.16
10.16
6.76
2.8500
0.0000
4
1.96
7.1600
6
3
Consumable – Necessities
NO
NO
NO
NO
USA
1
NYSE:C
C
Citigroup Inc.
Financial Services
Banks – Diversified
49.62
72.10
148.18
7.30
7.30
9.88
2.8300
21.3000
4
2.04
31.3900
2
5
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:CAT
CAT
Caterpillar
Industrials
Farm & Heavy Construction Machinery
67.20
217.71
119.66
24.38
24.38
8.93
2.0400
53.4000
4
4.44
9.0200
6
7
Durable
NO
YES
YES
NO
USA
1
NYSE:CB
CB
Chubb Corporation
Financial Services
Insurance – Property & Casualty
60.30
184.23
80.17
16.27
16.27
11.32
1.7400
17.2000
4
3.20
4.7800
7
7
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:CL
CL
Colgate-Palmolive
Consumer Defensive
Household & Personal Products
61.46
79.78
67.01
25.25
25.25
3.16
2.2600
55.6000
4
1.80
5.3900
6
6
Consumable – Necessities
NO
YES
YES
YES
USA
1
NYSE:CMI
CMI
Cummins Inc.
Industrials
Specialty Industrial Machinery
67.71
239.29
34.14
15.88
15.88
15.07
2.4200
35.7000
4
5.80
10.2600
7
7
Intermediate
YES
YES
NO
NO
USA
1
NYSE:CVS
CVS
CVS Health Corporation
Healthcare
Healthcare Plans
63.52
85.39
111.32
11.51
11.51
7.42
2.3400
36.6000
4
2.00
2.3400
6
4
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:CVX
CVX
Chevron
Energy
Oil & Gas Integrated
68.04
100.92
197.18
37.24
37.24
2.71
5.3100
275.9000
4
5.36
9.1200
8
6
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:D
D
Dominion Resources, Inc.
Utilities
Utilities – Diversified
55.17
78.46
62.83
20.98
20.98
3.74
3.2100
99.7000
4
2.52
7.5800
5
4
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:DE
DE
Deere & Company
Industrials
Farm & Heavy Construction Machinery
51.37
383.03
119.79
26.40
26.40
14.51
0.9400
21.8000
4
3.60
5.7800
5
4
Durable
NO
NO
NO
NO
USA
1
NYSE:DHR
DHR
Danaher Corporation
Healthcare
Diagnostics & Research
43.61
318.80
225.06
36.31
36.31
8.78
0.2600
10.4000
4
0.84
6.1900
6
4
Intermediate
NO
NO
NO
NO
USA
1
NYSE:DLR
DLR
Digital Realty Trust Inc.
Real Estate
REIT – Office
55.89
161.40
44.96
77.97
77.97
2.07
2.8700
251.4000
4
4.64
8.5500
8
5
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:DUK
DUK
Duke Energy Corporation
Utilities
Utilities – Regulated Electric
52.00
107.81
81.55
20.30
20.30
5.31
3.6500
100.9000
4
3.94
6.4100
6
5
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:ECL
ECL
Ecolab Inc.
Basic Materials
Specialty Chemicals
53.41
221.28
63.39
49.06
49.06
4.51
0.8700
51.9000
4
1.92
7.9900
7
5
Intermediate
YES
YES
YES
NO
USA
1
NYSE:ED
ED
Consolidated Edison Inc
Utilities
Utilities – Regulated Electric
52.53
78.25
27.47
18.63
18.63
4.20
3.9600
91.0000
4
3.10
6.5100
4
7
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:EL
EL
Estee Lauder Companies Inc.
Consumer Defensive
Household & Personal Products
48.62
327.98
118.40
63.81
63.81
5.14
0.6500
40.5000
4
2.12
2.3800
6
3
Consumable – Discretionary
NO
NO
NO
NO
USA
1
NYSE:EMR
EMR
Emerson Electric
Industrials
Specialty Industrial Machinery
47.11
103.64
62.02
25.97
25.97
3.99
1.9500
51.3000
4
2.02
3.1900
4
7
Intermediate
NO
YES
YES
YES
USA
1
NYSE:FDX
FDX
FedEx Corporation
Industrials
Integrated Freight & Logistics
71.79
281.66
74.10
15.49
15.49
18.18
1.0700
13.9000
4
3.00
14.1100
7
4
Consumable – Discretionary
NO
YES
NO
NO
USA
1
NYSE:GD
GD
General Dynamics Corporation
Industrials
Aerospace & Defense
68.06
200.46
55.45
17.46
17.46
11.48
2.3700
39.7000
4
4.76
11.9900
9
6
Durable
YES
YES
YES
NO
USA
1
NYSE:GIS
GIS
General Mills, Inc
Consumer Defensive
Packaged Foods
59.59
60.13
36.34
15.87
15.87
3.79
3.3900
53.3000
4
2.04
4.0800
4
4
Consumable – Discretionary
NO
YES
NO
NO
USA
1
NYSE:GS
GS
Goldman Sachs Group Inc.
