22 Best Retirement Stocks for an Income-Rich 2022 | Kiplinger

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Retirees, lacking a paycheck from a job, must find a different way to generate sufficient income to make ends meet while also ensuring they do not outlast their income stream. Thus, the best retirement stocks to buy in 2022 to meet those goals are ones that pay dividends.

Regular dividends can provide peace of mind by reducing or even eliminating the need to sell shares to generate income. Instead of worrying about elevated stock prices, the omicron variant or rising interest rates, owning a portfolio of quality businesses can deliver predictable, growing dividend income in all manner of market environments.

Even better? Many dividend-paying stocks raise their payouts annually, shielding dividends’ purchasing power in the face of today’s inflationary headwinds. Higher dividends often signal growth in a firm’s earnings power too, providing the fuel for long-term price appreciation.

Research firm Simply Safe Dividends published an in-depth guide about living on dividends in retirement here. But a critical element to this strategy is finding the market’s top retirement stocks – names that can both deliver safe income and increase in value over the years.

On that note, here are the 22 best retirement stocks to buy in 2022. The 22 stocks featured on this list look to have secure dividends based on their solid balance sheets and ability to generate cash, yield between 3% and 7%, and have strong potential to keep raising their payouts in the long term.

Data is as of Jan. 20. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Dividend growth streaks are calculated by using total dividends paid each fiscal year. Companies are listed in reverse order of yield.

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Flowers FoodsGetty Images

Market value: $6.0 billionDividend yield: 3.0%Dividend growth streak: 19 yearsSector: Consumer staplesBread has remained a household stable for centuries, and Flowers Foods (FLO, $27.86) has been there to serve this basic need since its founding in 1919.

The baked goods business sells breads, buns, snack cakes and rolls under an umbrella of popular brands, including Tastykake, Nature’s Own, Dave’s Killer Bread and Canyon Bakehouse.

As is the case with many consumer staples stocks, most of the categories Flowers competes in are very mature and enjoy predictable demand trends. With excellent cash flow generation in all manner of economic environments, Flowers has managed to raise its dividend each year since initiating its payout in 2002.

With an investment-grade credit rating, a reasonable payout ratio near 70%, and the No. 1 brands in faster-growing organic and gluten-free bread categories, Flowers should remain one of the best retirement stocks for 2022.

(And for those worried about a worst-case scenario for the market this year, FLO is also a solid pick for investors thinking about preparing their retirement portfolios for a recession, as discussed by Simply Safe Dividends.)

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General MillsGetty Images

Market value: $41.3 billionDividend yield: 3.0%Dividend growth streak: 2 yearsSector: Consumer staplesWith a history dating back to the 1800s, General Mills (GIS, $68.42) and its predecessors have been involved with a diverse mix of businesses over time, including restaurants, apparel and toys. However, in 1995, the firm shifted to focus exclusively on consumer-packaged foods.

Despite the company’s ongoing evolution, its dividend has always remained an important fixture, and that’s what makes it one of the top retirement stocks today. In fact, GIS has paid uninterrupted dividends every year since 1898.

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General Mills’ current portfolio covers major non-perishable food categories that you’d see at any grocery store. It includes major brands such as Cheerios cereal, Blue Buffalo pet food, Betty Crocker packaged meals and Nature Valley snack bars.

This collection of popular brands and General Mills’ extensive distribution network have helped the company generate reliable cash flow in all manner of economic conditions. The steady nature of food consumption hasn’t hurt either.

Simply Safe Dividends expects General Mills’ entrenched brands, large marketing budget, distribution relationships, investment-grade credit rating and product diversity to keep the firm and its dividend on solid ground for years to come.

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Lockheed MartinGetty Images

Market value: $103.5 billionDividend yield: 3.0%Dividend growth streak: 19 yearsSector: IndustrialsFormed in 1912 during the dawn of flight, Lockheed Martin (LMT, $369.40) has grown to become the world’s largest defense contractor and supplier of fighter aircraft. The firm is best known for its F-35 fighter jets, but Lockheed’s business spans missile defense systems, military helicopters, satellite systems and various combat aircraft.

Lockheed enjoys an entrenched relationship with the government thanks to the complex, extensive, and sensitive nature of developing weapon systems that are essential to national security.

With a large backlog of contracted work and conservative financial policies that earn Lockheed an investment-grade credit rating, the firm has paid uninterrupted dividends since 1995 and increased its payout every year since 2003.

