Most retirees should hold dividend-paying stocks in their investment portfolios. These aren’t the high-growth rockstars that grab the headlines in financial news, and they aren’t the exciting stories that younger investors will crave for the explosive returns.
Instead, these are usually established stalwarts leading mature industries, and they can play a very important role in your portfolio. Dividend-paying stocks offer a combination of income, growth, and stability that few other investments can boast, so you should understand how they can improve your retirement plan.
This one’s a bit obvious, but dividend income is enormous for retirees. Once your work income stops, you’re forced to live off Social Security benefits and whatever cash flow is generated from pensions, investment accounts, or annuities. As pensions become less popular, people are relying more and more on the interest and dividends from their retirement accounts.