Financial Services
Capital Markets
75.99
408.35
138.47
7.37
7.37
55.38
1.9600
9.1000
4
8.00
15.5300
9
7
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:HD
HD
Home Depot Inc.
Consumer Cyclical
Home Improvement Retail
77.31
335.05
352.28
24.44
24.44
13.71
1.9700
44.8000
4
6.60
19.4600
10
6
Consumable – Discretionary
YES
NO
NO
NO
USA
1
NYSE:HON
HON
Honeywell International Inc.
Industrials
Specialty Industrial Machinery
63.28
233.74
160.01
30.88
30.88
7.57
1.5900
52.0000
4
3.72
11.4200
7
6
Intermediate
YES
NO
NO
NO
USA
1
NYSE:IBM
IBM
International Business Machines Corp.
Technology
Information Technology Services
59.40
143.59
128.34
16.41
16.41
8.75
4.5700
111.9000
4
6.56
7.9000
6
6
Subscription
YES
YES
NO
NO
USA
1
NYSE:IFF
IFF
International Flavors & Fragrances Inc.
Basic Materials
Specialty Chemicals
56.21
155.56
39.04
26.73
26.73
5.82
2.0300
390.8000
4
3.16
6.5800
9
4
Intermediate
YES
YES
NO
NO
USA
1
NYSE:ITW
ITW
Illinois Tool Works
Industrials
Specialty Industrial Machinery
63.82
235.20
73.39
29.18
29.18
8.06
2.0700
53.9000
4
4.88
15.0900
7
6
Intermediate
YES
YES
YES
NO
USA
1
NYSE:JNJ
JNJ
Johnson & Johnson
Healthcare
Drug Manufacturers – General
57.24
177.84
463.97
19.48
19.48
9.13
2.3800
60.6000
4
4.24
8.5600
6
7
Consumable – Necessities
NO
YES
YES
YES
USA
1
NYSE:JPM
JPM
JP Morgan Chase
Financial Services
Banks – Diversified
73.73
158.93
478.05
10.54
10.54
15.08
2.2700
24.0000
4
3.60
18.1800
9
7
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:KMB
KMB
Kimberley-Clark
Consumer Defensive
Household & Personal Products
59.40
138.57
45.96
20.74
20.74
6.68
3.2900
74.9000
4
4.56
6.6200
5
7
Consumable – Necessities
NO
YES
YES
NO
USA
1
NYSE:KO
KO
Coca-Cola
Consumer Defensive
Beverages – Non-Alcoholic
58.81
57.48
247.04
25.55
25.55
2.25
2.9200
88.5000
4
1.68
6.4000
5
8
Consumable – Discretionary
NO
YES
YES
YES
USA
1
NYSE:KR
KR
Kroger Co
Consumer Defensive
Grocery Stores
67.82
43.45
31.99
12.63
12.63
3.44
1.9300
37.0000
4
0.84
13.1300
10
5
Consumable – Necessities
YES
YES
NO
NO
USA
1
NYSE:KSU
KSU
Kansas City Southern
Industrials
Railroads
26.66
292.86
26.62
37.45
37.45
7.82
0.7400
135.5000
4
2.16
5.1700
3
2
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:LIN
LIN
Linde Praxair Inc.
Basic Materials
Specialty Chemicals
62.28
311.35
159.78
32.30
32.30
9.64
1.3600
64.3000
4
4.24
7.4900
8
6
Intermediate
NO
YES
YES
NO
USA
1
NYSE:LLY
LLY
Lilly
Healthcare
Drug Manufacturers – General
37.93
269.94
252.74
33.62
33.62
8.03
1.2600
49.2000
4
3.40
5.4700
4
5
Consumable – Necessities
NO
NO
NO
NO
USA
1
NYSE:LMT
LMT
Lockheed Martin Corporation
Industrials
Aerospace & Defense
83.30
360.25
99.13
13.69
13.69
26.32
2.8900
30.3000
4
10.40
12.4100
10
8
Durable
YES
YES
NO
NO
USA
1
NYSE:LOW
LOW
Lowe’s Companies, Inc.
