MPLX Lp

This article is part of our monthly series where we highlight five large-cap, relatively safe, dividend-paying companies offering significant discounts to their historical norms. We go over our filtering process to select just five conservative DGI stocks from more than 7,500 companies that are traded on U.S. exchanges, including OTC networks. In addition to the primary list that yields 3.7%, we present two other groups of five DGI stocks, each with moderate to high yields of up to 8%.

Most retirees aren't trying to beat the market. They want reliable monthly income that pays the bills without causing sleepless nights. The catch is that high yield and peace of mind tend to pull in opposite directions, and many tempting high-yielders have let investors down. The way out is a deliberate compromise: give up big growth in return for income you can count on and stable capital.

The best retirement income machines combine high current yields, growing payouts, durable cash flows, and investment-grade balance sheets. Two of my largest holdings offer yields approaching or exceeding 8%, with analyst forecasts suggesting potential annualized total returns of 12% to 15% without needing valuation multiple expansion. Both businesses have substantial payout coverage and attractive growth prospects.

The 10-year Treasury now hands you a nearly 5% yield with zero credit risk, so any dividend stock asking you to take on more complexity had better earn it.