5 of the Safest Dividend Stocks Retirees Can Buy Right Now

Though there are a lot of ways to make money in the stock market, few have proved more successful than investing in dividend stocks. A study from J.P. Morgan Asset Management, a subsidiary of JPMorgan Chase, showed that companies initiating and growing their payouts between 1972 and 2012 averaged an annual return of 9.5%. By comparison, non-dividend-paying stocks delivered a meager annualized return of 1.6% over the same 40-year time frame.

Dividend stocks are an especially smart investment idea for retirees. With core inflation hitting a nearly three-decade high recently, it’s important for seniors to continue building their nest egg to offset rising prices. At the same time, retirees also want to ensure that their initial investment is well protected.

The good news is there are plenty of lower-risk, high-reward income stocks for retirees to choose from. Below are five of the safest dividend stocks retirees can buy right now.

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NextEra Energy: 1.8% yield

Electric utility stock NextEra Energy (NYSE:NEE), the largest utility company in the U.S. by market cap, is a perfect example of a safe stock seniors can add to their portfolio and not worry about.

Usually, electric utilities have yields of 3% or higher. The reason NextEra’s is so low has to do with the company’s stock outperforming its peers. Since yield is a function of payout relative to share price, a rising share price will reduce yield. Over the trailing 10 years, NextEra’s shares are up 529%, and that’s not including the dividend.

What really separates NextEra from its competition is its beefy investments in renewable energy. No U.S. utility is generating more capacity from wind and solar than NextEra. While these investments in green energy aren’t cheap, they’re helping to reduce the company’s electric generation costs and lifting its earnings growth potential to the high single digits. Traditionally, electric utilities grow at a low single-digit rate.

Yet the company also benefits from the highly predictable cash flow associated with its regulated utilities (i.e., those not powered by renewable energy). Since electricity and natural gas demand don’t fluctuate much from year to year, NextEra is a solid bet to deliver steady long-term returns.

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Verizon Communications: 4.7% yield

If extremely low volatility and an inflation-crushing yield are more what you’re after, telecom giant Verizon (NYSE:VZ) could be the perfect stock for retirees.

It’s been a decade since wireless download speeds have been meaningfully improved for businesses and consumers. The ongoing rollout of 5G infrastructure is expected to lead to a multiyear technology upgrade cycle and a significant uptick in data consumption. Since Verizon leans on transparent and predictable cash flow from its wireless customers, and data is the key driver of its wireless margins, 5G is set to be a steady source of organic…