Consumer Cyclical
Home Improvement Retail
84.97
193.48
134.67
18.84
18.84
10.27
1.6500
25.5000
4
3.20
14.9900
10
7
Consumable – Discretionary
YES
YES
YES
YES
USA
1
NYSE:MA
MA
Master Card
Financial Services
Credit Services
55.44
363.56
357.95
52.46
52.46
6.93
0.4800
23.7000
4
1.76
26.5800
7
2
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:MCD
MCD
McDonald
Consumer Cyclical
Restaurants
63.79
240.97
178.35
29.35
29.35
8.21
2.1400
55.4000
4
5.16
10.0800
6
7
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NYSE:MCO
MCO
Moody’s Corporation
Financial Services
Financial Data & Stock Exchanges
66.07
384.44
70.88
32.36
32.36
11.88
0.6500
21.1000
4
2.48
11.1400
10
6
Subscription
YES
NO
NO
NO
USA
1
NYSE:MDT
MDT
Medtronics
Healthcare
Medical Devices
59.15
129.59
172.48
29.25
29.25
4.43
1.9400
86.5000
4
2.52
9.8300
7
6
Durable
YES
YES
YES
NO
USA
1
NYSE:MMM
MMM
3M
Industrials
Specialty Industrial Machinery
67.67
202.32
116.06
19.89
19.89
10.17
2.9300
57.3000
4
5.92
10.4000
8
7
Consumable – Discretionary
YES
YES
YES
YES
USA
1
NYSE:MO
MO
Altria Group, Inc.
Consumer Defensive
Tobacco
61.78
48.39
89.62
10.80
10.80
4.48
7.1100
140.1000
4
3.44
15.9300
6
7
Consumable – Discretionary
NO
YES
NO
NO
USA
1
NYSE:MRK
MRK
Merck & Co., Inc.
Healthcare
Drug Manufacturers – General
61.84
77.93
194.21
13.51
13.51
5.77
3.3400
101.2000
4
2.60
8.3500
6
5
Consumable – Necessities
NO
NO
NO
NO
USA
1
NYSE:MS
MS
Morgan Stanley
Financial Services
Capital Markets
74.20
103.72
189.64
13.61
13.61
7.62
2.7000
18.6000
4
2.80
18.5700
9
6
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:NEE
NEE
NextEra Energy, Inc.
Utilities
Utilities – Regulated Electric
62.46
83.95
163.71
34.34
34.34
2.45
1.8300
89.2000
4
1.54
12.6800
9
5
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NYSE:NKE
NKE
NIKE, Inc.
Consumer Cyclical
Footwear & Accessories
63.05
172.36
271.80
48.42
48.42
3.56
0.6400
29.6000
4
1.10
9.7000
10
6
Consumable – Discretionary
YES
YES
NO
NO
USA
1
NYSE:NOC
NOC
Northrop Grumman Corporation
Industrials
Aerospace & Defense
79.63
368.62
58.14
14.47
14.47
25.47
1.7000
21.4000
4
6.28
13.6200
10
7
Durable
YES
YES
NO
NO
USA
1
NYSE:NSC
NSC
Norfolk Southern
Industrials
Railroads
56.98
269.73
66.42
24.34
24.34
11.08
1.6200
35.7000
4
4.36
11.3800
6
4
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:NUE
NUE
Nucor Corporation
Basic Materials
Steel
45.57
124.28
37.06
12.17
12.17
10.21
1.3000
16.2000
4
1.62
2.4100
3
7
Intermediate
NO
YES
YES
NO
USA
1
NYSE:O
O
Realty Income Corporation
Real Estate
REIT – Retail
52.21
72.52
28.02
73.25
73.25
0.99
3.9000
279.4000
12
2.83
7.2400
7
5
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:ORCL
ORCL
Oracle Corporation
Technology
Software – Infrastructure
61.32
90.82
252.34
19.36
19.36
4.69
1.4100
22.3000
4
1.28
14.8900
7
6
Subscription
NO
NO
NO
NO
USA
1
NYSE:PEG
PEG
Public Service Enterprise Group
Utilities
Utilities – Diversified
47.65
64.82
32.72
18.06
18.06
3.59
3.1500
68.5000
4
2.04
6.7900
4
6
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:PFE
PFE
Pfizer Inc.