While pandemic-related supply chain disruptions and concerns about shifts in the defense budget have weighed on the stock in recent years, Simply Safe Dividends expects Lockheed’s dividend to remain a safe bet.

CFRA analyst Colin Scarola, who rates LMT at Strong Buy, also believes Lockheed trades at a steep discount “driven by market fear of defense spending cuts under Democrats.” However, he notes that a Democrat-controlled committee has already passed a 5% defense budget raise over the Trump era level and that Lockheed grew its earnings per share 10% annually during 2012-2015, even as defense spending fell 4% annually in those years.

Regardless of where the defense budget heads, Lockheed belongs among the best retirement stocks to consider, as it’s a good bet to continue delivering rising income in the years ahead.

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Dominion EnergyGetty Images

Market value: $64.1 billionDividend yield: 3.2%Dividend growth streak: 1 yearSector: UtilitiesDominion Energy (D, $79.09), a large, diversified utility company, surprised many investors in July 2020 when it decided to divest its natural gas transmission and storage business. This segment represented a material portion of the firm’s earnings, necessitating a 33% dividend cut to better align the payout with Dominion’s ongoing cash flow.

This asset sale moved Dominion much closer to a pure-play regulated utility business model and improved the firm’s growth profile. In fact, management expects to deliver 6.5% annual earnings growth between 2022 and 2025, up from its prior long-term target of 5%.

Dominion’s dividend is also expected to increase 6% annually, much faster than the prior 2.5% target, though admittedly this growth is now off a lower starting base. Regardless, Dominion punched through its first 6% raise in December 2021, and income investors should expect more of the same in late 2022.

Investors should also note that Dominion has an “industry-leading energy profile,” reflecting the investments its utilities are making across wind, solar, and battery storage technologies. These qualities seem likely to become more valued by regulators and investors alike in the coming years.

Dominion will generally be viewed with skepticism given the recent dividend cut. However, overall, Simply Safe Dividends believes D shares represent an appealing combination of income and growth for long-term investors.

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Kimberly-ClarkGetty Images

Market value: $47.7 billionDividend yield: 3.2%Dividend growth streak: 49 yearsSector: Consumer staplesSince its founding in 1872, Kimberly-Clark (KMB, $141.61) has assembled a leading portfolio of tissue and hygiene products under classic brands including Huggies, Kleenex, Cottonelle and Scott.

The company’s products are so popular that a quarter of the global population uses at least one Kimberly-Clark item daily. This sizable, recurring demand provides helps the firm invest heavily in marketing, gain economies of scale, and distribute its products to a larger base of retailers compared to its smaller competitors.

With diapers, wipes, paper towels and toilet paper remaining in demand even during economic downturns, Kimberly-Clark has historically delivered predictable results in many different environments, making it one of the best retirement stocks on the rmarket today.

These qualities have helped the Dividend Aristocrat pay higher dividends for 49 straight years, putting it on track to be crowned a dividend king in 2022.

KMB will never be the fastest-growing business, as demand for many of its products tracks global population growth. But the stock can serve as a defensive holding for a conservative retirement portfolio.

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Brookfield Infrastructure Partners LPGetty Images

Market value: $18.4 billionDistribution yield: 3.4%*Dividend growth streak: 13 yearsSector: UtilitiesBrookfield Infrastructure Partners LP (BIP, $60.40), one of the world’s largest owners of global infrastructure assets, is a unique utility-esque play structured as a master limited partnership (MLP). Unlike traditional energy providers in this sector, Brookfield owns an eclectic mix of railroads, ports, pipelines, telecom towers, power transmission lines, and data centers.

But like regulated utilities, all the firm’s assets serve essential needs, are difficult to replicate and produce annuity-like cash flows. In fact, approximately 90% of Brookfield’s adjusted EBITDA is backed by regulated or long-term contracts.

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Along with an investment-grade credit rating and continued pursuit of infrastructure investment opportunities worldwide, this stability has helped Brookfield pay higher distributions every year since 2008. Investors can likely expect more of the same, with management guiding for long-term annual distribution growth of 5% to 9%.

Just note that BIP is admittedly one of the more complicated retirement stocks on this list.

The partnership is structured to avoid generating unrelated business taxable income. Unlike most limited partnerships that can have more complex taxes, Brookfield’s units are suitable for holding in non-taxable accounts. (For more on how partnerships are taxed, Simply Safe Dividends has published an MLP tax guide.)

For investors who would still prefer to hold corporations over partnerships that issue K-1 forms, the firm also trades under Brookfield Infrastructure Corporation (BIPC). BIPC shares provide an economic return equal to BIP units through a traditional corporate structure. They have the same distribution as BIP units, too.

