3 Great Dividend Stocks for Retirees to Buy Right Now

Peanut butter and jelly. March and college basketball. Retirees and dividend stocks. Some things just go together.

The challenge for retirees, though, is finding the right dividend stocks. The search can be daunting, especially considering that more than 4,300 stocks traded on U.S. exchanges offer dividends. However, some alternatives stand out more than others. Here are three great dividend stocks for retirees to buy right now.

1. Brookfield Infrastructure

Brookfield Infrastructure (BIP 1.37%) (BIPC 1.54%) CEO Sam Pollock recently laid out a strong argument for investing in infrastructure assets. He wrote in a letter to shareholders that infrastructure investments “typically perform well through all parts of the market cycle, and notably outperform during economic troughs.” Pollock was right. History shows that infrastructure stocks are smart investments during times like these. 

There are several reasons why Brookfield Infrastructure is a good pick right now. For one thing, the company’s infrastructure assets generate steady revenue and cash flow. Brookfield Infrastructure collects fees on the use of its pipelines, electric utilities, cell towers, toll roads, and many other assets regardless of economic conditions. Higher inflation actually serves as a tailwind for the company. 

For retirees, the main attraction with Brookfield Infrastructure is its distribution. The company has grown its distribution by a compound annual growth rate of around 10% since 2009. Its yield currently stands at nearly 4.5% for the limited partnership shares.

Brookfield Infrastructure expects to increase its distribution between 5% and 9% annually over the long run. With growth opportunities in data centers, cell towers, decarbonization, and more, the company should be able to achieve that goal. 

2. Easterly Government Properties

Real estate investment trusts (REITs) have long been favorites for retirees. They’re required to pass along at least 90% of their taxable income to shareholders as dividends. As a result, REITs can offer especially attractive dividend yields.

That’s certainly the case with Easterly Government Properties (DEA -1.12%). The company’s dividend yield tops 6.6% right now. Although Easterly hasn’t increased its dividend very much over the last five years, it has delivered steady income to shareholders.

The REIT often points out that nearly all of its lease income “is backed by the full faith and credit of the U.S. government.” That’s not an exaggeration. Easterly leases most of its properties to federal agencies such as the Food and Drug Administration and Veterans Administration. 

Easterly isn’t immune to macroeconomic headwinds. Higher interest rates make it more expensive for the company to finance expansion. On the other hand, the company’s leases have automatic increases that provide inflation protection. When interest rates come down (which they’ll do sooner or later), Easterly’s shares could rise significantly. In the meantime, retirees can depend on its solid dividend payments.

3. Enbridge

Enbridge (ENB -0.66%) is another excellent pick for retirees that’s relatively low risk. The company operates over 17,800 miles of liquids pipelines and over 76,500 miles of natural gas pipelines in North America. Roughly 98% of Enbridge’s cash flow is either contracted or under cost-of-service arrangements where rates are set by regulators.

Income investors should absolutely love Enbridge. The company has increased its dividend for 28 consecutive years. Its dividend yield currently stands above 6.8%.

But will the shift from fossil fuels to renewable energy sources hurt Enbridge? Not nearly as much as you might think. The company continues to expand into renewable energy and carbon capture and storage. It currently owns 23 wind farms, 17 solar energy facilities, plus other renewable energy assets. Enbridge is investing heavily in building up this part of its business.

CEO Greg Ebel acknowledged this transition during the company’s recent quarterly update. He stated, “Enbridge is right at the center of it.” This ability to adapt and evolve should enable Enbridge to keep the dividends flowing for a long time to come.

Keith Speights has positions in Brookfield Infrastructure and Brookfield Infrastructure Partners. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Easterly Government Properties. The Motley Fool has a disclosure policy.