Healthcare
Drug Manufacturers – General
59.32
48.91
271.38
15.58
15.58
3.14
3.1900
70.5000
4
1.56
9.0900
6
7
Consumable – Necessities
NO
NO
NO
NO
USA
1
NYSE:PG
PG
Procter & Gamble
Consumer Defensive
Household & Personal Products
56.79
144.64
348.68
25.55
25.55
5.66
2.4100
57.1000
4
3.48
5.5600
5
7
Consumable – Necessities
NO
YES
YES
YES
USA
1
NYSE:PH
PH
Parker-Hannifin Corporation
Industrials
Specialty Industrial Machinery
77.04
299.00
37.81
19.93
19.93
15.00
1.3800
19.5000
4
4.12
9.6100
8
7
Intermediate
YES
NO
NO
YES
USA
1
NYSE:PM
PM
Philip Morris International Inc.
Consumer Defensive
Tobacco
57.49
102.39
158.33
17.59
17.59
5.82
4.6900
84.9000
4
4.80
7.9400
6
8
Consumable – Discretionary
NO
NO
NO
NO
USA
1
NYSE:PPG
PPG
PPG Industries, Inc.
Basic Materials
Specialty Chemicals
56.72
169.39
40.30
23.08
23.08
7.34
1.3900
33.6000
4
2.36
8.1700
6
6
Intermediate
NO
YES
YES
NO
USA
1
NYSE:PRU
PRU
Prudential Financial
Financial Services
Insurance – Life
66.51
107.32
41.69
7.64
7.64
14.04
4.2900
25.2000
4
4.60
16.8000
7
8
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:PSX
PSX
Phillip 66
Energy
Oil & Gas Refining & Marketing
44.88
71.85
32.36
0.00
0.00
-1.59
5.0100
0.0000
4
3.60
14.6700
4
3
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:ROP
ROP
Roper Technologies, Inc.
Industrials
Specialty Industrial Machinery
54.38
485.19
50.68
34.44
34.44
14.09
0.4600
21.7000
4
2.25
21.6200
7
2
Intermediate
NO
YES
YES
NO
USA
1
NYSE:RSG
RSG
Republic Services, Inc.
Industrials
Waste Management
55.49
121.72
38.39
30.28
30.28
4.02
1.5100
48.3000
4
1.84
8.9400
7
6
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:SCHW
SCHW
Charles Schwab Corporation
Financial Services
Capital Markets
50.67
73.26
139.73
25.62
25.62
2.86
0.9800
30.1000
4
0.72
12.6000
7
2
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:SHW
SHW
The Sherwin-Williams Company
Basic Materials
Specialty Chemicals
62.15
307.76
80.48
33.56
33.56
9.17
0.7100
24.9000
4
2.20
14.7600
10
5
Intermediate
YES
YES
YES
NO
USA
1
NYSE:SO
SO
Southern Company
Utilities
Utilities – Regulated Electric
56.01
66.38
69.38
18.91
18.91
3.51
3.9800
85.9000
4
2.64
7.3400
5
8
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:SPGI
SPGI
S&P Global Inc
Financial Services
Financial Data & Stock Exchanges
58.79
446.11
106.46
35.49
35.49
12.57
0.6900
28.1000
4
3.08
11.7400
10
5
Subscription
YES
YES
YES
NO
USA
1
NYSE:SWK
SWK
Stanley Black & Decker, Inc.
