3 cash-rich dividend stocks to boost your retirement income

  • Coca-Cola’s track record shows its ability to survive the toughest economic times
  • Cisco has increased its payout over the past 12 years, making it attractive to those looking for growing income
  • Lockheed Martin’s dividend supported by strong cash flow and recession-proof business nature

The continued sell-off in stock markets this year is a strong sign that the US economy is heading for a hard landing amid the central bank’s struggle to fight inflation. In such an uncertain economic environment as a recession looms, which stocks are best to buy as you build your retirement portfolio?

The answer to this question depends a lot on your risk appetite and retirement goals. But if you’re like many retirees with the goal of preserving capital and generating stable returns to fund a comfortable lifestyle during your golden years, I generally recommend buying low-risk stocks that provide growing dividends. constant.

Within these selection criteria, you will typically find blue chip companies with healthy balance sheets, strong cash flow, and a long history of paying dividends. Below, I’ve shortlisted three such dividend-paying stocks for your consideration:

1. Coca-Cola

Atlanta-based food and beverage giant Coca-Cola (NYSE:) is a recession-proof, cash-rich company that has been issuing dividend checks for more than a century. This impressive track record shows the strength of its brands and its ability to survive in the most difficult economic times.

The latest proof of this strength came when Coca-Cola released its . Coca-Cola’s sales beat expectations and the company raised its full-year forecast, helped by consumers’ willingness to pay more for its drinks.

For the full year, the Atlanta-based company is now reporting organic revenue growth of 12% to 13%, up from its previous estimate of 7% to 8%. And this despite an expected negative currency effect of 9%.

Coca-Cola Payment History

Source: InvestingPro

The maker of Sprite, Fanta and Simply is acquiring beverage start-ups to better resonate with health-conscious customers and find new areas for growth. His recent investments include Honest Tea, Fairlife Dairy and Suja Life.

Trading at $61.92, Coke’s stock is earning 2.85% annually. This comeback might not sound too exciting, but the company has a long track record of increasing its payouts, for 58 consecutive years now.

With an annual dividend growth rate of 6% over the past 10 years, KO currently pays $0.44 per share per quarter.

2. Cisco Systems

Cisco Systems (NASDAQ:) is another stable, dividend-paying stock well-suited to long-term investors whose goal is to create a solid stream of income during their golden years. Cisco is a cash-rich company that is well positioned to pay dividends without interruption. The San Jose-based networking giant is the world’s largest producer of routers, switches and other equipment businesses use to connect computers.

Cisco has significantly improved its future growth prospects after aggressively diversifying from the hardware model to a software model in new high-growth areas of the market, such as cybersecurity, applications and services.

Cisco Dividend History

Cisco Dividend History

Source: InvestingPro

These growth initiatives, coupled with the company’s dominant position in the Americas, where it generates the majority of its sales, have positioned the company to outperform when macroeconomic risks abate.

The latest information from Cisco shows that the company is successfully overcoming supply-side challenges that have hampered its growth over the past year. In the second quarter, the company saw orders remaining flat and there were no signs that customers were tightening their budgets.

The company has traditionally generated the bulk of its revenue from the expensive switches and routers that form the backbone of computer networks, but that’s changing. Subscription revenue will reach 50% of Cisco’s total by fiscal year 2025, the company predicted in September 2021.

In addition to growth, Cisco is also a reliable dividend payer. Cisco has increased its payment every year for the past 12 years, making it an attractive option for those looking for growing income. The company currently pays $0.38 per quarter for an annual payment of $1.52 per share.

3. Lockheed Martin

Lockheed Martin Corp. (NYSE:) is not the kind of action that makes headlines every day. But it’s definitely one of those names that fit well into a long-term retirement portfolio. It pays a quarterly dividend of $2.8 per share, translating into an annual dividend yield of 2.67%, supported by the company’s strong cash flow and recession-proof business nature .

In a report titled “Into the new Cold War,” RBC Capital Markets analyst Ken Herbert launched coverage of defense companies this week, saying “high defense spending (with less volatility) will justify a positive revaluation of the sector”. As Russia’s war on Ukraine bolsters demand, “continued Chinese risk will support long-term sentiment and rising funding.”

Due to this increase in military spending and its defensive nature, LMT stock has easily beaten the market this year, rising more than 18%. According to several financial models, such as those that value companies based on P/E or P/S multiples or terminal values, the average fair value for LMT on InvestingPro is $528.45, implying more than 25% upside potential.

Fair market value of Lockheed Martin

Fair market value of Lockheed Martin

Source: InvestingPro

Russia’s invasion of Ukraine has triggered promises from European governments to increase military spending, while the US Congress is on track to increase the national defense budget beyond the request from the White House. Lockheed chief financial officer Jay Malave said in July that the overall pipeline of potential new defense deals was stronger than a year ago.

Disclaimer: Haris Anwar owns shares of Cisco and Coca-Cola.