* Distribution yields are calculated by annualizing the most recent distribution and dividing by the share price. Distributions are similar to dividends but are treated as tax-deferred returns of capital and require different paperwork come tax time.

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MerckGetty Images

Market value: $204.0 billionDividend yield: 3.4%Dividend growth streak: 10 yearsSector: HealthcareMerck (MRK, $80.50) boasts a track record of paying uninterrupted dividends every year since 1971, reflecting the branded pharma giant’s proven research process, vast distribution network and financial conservatism.

Morningstar equity analyst Damien Conover expects MRK to earn strong returns on invested capital over the long term thanks to its “wide lineup of high-margin drugs” and divestiture of its Organon (OGN) business in June 2021, which improved Merck’s mix of drugs with strong patent protection.

Looking ahead, Conover believes “Merck’s drug development strategy is yielding important new drugs.” This pipeline should help the company manage its patent expiration schedule to keep the business strong and capable of paying reliable dividends.

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American Electric PowerGetty Images

Market value: $44.6 billionDividend yield: 3.5%Dividend growth streak: 12 yearsSector: UtilitiesFounded in 1906, American Electric Power (AEP, $89.99), or just AEP, is one of the largest electric utility companies in America with 5.5 million customers spanning 11 states, including Ohio and Texas.

AEP generates nearly all its earnings from its vertically integrated utilities and its transmission and distribution utilities. These regulated businesses enjoy predictable earnings streams and have solid growth opportunities.

In fact, management targets 5% to 7% annual earnings per share growth, which is expected to be driven by upgrading American Electric Power’s aging transmission and distribution lines as well as opportunities to connect remotely located wind farms and solar fields to the grid.

Coupled with AEP’s conservative payout ratio target of 60% to 70% and the firm’s investment-grade credit rating, the utility easily belongs among the best retirement stocks for 2022 and beyond.

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Regency CentersGetty Images

Market value: $12.1 billionDividend yield: 3.5%Dividend growth streak: 7 yearsSector: Real estateRegency Centers (REG, $70.55) was founded in 1963 and owns more than 400 grocery-anchored shopping centers leased to a diverse group of over 8,000 tenants.

The retail real estate investment trust (REIT) was one of the few companies in its industry to preserve its dividend throughout the depths of the pandemic, reflecting management’s conservative payout ratio policy and Regency’s investment-grade balance sheet.

While e-commerce demand and COVID variants continue to weigh on segments of brick-and-mortar retail, Regency’s open-air shopping centers had already seen their foot traffic exceed 2019 levels as of late October 2020.

The resiliency of Regency’s properties reflects their convenient proximity to customers and location in major metropolitan areas benefiting from pandemic-driven growth in America’s suburbs. These qualities should keep REG’s rental income stream and dividend well supported.

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Old Republic InternationalGetty Images

Market value: $7.6 billionDividend yield: 3.6%Dividend growth streak: 40 yearsSector: FinancialsOld Republic International (ORI, $24.65) boasts one of the most impressive track records in the cyclical insurance industry, with uninterrupted dividends since 1942. The firm has raised its dividend for 40 consecutive years, to boot.

A little more than half of the commercial lines underwriter’s profits are generated from general insurance policies tied to workers compensation, trucking and home warranty offerings. The rest of Old Republic’s business focuses on title insurance provided to real estate buyers.

The insurance business is all about risk management – an area Old Republic has excelled in since its founding nearly a century ago. In fact, the firm’s general insurance segment has recorded combined ratios (which measure losses and expenses as a percentage of premium revenue) below the industry average in 41 of the last 50 years.

ORI’s title business adds additional stability. Unlike general insurance, this business collects the full premium upfront and losses are usually minimal, reducing underwriting volatility and providing nice diversification.

Overall, Old Republic remains one of the best retirement stocks as we head into 2022 because its conservative financial practices and disciplined underwriting should keep its regular dividend safe and growing despite the industry’s cyclical nature.

We also expect ORI to keep delivering special dividends – it regularly provides a top-up payout every year as profits allow. If Old Republic provides a 2022 special dividend similar to last year’s $1.50-per-share payout, for instance, shares would end up delivering a yield of closer to 9.7%.