Industrials
Tools & Accessories
74.62
200.49
32.61
16.18
16.18
12.39
1.5800
24.9000
4
3.16
6.3100
8
7
Consumable – Discretionary
NO
YES
YES
YES
USA
1
NYSE:SYK
SYK
Stryker Corporation
Healthcare
Medical Devices
60.76
265.05
99.23
29.03
29.03
9.13
0.9500
44.5000
4
2.52
11.5400
9
5
Durable
YES
YES
NO
NO
USA
1
NYSE:SYY
SYY
Sysco Corporation
Consumer Defensive
Food Distribution
35.84
79.33
40.64
55.09
55.09
1.44
2.3700
132.1000
4
1.88
8.1700
4
2
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NYSE:T
T
AT&T
Communication Services
Telecom Services
59.27
28.20
201.28
8.65
8.65
3.26
7.3800
0.0000
4
2.08
9.3800
5
7
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:TFC
TFC
Truist Financial
Financial Services
Banks – Regional
77.25
57.07
76.59
11.69
11.69
4.88
3.3600
46.7000
4
1.92
14.7500
9
6
Tollbooth – Unregulated
NO
NO
NO
NO
USA
1
NYSE:TGT
TGT
Target
Consumer Defensive
Discount Stores
71.76
263.15
129.39
21.00
21.00
12.53
1.3700
22.7000
4
3.60
6.2900
9
7
Consumable – Discretionary
YES
YES
YES
NO
USA
1
NYSE:TMO
TMO
Thermo Fisher Scientific Inc
Healthcare
Diagnostics & Research
39.27
554.46
214.27
21.72
21.72
25.53
0.1900
4.4000
4
1.04
8.1500
5
4
Intermediate
NO
NO
NO
NO
USA
1
NYSE:TRV
TRV
The Travelers Companies, Inc.
Financial Services
Insurance – Property & Casualty
65.43
157.74
39.00
11.10
11.10
14.21
2.2300
23.2000
4
3.52
8.2300
7
7
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:UNH
UNH
UnitedHealth Group Incorporated
Healthcare
Healthcare Plans
66.52
417.21
386.28
26.01
26.01
16.04
1.3900
33.9000
4
5.80
20.2700
9
5
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:UNP
UNP
Union Pacific Corp.
Industrials
Railroads
62.42
227.49
148.55
25.03
25.03
9.09
1.8800
45.2000
4
4.28
13.9000
7
6
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NYSE:UPS
UPS
United Parcel Service Inc.
Industrials
Integrated Freight & Logistics
84.24
197.07
168.96
18.30
18.30
10.77
2.0700
58.9000
4
4.08
8.7800
8
7
Consumable – Discretionary
NO
NO
NO
NO
USA
1
NYSE:USB
USB
U.S. Bancorp
Financial Services
Banks – Regional
72.18
57.57
86.32
12.33
12.33
4.67
2.9200
36.1000
4
1.68
13.6300
8
7
Tollbooth – Unregulated
YES
NO
NO
NO
USA
1
NYSE:V
V
Visa
Financial Services
Credit Services
67.10
235.36
494.80
43.50
43.50
5.41
0.5400
26.2000
4
1.28
20.6600
10
5
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NYSE:VFC
VFC
V.F. Corporation
Consumer Cyclical
Apparel Manufacturing
60.90
79.74
31.73
37.26
37.26
2.14
2.4600
98.2000
4
1.96
5.8300
7
3
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NYSE:VZ
VZ
Verizon Communications Inc.
Communication Services
Telecom Services
61.97
55.98
231.31
10.89
10.89
5.14
4.4800
52.0000
4
2.51
6.8300
4
8
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:WEC
WEC
WEC Energy Group, Inc.
Utilities
Utilities – Regulated Electric
67.51
97.18
30.35
23.82
23.82
4.08
2.7900
64.0000
4
2.71
9.5300
8
7
Tollbooth – Unregulated
YES
YES
NO
NO
USA
1
NYSE:WM
WM
Waste Management
Industrials
Waste Management
50.79
151.93
63.42
33.39
33.39
4.55
1.5100
59.4000
4
2.30
7.1500
6
6
Tollbooth – Unregulated
NO
YES
NO
NO
USA
1
NYSE:WMT
WMT
Walmart
Consumer Defensive
Discount Stores
55.81
150.75
419.00
24.92
24.92
6.05
1.4600
50.0000
4
2.20
3.8400
7
6
Consumable – Discretionary
NO
YES
YES
NO
USA
1
NYSE:XOM
XOM
Exxon Mobile Corp
Energy
Oil & Gas Integrated
76.07
55.94
240.34
34.96
34.96
1.60
6.2200
0.0000
4
3.48
10.0800
8
7
Tollbooth – Unregulated
NO
YES
YES
NO
USA
1
NYSE:YUM
YUM
Yum! Brands, Inc.
Consumer Cyclical
Restaurants
36.58
135.12
39.90
30.78
30.78
4.39
1.4800
43.9000
4
2.00
3.6300
3
4
Consumable – Discretionary
NO
YES
NO
NO
USA
1
Pay attention to the 3, 5 and 10 year dividend yield average (If you have access to the data) in order to make sure the stock has paid above your desired yield for consistency.
