Forget Bonds, Grab These 3 Dividend Stocks for Retirement Income

Many investors have been chasing bonds instead of dividend stocks for the better part of 2023, as the ten-year United States treasury bond yield reached 5.0% at one point. Retracing to 4.3% today, it is still a potentially attractive proposition to beat inflation. However, it has stagnated compared to some of the money these bondholders leave on the table.

Bonds don’t appreciate; they don’t buy back shares or have the appreciation potential that stocks can offer. Of course, these added benefits don’t come for free. Buying stocks comes with the added risk of volatility. Still, volatility can be directional, meaning it can be your best friend if you get the direction right.

Three stocks selling at incredible discounts today bring you the best of both worlds: the high – and higher – dividends to beat inflation and bond yields alongside its distant cousin in the appreciation factor. If you want to add stocks to your retirement balance, consider these global long-term plays to keep adding to your income.

Dividend Stocks: Simon Property Group (SPG)

Source: Jonathan Weiss / Shutterstock.com

After rising by as much as 50.0% over the past quarter, there is one REIT (real estate investment trust) adding to the list of stocks that offer you the added income to be had into retirement as well as the appreciation that comes as the added benefit that you cannot find in bonds.

Simon Property Group (NYSE:SPG) is giving you a 5.2% dividend yield today to be paid quarterly. Why is it stable? Well, as long as people need malls, which, contrary to unpopular opinion, they will. Simon Property will be able to keep expanding its holdings portfolio and adding to incremental rent bumps year after year to afford the dividend payouts.

These payouts amount to roughly $2.2 billion, while the property holder generated $3.1 billion in free cash flow (operating cash flow minus capital expenditures). By increasing rents by as much as 3.1% over the past twelve months, the company keeps on its track record of inflation-protected financials to add income for your retirement.

Comparing the historical dividend yields in this company, you can see that when the stock is fairly and even overvalued, the dividend yield goes down to 2.8% roughly, meaning that today’s 5.2% yield would imply the stock still has much more room to keep moving higher.

3M (MMM)

a photo of 3M protective masks

Source: r.classen / Shutterstock.com

Part of a classic group of conglomerates worldwide, this stock has been – successfully – dealing with a lot of controversy in the past couple of years. There are many reasons to believe that the stock will keep moving higher and return to its former glory days. Here is why 3M (NYSE:MMM) stock can be a worthy addition to your retirement income list.

After declining by as much as 50.0% from its 2021 high of roughly $208.0 a share, 3M faced lawsuits from the faulty equipment found in earplugs and water systems. Markets were justified in selling off the stock since these headlines can be a source of fear for anyone.

Now that these legal matters have been settled, markets could soon realize that the reality isn’t as bad as they once feared, as the company’s relentless free cash flow of $5 billion annually is more than enough to pay for the $13 billion settlement (which is spread out over the next decade).

Trading at a P/E ratio of below 10.0x would make this not only an undervalued stock with the promise of a 14.5% upside initially per analysts’ targets of $106.0 a share, but the company is also relaying its confidence in the future by paying you a 6.5% dividend yield for your retirement.

This yield is one of the highest in the company’s history, topped only by the 7.0% yield from November 2023.

Brookfield Renewable (BEP)

Brookfield Renewable logo on a phone screen. BEPC stock. BEP stock.

Source: IgorGolovniov / Shutterstock

It shouldn’t be news to learn that the world has no other choice but to seriously consider its transition to clean renewable energy sources, which is why aligning your portfolio to the best names in the ‘green race’ could lend you the peaceful ride that could be had on top of attractive dividend yields.

Paying you an inflation and bond-beating dividend of 5.8%, Brookfield Renewable (NYSE:BEP) could be the best way to expose yourself to the wonders of the new energy revolution. The stock trades at a significant discount (53.9%) from its all-time high price of $49.9 a share back in 2021.

According to the company’s latest quarterly results, management bumped the dividend payout by 5.0% over the past year, which is more than enough to increase your retirement income in a year where inflation hovered between 3.0% and 4.0%. The likelihood of this trend continuing sees no obstacle in the global race for green energy.

As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.

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