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MSC IndustrialGetty Images

Market value: $4.6 billionDividend yield: 3.7%Dividend growth streak: 0 yearsSector: IndustrialsIn business since 1941, MSC Industrial (MSM, $82.13) distributes over 1 million products to manufacturers across North America. Some of its product categories includes cutting tools, fasteners, measuring instruments, power tools and janitorial supplies.

Nearly every manufacturer has an ongoing need for at least some of the supplies and inventory management services that MSC Industrial provides. As one of the biggest distributors in this highly fragmented industry, MSC has a leg up over smaller distributors thanks to its wider selection of inventory, quicker delivery options and more competitive cost structure.

While this isn’t an exciting business, it generates reliable free cash flow, which has enabled MSC to pay uninterrupted dividends since 2003. The firm has paid out several large special dividends over the past decade, too.

With a strong balance sheet, healthy payout ratio and continued solid cash flow generation, the dividend on MSM stock remains a good bet going forward for income-minded retirement portfolios.

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Washington Trust BancorpGetty Images

Market value: $1.0 billionDividend yield: 3.7%Dividend growth streak: 11 yearsSector: FinancialsWith roots tracing back to 1800, Washington Trust (WASH, $57.88) is the oldest community bank in America and operates mostly in Rhode Island.

The financial services firm has weathered many storms over the past two centuries, and the pandemic was no different. Washington Trust delivered record earnings in 2020 and continued its track record of 100-plus years of uninterrupted quarterly dividend payments.

The bank even announced modest payout raises at the end of 2020 and 2021. Washington Trust’s impressive dividend record reflects the firm’s diverse mix of lending, wealth management and mortgage banking businesses, which contribute steadier fee income over a full economic cycle.

Management runs the bank conservatively, too. This includes maintaining very healthy capital levels to help buffer credit losses in future downturns.

While banks and other financial stocks are usually cyclical plays, WASH is among the few that look like dependable retirement stocks, earning it a spot in Simply Safe Dividends’ top 20 high-dividend stocks list. The firm should have upside should the economic recovery continue, too.

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Consolidated EdisonGetty Images

Market value: $29.0 billionDividend yield: 3.8%Dividend growth streak: 47 yearsSector: UtilitiesConsolidated Edison’s (ED, $82.00) roots trace back to 1823 when its earliest corporate predecessor – New York Gas Light company – was formed to provide gas for New York’s streetlamps. Today, the business continues providing electric and gas power to the New York metro area.

As a regulated utility, Consolidated Edison enjoys monopoly-like status in its service territories; state regulators determine how much profit the firm can earn and which projects it can invest in, ensuring households and businesses have reliable energy at reasonable prices.

Coupled with the essential nature of power demand, ED has a stable and recession-resistant earnings stream. Management has thus been able to grow the dividend for a remarkable 47 consecutive annual years – the longest streak of any utility in the S&P 500.

Dividend growth has averaged only about 2% per year over the past two decades, but the utility should remain a reliable income play.

Argus analyst Angus Kelleher-Ferguson believes “the dividend appears secure” and sees Consolidated Edison’s yield as attractive for income-oriented investors who don’t mind the firm’s slower growth profile.

Editor’s note: Consolidated Edison announced a dividend increase on Jan. 21 (after the data deadline for this article), to 79 cents per share quarterly from 77.5 cents previously. The yield as of the new dividend is 3.9%. Edison is thus primed to record its 48th consecutive year of higher payouts.

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Duke EnergyGetty Images

Market value: $78.7 billionDividend yield: 3.8%Dividend growth streak: 15 yearsSector: UtilitiesThe defensive nature of regulated utilities and their large dividends often make them popular holdings in conservative retirement portfolios. These qualities have also resulted in many utilities being featured in the most recession-proof stocks analyzed by Simply Safe Dividends.

Duke Energy (DUK, $102.80) made the cut. With a history dating back to the early 20th century, Duke is one of the oldest and largest regulated utilities in America. Its electric and gas utilities currently service seven states throughout the Southeast and Midwest.

These territories have historically exhibited a favorable operating environment, helping Duke pay uninterrupted dividends for 95 consecutive years – one of the longest such streaks among these elite retirement stocks.

Andrew Bischof, an equity analyst at Morningstar, says that Duke’s regulatory environment “is supported by better-than-average economic fundamentals in its key regions.” This has helped Duke develop a constructive relationship with its regulators, “the most critical component of a regulated utility’s moat.”

With this solid foundation, DUK expects to deliver 5% to 7% annual earnings growth through 2025 and should have no trouble extending its 15-year dividend growth streak.