While there are more than 10 stocks that show up in each of the filters, I am going with 10 holdings form the TSX and 10 from the NYSE or NASDAQ. Those represent my core dividend payers but they do not have to be the only stocks.
The filter in the page is fixed but I found a couple of stocks outside with a lower Chowder Score that still attracted me. In the end, it’s not the individual stock’s ability to keep up with inflation that is important but the overall portfolio dividend growth.
Canadian Retirement Stocks
Based on the Dividend Snapshot Screener, I came up with the list below that matches my criteria. Nothing surprising if you are familiar with the Canadian stock market. Perhaps you already own them all.
Enbridge and TC Energy still meet the requirements but there is pressure from an oil consumption and environment perspective. You could decide to have none, one or both. One option is to swap with life insurance stocks.
There are 10 stocks. All solid blue chip stocks from a Canadian perspective and if you were to have $50K in each, that would be worth $500,000 with an income of $22,000 or a 4.42% yield.
There are other names you can add but I consider those the core stocks for a Canadian retirement portfolio. Feel free to swap a bank or a telecom, both industries are pretty much an oligopoly and will have some protection by the Canadian government for the foreseeable future.
You get an approximate dividend growth of 4% which means you could still have a lower yield stock like CNR or CP if you want. However, I intend to reduce my high growth dividend stocks once I live from the income of my portfolio.
US Retirement Stocks
This is similar to the Canadian list but in general the yield is a bit lower. You would make around $18,200 in dividend for a $500,000 portfolio value in Canadian dollars and a yield of 3.77%. Obviously, the best account to hold the US stocks is in your RRSP.
Why hold US stocks in retirement? It’s simply a bigger economy and if you are not willing to hold $1,000,000 in the 10 stocks above, you are diluting your Canadian holdings into lower yield stocks or riskier holdings. The difference between the Canadian and US stock market is significantly different.
A Word on REITs
Contrary to other investors, I am not keen on REITs. Real estate is a solid and stable asset class but when you invest in a REIT, you invest in a business that holds the real estate asset class and you rely on management to run the business.
REITs are a proxy to the real estate asset class and real estate stocks is a sector where you invest in stock equity. The physical building is an asset class like bonds and equities. There is a distinction between a REIT and a real estate building.
Moving past this nuance, I find the yield of many REITs high and risky. Sure, it’s appealing but I want safety and I want it for 10, 15 or 20 years and it’s impossible to predict safety like that for REITs.
I got burned with REITs and after watching REITs for the last 10 years, I see too many drop the distribution over time. If there is a REIT with a normal yield and it has a limited limited growth, why should I bother with the REIT in my portfolio over the best Canadian bank or the best utility stock? REITs have to convince me they:
are more stable than other stocks (size)
have similar stock growth than other stocks (keep up with the TSX)
have similar distribution growth than other stocks (a decent chowder score)
What about Bonds?
No bonds for this model portfolio as it assumes the dividend income will cover your expenses. If it doesn’t then you delay and save more or you need to withdraw money from your portfolio.
If you need to withdraw, you should have bonds. You should establish your strategy to have access to bonds or fixed income equivalent that will not fluctuates with the stock market.
It’s about having a cash wedge plan. Don’t live from the income your generate today. Your portfolio income should be generating at a minimum next year’s income.
The Transition To a Dividend Retirement Portfolio
The transition should not be sudden on the day you flip the switch to retirement. You want to ease yourself into the new stocks as you slowly start taking profits from your other holdings not fitting your retirement income goals.
One way to do this is start a position 3 to 5 years ahead of your retirement years. You can start investing and averaging into those different holdings.
My approach will go with a 5 year transition and see new money added to some of those stocks to build a position. With a few stocks not currently in portfolio, I can chose the stock with a better value when it’s time to buy and grow my position over time.
Depletion & Withdrawal Strategy
To avoid being caught in a stock market storm, there needs to be a strategy for cash. I plan to use my dividends and flow them through a set of cash accounts or a 1 year GIC as an example.
I plan to have a full year’s worth of cash on hand (maybe two) and the following year is being filled by the incoming dividend income. Stock market fluctuation should not impact the dividend income.
If there is a need to withdraw, I will consider bonds (ETFs or coupons) to avoid selling at the wrong time and shift part of the portfolio to fixed income.