The year has not been easy for stock market investors. Since the start of 2022, tighter central bank policy and the raging war between Russia and Ukraine have provided strong headwinds to the global economy, putting pressure on the 13-year-old bull run. years for US stocks.
While cutting its outlook for U.S. economic growth last week, Goldman Sachs said the likelihood of a recession next year could rise to 35% amid soaring prices and fallout from war in Ukraine. . Bank of America said the risk of an economic slowdown is low for now but higher next year.
In this highly uncertain environment, choosing the right stocks for your retirement portfolio is not easy, especially when a marked slowdown in economic growth is looming. However, a proven strategy that many retirees have relied on to secure growing income is to buy quality dividend-paying growth stocks.
Companies that increase their cash payouts quarter after quarter demonstrate that they can generate stable and reliable income for investors, not only during good times, but also during downturns and recessions.
Dividend growth stocks can also be a great way to fight inflation. The shares of these companies, unlike bonds which pay a fixed principal in addition to interest payments, provide a regular wage increase to stakeholders, in the form of increased dividends to increase purchasing power.
Below, we’ve listed three stocks for earning ever-growing income.
1. Texas Instruments
- 5-year average dividend growth: 21%
- Dividend yield: 2.76%
- Payout rate: 50%
Texas Instruments (NASDAQ:) manufactures electronics, including microchips vital to many diverse industries. Its long-standing, consolidated market position and strong dividend history make it a reliable name to include in your retirement portfolio. The stock closed Monday at $166.72.
The Dallas-based chip giant is the largest producer of analog and embedded processing chips, which go into everything from household gadgets to space hardware. TI has the widest reach in the industry, making its revenue base very diverse. This means the company could weather an economic downturn better than its peers.
But the biggest attraction for long-term investors is the company’s dividend program, which increases every year. With an annual dividend yield of around 3%, TI currently pays $1.15 per share per quarter, which has grown 21% per year over the past five years.
With a payout ratio of over 50%, TI is in a comfortable position to further increase its dividend in the near future. Additionally, the company’s long-term growth prospects are promising given the number of electronic devices being added to cars and machinery. Additionally, the company posted a strong performance in January.
2. CN Railway
- Average dividend growth over 5 years: 11%
- Dividend yield: 1.85%
- Payout rate: 35%
Another important investment for dividend income growth is Canada’s largest railroad, Canadian National Railways (NYSE:). Because this rail operator benefits from a unique competitive advantage within the North American economy, CNI is particularly attractive. Shares closed Monday at $123.50.
Montreal-based CN transports more than C$250 billion ($195 billion) worth of goods annually, ranging from petroleum energy products to consumer goods, on an approximately 20,000-mile rail network that stretches from Canada in the middle of America, connecting the Atlantic, the Pacific and the Gulf of Mexico. This wide economic moat makes CNR a safer bet in the long term.
Strong demand for commodities such as metals, lumber and oil helped CN post profits in 2021, nearly double a year ago when the COVID-19 pandemic took hold .
CN Rail pays $0.73 per share per quarter, which has increased by about 11%, on average, per year, over the past five years. The company also posted better than expected results in January.
- Average dividend growth over 5 years: 18%
- Dividend yield: 2.47%
- Payout rate: 50%
Shares of global food companies can provide a safe haven for long-term investors during a market downturn. Their low-cost meal options, global footprint and stable earnings are some of the strengths that shield them from the extreme volatility that can plague high-flying growth stocks during uncertain times.
Global coffee chain Starbucks (NASDAQ:) is one such income-generating stock we recommend. It closed at $79.29 on Monday.
Shares of the Seattle-based specialty food and coffee supplier are currently under selling pressure, due to rising costs and the still challenging operating environment in China, the company’s second largest market where the local government is still imposing containment measures to prevent COVID infections.
But this bearish period, in our view, is a good buying opportunity, offering investors the opportunity to take a stake in a company that has strong long-term growth prospects and an excellent dividend record. The company’s strategy of keeping prices low to gain market share is the right one because it can pay off in the long run. SBUX sales in North America remain strong, and it’s only a matter of time before they pick up in China as well.
Although the company fell short of expectations last quarter, earnings remain strong.
Another reason to own Starbucks: management’s focus on returning more money to shareholders in the form of dividends. The stock currently pays a quarterly dividend of $0.49 per share, which translates to an annual yield of approximately 2.47%. His payment has increased by about 18% per year for the past five years.