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AbbVieGetty Images

Market value: $235.2 billionDividend yield: 4.3%Dividend growth streak: 8 yearsSector: HealthcareAbbVie (ABBV, $132.52) was created in 2013 when Abbott Laboratories (ABT) spun off its branded biopharmaceutical business. Since becoming a standalone company, AbbVie has remained true to its roots of branded drugs, which enjoy high barriers to entry and excellent margins.

ABBV also sports one of the highest dividends in Big Pharma, putting it squarely in the sights of investors looking for income-producing retirement stocks.

Admittedly, this high yield reflects some uncertainty around AbbVie’s growth profile as its blockbuster Humira drug loses market exclusivity in the U.S. in 2023. However, management has been busy investing in AbbVie’s drug pipeline and making acquisitions to diversify the business.

Along with the company’s investment-grade credit rating and moderate payout ratio, ABBV has positioned itself to defend and grow the dividend in 2023 and beyond when headwinds from Humira impact results.

While AbbVie will continue to have a rather concentrated portfolio of medicines, the drugmaker seems likely to remain a solid income generator for retirement portfolios – just as it has each year since being spun off.

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Leggett & PlattGetty Images

Market value: $5.2 billionDividend yield: 4.3%Dividend growth streak: 50 yearsSector: Consumer discretionaryLeggett & Platt (LEG, $39.31) supplies components used in everything from mattresses to cars, flooring, and furniture. Despite operating in cyclical markets driven by consumer spending, the diversified business has managed to pay higher dividends every year since 1972.

Leggett’s impressive streak reflects the firm’s focus on dominating niche markets that typically have a slow pace of change and are driven by more predictable replacement demand. Coupled with the firm’s operating history dating back to 1883, Leggett has developed a respected brand and many entrenched customer relationships.

As the firm finds more opportunities to increase the amount of content it supplies into its various end markets and continues making bolt-on acquisitions, management sees potential to grow revenue by 6% to 9% annually in the long term.

Along with LEG’s investment-grade credit rating and consistent profitability, this engineered components maker should be among the most reliable retirement stocks you can find in 2022.

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TelusGetty Images

Market value: $32.2 billionDividend yield: 4.3%Dividend growth streak: 19 yearsSector: Communication servicesCanadian dividend stocks have a place in your retirement portfolio, too.

Telus (TU, $23.66) a Canadian telecom business, has long been a source of stability for income investors thanks to its 19 consecutive years of dividend growth.

Morningstar analyst Matthew Dolgin provides several explanations for the firm’s durability. Telus’ wireless business enjoys a large subscriber base and national network, which have limited competition. In fact, the three largest wireless services providers in Canada account for 90% of the market.

In the wireline business, Mr. Dolgin notes that Telus’s main competition is Shaw Communications (SJR). Together, the two companies enjoy an oligopoly due to the efficient scale of their capital-intensive networks. 

Given these traits and the essential nature of telecom services, Telus has delivered steady results in various economic environments. For example, during the 2007-09 financial crisis, the telecom firm’s sales dipped just 1%, per data from Simply Safe Dividends.

These defensive qualities, plus Telus stock’s high dividend yield, make TU shares appealing for a retirement portfolio.

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Realty IncomeGetty Images

Market value: $38.1 billionDividend yield: 4.4%Dividend growth streak: 26 yearsSector: Real estateRealty Income (O, $67.38) has earned its self-proclaimed moniker as “The Monthly Dividend Company.” Since listing on the NYSE in 1994, the retail REIT has raised its monthly dividend 114 times. And the firm has paid 618 consecutive monthly dividends – a number that likely will continue to grow for some time.

Not surprisingly, Kiplinger believes Realty will remain among the best monthly dividend stocks for retirement portfolios in 2022.

Realty’s portfolio includes more than 7,000 properties leased to approximately 650 tenants operating in 60 industries. This diversification, plus the REIT’s investment-grade credit rating and conservative payout ratio policy, helped Realty maintain its dividend throughout the depths of the pandemic.

As the economic recovery continues, Realty should continue paying a safe dividend while growing through acquisitions in the fragmented retail real estate market.

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National Retail PropertiesGetty Images

Market value: $7.6 billionDividend yield: 4.9%Dividend growth streak: 32 yearsSector: Real estateNational Retail Properties (NNN, $43.44) was founded in 1984, then began raising its dividend in 1990 and hasn’t looked back, delivering 32 consecutive annual increases through 2021. Focusing on single-tenant, freestanding retail properties has served the REIT well over the decades.

