Embrace 'Dividend Aristocrats' for a Regal Retirement
NEW YORK (TheStreet) -- Some retirement planners embrace the "Age in Bonds" school of thought that advises investors to increase the amount of bonds owned as they age. For example, a twenty-year old should have 20% of their holdings in bonds. By contrast, someone who is 80 should have an 80% position in bonds. That is recommended so that the investor has retirement income from stable securities.
The best way to assure that there is steady income from secure retirement holdings is to not own any bonds at all and instead buy what are known as "Dividend Aristocrat" stocks, such as Coca-Cola
I believe that anything a bond can do, a Dividend Aristocrat can do much, much better. The primary appeal of a bond for retirement purposes is to supply a consistent stream of income. To become a Dividend Aristocrat, a publicly traded company must have increased its dividend for at least 25 consecutive years.
Just paying a dividend is a solid indicator from a company. It signals that the executive management of the company feels that it can reward the shareholders with a cash payment while still upholding their fiduciary duty. That is a strong sign when a company can continue to responsibly fund its commercial activities and still pay a dividend from the cash generated from the core business operations.
To increase it every year for well over two decades is an even more bullish sign.