3 High-Yield Dividend Growth Stocks Retirees Can Count On For Recurring Income

If you’re a retiree looking to make the most of your nest egg, investing in dividend stocks can be a great way to do so. You can help maximize the recurring income you earn by investing in dividend growth stocks that have a solid track record of growing payouts. Dividend payments are never a guarantee, but companies with strong financials that prioritize growing their payouts can be ideal income investments to keep in your portfolio.

Three dividend growth stocks with high yield payouts that could be attractive to today’s retirees are AbbVie (ABBV 0.26%), Verizon Communications (See 1.42%)and Prologue (PLD -1.54%).

AbbVie

Drugmaker AbbVie pays a hefty dividend yield of 3.3% — more than double the S&P 500 average yield of 1.4%. The stock is technically a dividend king when you count its timing as part of it Abbott Laboratories. It went out of business in 2013 and has continued to increase dividend payments. Over the past five years, AbbVie has increased its dividend payout by 45%, representing a compound annual growth rate (CAGR) of 7.7%.

With AbbVie, retirees get not only a great dividend stock, but also a good growth stock. AbbVie has invested in several companies over the years as a way to support its growth prospects. This year, it completed several acquisitions, including neuroscience company Cerevel Therapeutics and cancer company ImmunoGen.

AbbVie is facing challenges due to the loss of patent protection for its best-selling drug Humira. But it projects that by next year it will return to generating strong growth, targeting single-digit CAGR over the long term.

Between its high dividends and promising growth opportunities, retirees can get a fantastic investment with AbbVie. The company is consistently profitable and trades at a fairly modest forward price-earnings multiple of 18.

Verizon Communications

Retirees can get a particularly high return with telecom giant Verizon, which pays investors 6.5%. That’s nearly double AbbVie’s rate. Investors were bearish on telecom stocks due to rising interest rates and high debt. But big-name players like Verizon are still making solid long-term investments.

The company may not be a growth machine, but it can be a reliable dividend stock to hang on to over time. In its most recent quarter, which ended in June, the company’s earnings per share of $1.09 were only slightly lower than the $1.10 per share it posted in the same period last year. More importantly, that’s still a much higher level of profit than what the company pays out in dividends per quarter — $0.665.

Verizon has increased its dividend by 10% over five years, averaging a CAGR of about 2%. While that’s not a terribly high growth rate, with Verizon already paying investors a big yield, retirees will still collect plenty of dividend income from the telecom stock even if there aren’t big increases. And if inflation continues to decline, at least those 2% increases may be enough to offset rising costs in the years ahead, assuming Verizon continues to make similar increases to its dividend going forward.

Prologue

Prologis is a real estate investment trust (REIT) that invests in warehouses and plays an important role in the e-commerce industry. Many of its customers require large warehouses to help move products around the world, and as a leading logistics company, Prologis can benefit from long-term growth in the global economy.

The stock pays the lowest yield on this list at 3.2%, but that’s still an above-average payout. The REIT expects its core funds from operations (FFO) per share to be around $5.39 to $5.47 this year, which is well above its annual dividend rate — $3.84.

Prologis has been generous when it comes to dividend growth. It has increased its payout from $0.53 five years ago to now paying shareholders $0.96 per share. This represents an 81% increase in the dividend over that time frame, for a CAGR of 12.6%. Given the buffer between the stock’s FFO and its dividend, it seems likely that Prologis will continue to make another sizeable increase in its payout next year.