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Young Americans have always been enticed by the idea of leaving their 9-to-5 grind behind and enjoying the prime of their lives at the beach doing what they love. But in recent years, this idea has risen dramatically in popularity. In a recent survey conducted by the Federal Reserve Bank of New York, 45.8% of respondents said they were likely to work after age 62. According to the bank, this metric averaged 55% between March 2014 and March 2020.
The early retirement movement rose to prominence during the COVID-19 pandemic as millions of Americans began working from home and saving money through stimulus checks. In October 2021, St. Louis Federal Reserve economist Miguel Faria-e-Castro estimated that as many as three million Americans were retiring early as a result of the pandemic. However, this phenomenon, known as “The Great Resignation,” reversed when inflation began to impact American households.
Early retirement communities like Reddit’s/FinancialIndependence are still growing. Investing in dividend stocks is often cited as one of the faster and safest ways to retire early on Reddit. We searched several discussion boards on Reddit to see the most popular dividend stocks recommended for retirement by investors on the platform based on their personal experiences.
Pfizer
Pfizer Inc (NYSE:PFE) is a notable dividend stock that is popular among Redditors who want to make a living from dividends. Pfizer shares are down about 7% in the past year. The stock yields about 6%, which is high compared to the industry average of about 2.3%. Redditors believe Pfizer is experiencing a post-COVID crisis, but the company is poised to bounce back thanks to strong growth catalysts in the pipeline. During the first quarter, Pfizer’s revenue from non-COVID products saw operational growth of 11% year over year. Pfizer has increased its dividend for fourteen years in a row.
Philip Morris
With 16 consecutive years of dividend growth and a 5% yield, the tobacco company Philip Morris International Inc (NYSE:PM) is a top pick for many Redditors who live entirely on dividends. As the popularity of traditional tobacco products declines, Philip Morris is aggressively expanding into tobacco-free products. The company plans to generate approximately two-thirds of its net revenue from non-traditional products by 2030. The company posted strong first-quarter results in April and revised down guidance for full-year 2024. Adjusted earnings per share in the quarter came in at $1.50, beating estimates by $0.09, while revenue rose 9.7% year over year to $8.8 billion, beating the consensus estimate by $350 million. Philip Morris expects organic sales growth to be somewhere between 7% and 8.5% in 2024, compared to its previous forecast of 6.5% to 8%.
Capital of the street
Texas-based business development company Main Street Capital Corp (NYSE:MAIN) is one of the most popular monthly dividend stocks among Redditors in the social media platform’s retirement and dividend communities. Main Street has been consistently paying dividends since 2007 and has increased the dividend every year since 2014.
Main Street management said during the Q1 earnings call that the company’s net investment income in the quarter was 54% higher than the monthly dividends the company paid to its shareholders and 9% more than the total dividends paid to shareholders paid out. Total investment income in the March quarter came in at $131.6 million, easily surpassing the Street consensus of $127.9 million.
Altria
Reddit’s pension and dividend communities love it Altria Group Inc (NYSE:MO) for its dividend yield (over 8%) and impressive history of dividend growth (54 consecutive years of increases). Retail investors on Reddit believe the stock is undervalued and poised for growth due to the growth of recreational marijuana and tobacco-free products.
Last year, Altria completed its $2.75 billion acquisition of electronic vapor products company NJOY Holdings. Analysts believe that growth in the oral tobacco and vaping products category could offset declines in the smokable products segment.
Altria’s valuation is indeed low. The stock is trading at a forward price-to-earnings ratio of 9.05, much lower than the industry’s average price-to-earnings ratio of 17.24.
IBM
International Business Machines Corporation (NYSE:IMB) is one of the most talked about stocks in Reddit’s retirement and dividend communities, as many Redditors who live off dividends have the tech stocks in their portfolios. IBM is in the sweet spot between dividend income and stock growth, as some Redditors think the company’s cloud and AI businesses have the potential to boost IBM’s stock.
IBM has 29 years of consecutive dividend growth and yields 3.95%. In April, IBM increased its quarterly dividend by 0.6% to $1.66 per share. The same month, IBM said it would buy HashiCorp. for $6.4 billion. The company stated that the acquisition would allow it to expand its hybrid cloud platform for AI. Bank of America analyst Wamsi Mohan said IBM has the ability to fuel HashiCorp’s growth within its customer base.
Real estate income
California-based REIT Real Estate Income Corp (NYSE:O) is one of the best monthly dividend stocks and has increased its dividends for 29 years in a row. Redditors love this high-yield (5.9%) dividend growth stock. Realty Income increased its monthly dividend by 0.2% to $0.263 per share on June 11. The company also raised the lower end of its 2024 earnings guidance. It now expects adjusted FFO per share to be between $4.15 and $4.21 this year, compared to its previous guidance of $4.13 to $4.21.
Apple
Although the yield is low, Apple Inc (NASDAQ:AAPL) is one of the favorite dividend stocks on Reddit, as retail investors on the platform believe the iPhone maker is a solid addition to a diversified dividend portfolio. With a surplus of cash and increasing competition, Apple is prioritizing shareholder returns more than ever. The company has increased its dividend every year for the past decade. Earlier this year, Apple increased its dividend by 4%. It’s still a growth stock, with many analysts betting that Apple’s AI plans will pay off. The stock soared to new highs following Apple’s latest AI-related announcements at its annual Worldwide Developers Conference.
In the latest note, TF International Securities analyst Ming-Chi Kuo praised Apple’s AI move, saying the company could have a competitive advantage over its competitors as it has “successfully defined AI on-device.”
Coca-Cola
Coca Cola Co (NYSE:KO) has more than six decades of dividend growth, a solid business and a 3% yield. Redditors believe this old-fashioned, ‘boring’ dividend stock is important for any balanced dividend portfolio. Coca-Cola’s organic sales rose 11% year over year in the first quarter.
The company’s defensive activities make it an all-weather dividend stock. In May, Goldman Sachs said in a note that Coca-Cola is among stocks “insulated” against the headwinds of shaky consumer spending amid rising inflation.
Looking for opportunities with higher returns?
The current high interest rate environment has created an incredible opportunity for income-seeking investors to earn huge returns, but not through dividend stocks… Certain private market real estate investments offer retail investors the opportunity to take advantage of these high-yield investments. possibilities and Benzinga has identified some of the most attractive options for you.
For example, the Jeff Bezos-backed investment platform just launched its own investment platform Private credit fund, which provides access to a pool of short-term loans backed by residential real estate, with a net annual return of 7% to 9% paid out to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of just $100.
Don’t miss this opportunity to take advantage of high-yield investments while interest rates are high. See Benzinga’s favorite high-yield deals.
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This article Redditors Buy These 8 Dividend Stocks for Early Retirement originally appeared on Benzinga.com