National Retail has done a good job avoiding retail categories most susceptible to e-commerce disruption. Experiential or service businesses such as convenience stores and restaurants account for most of National Retail’s rent.

The portfolio’s diversification reduces risk, too.

In total, the company owns approximately 3,200 properties leased to over 370 retail tenants in more than 30 industries. No industry exceeds 20% of rent, and no tenant is greater than 5% of rent.

With a time-tested underwriting process, low financial leverage and a conservative payout ratio policy, NNN seems like a good bet to remain one of the most reliable dividend growers in its industry.

Like most other REITs, National Retail’s dividends are mostly non-qualified and taxed as ordinary income. Investors generally prefer to own shares in a tax-sheltered account to avoid the higher tax rate applied to non-qualified dividends, as reviewed in Simply Safe Dividends’ guide to REIT taxes.

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Physicians Realty TrustGetty Images

Market value: $4.0 billionDividend yield: 5.1%Dividend growth streak: 0 yearsSector: Real estateFormed in 2011, Physicians Realty Trust (DOC, $18.00) is a healthcare REIT that owns 275 high-quality medical office buildings located either on campus with a hospital or off-campus closer to where patients live.

Medical practices and large healthcare systems have historically been reliable tenants given the non-discretionary nature of the many services they provide. Physicians Realty also focuses on the strongest operators, with more than 70% of its tenants considered investment-grade caliber.

Coupled with Physicians Realty’s diversified mix of tenants and geographical diversification, the REIT collected over 90% of rent during the worst of the pandemic in 2020, including 99.6% during the fourth quarter. That’s despite many medical providers experiencing business disruptions caused by the pandemic.

Looking ahead, Physicians Realty appears poised to continue delivering reliable dividends as it has since making its first payout in 2013. While dividend growth has been lackluster over this period, a high nominal yield still puts DOC among the best retirement stocks for those focused on income.

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W.P. CareyGetty Images

Market value: $14.1 billionDividend yield: 5.6%Dividend growth streak: 22 yearsSector: Real estateOne of the largest net lease real estate investment trusts in the market, W.P. Carey (WPC, $76.00) owns 1,264 properties spanning industrial, warehouse, office, retail, and self-storage markets across the U.S. and Europe.

Thanks to the quality of its single-tenant properties and W.P. Carey’s conservative management style, the diversified REIT has managed to pay higher dividends every year since going public in 1998.

W.P. Carey’s diversified portfolio has helped it deliver predictable dividends by reducing risk. No tenant exceeds 3.5% of rent, only one industry accounts for more than 15% of rent, and no property type exceeds 25% of rent.

Reflecting the quality of WPC’s properties, the REIT’s occupancy has exceeded 96% for at least a decade – even throughout the pandemic – and the firm maintains an investment-grade balance sheet.

Approximately 60% of its leases contain contractual rent increases linked to the consumer price index (CPI). Thus, W.P. Carey’s rental income stream has some protection from inflation and helps make the firm one of Kiplinger’s best REITs to consider owning in 2022.

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Main Street CapitalGetty Images

Market value: $3.0 billionDividend yield: 5.9%Dividend growth streak: 11 yearsSector: FinancialsBusiness development companies (BDCs) are one of the best areas to find high-yielding stocks according to Simply Safe Dividends. Main Street Capital (MAIN, $43.85) is no exception, with a dividend yield near 6%.

The firm provides debt and equity capital to small and mid-sized companies, typically those that generate annual revenues between $10 million and $150 million. The internally managed BDC’s investments are highly cyclical over a full economic cycle, as many of the firms it works with are unable to obtain traditional bank financing.

Despite this volatility, Main Street has never cut its regular monthly dividend since the firm went public in 2007, right before the Great Financial Crisis.

This track record reflects management’s conservative style, which includes maintaining a diversified portfolio of nearly 180 investments, limiting exposure to any one industry to less than 10% of the portfolio’s cost basis and using only moderate amounts of leverage. As a result, Main Street is one of the only business development companies to earn an investment-grade credit rating.

It also reflects management that also keeps its monthly dividend payout sustainable, choosing to further reward investors as it can with special distributions.

That said, companies in this industry are riskier investments during economic downturns, which Simply Safe Dividends explained in its guide to investing in business development companies. However, MAIN remains one of the best retirement stocks for 2022 given the firm’s relatively conservative style and solid track record of managing risk.

Brian Bollinger was long AEP, D, DUK, ED, GIS, KMB, LEG, MAIN, MSM, NNN, ORI and WPC as of this writing.


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