Monday, October 28, 2019

6 Dividend Stocks Ignoring The 4% Rule

William P. Bengen is an author and a certified financial planner. In 1994 he published a study concluding that if retirees withdrew 4% (the 4% rule) of their nest egg in the first year, and then increased the dollar amount by the inflation rate every year, their savings would easily last 30 years.

At the time of the initial study, he assumed the portfolio was held in a tax-deferred account and was evenly split between large-company stocks and U.S. Treasury bonds. In a subsequent study he revised the withdrawal rate to 4.5%. The higher rate was supported by adding U.S. small-company stocks to the portfolio. This increased the portfolio's potential return, and also increased its volatility

Bengen notes that people who retired in 2000 are of the greatest concern. Since retiring, they have endured two major bear markets. The next five years will be critical for this group. A surge of inflation above its historical average of 3 percent, could derail the 4% rule for this group.

You have to be able to survive worst-case scenarios. There is a better way...

Instead of eating away at your principle, why not live off the fruit of your portfolio. The best way to do that is with a hand-selected portfolio of dividend growth stocks. Not only will you receive an annual income, but it will grow each year.

This week week, I screened my Dividend Growth Stocks database for select stocks with a minimum 3% dividend growth rate and yield of 4% or more. The results are presented below:

Southern Company (SO) is an Atlanta-based energy holding company and is one of the largest producers of electricity in the U.S.
Yield: 4.1% | Dividend Growth: 3.4%

Wells Fargo & Company (WFC), with March 31 assets of $1.85 trillion, is the fourth largest U.S. bank, by global assets, but has the largest U.S. lending footprint.
Yield: 4.1% | Dividend Growth: 5.9%

National Health Investors (NHI) is a real estate investment trust that invests in income-producing health care properties primarily in the long-term care industry.
Yield: 5.1% | Dividend Growth: 5.0%

Exxon Mobil Corp. (XOM), formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company.
Yield: 5.1% | Dividend Growth: 4.5%

Main Street Capital Corporation (MAIN) is a business development company specializing in equity, equity related, and debt investments in small and lower middle market companies.
Yield: 6.8% | Dividend Growth: 3.1%

Meredith Corp. (MDP) publishes a suite of magazines and websites focused on food, parents and women (e.g. Better Homes and Gardens) and operates 17 local TV stations.
Yield: 6.3.% | Dividend Growth: 5.6%

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long SO, NHI, XOM, MAIN, MDP, 

Related Articles
- 10 Dividend Stocks Building A Growing Cash Stream
- How To Build A Sustainable High Yield Portfolio
- How To Buy Dividend Stocks At The Bottom
- 10 Stocks That Have Paid Dividends Since The 1800s
- Are You Patient Enough To Be Wealthy? These 7 Dividend Stocks Will Help You Wait

Sources: Wall Street Journal, Yahoo Finance, Wikipedia
(Photo Credit)


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