Dividend Portfolio for Retirement Income: 6% or higher club

[dipod]

Quick question for the group;

Anyone allocate a certain portion of a retirement portfolio solely for dividend income?

 

My favorites so far are ET and EPD.

 

Running a series of informal experiments comparing this approach to selling cash secured puts on well selected, stable stocks. Obviously trading costs/taxes are higher with the later.

Any names outside of these you'd recommend? Looking into Canadian Telcos as well.

[james22]

BAC-L and WFC-L?

 

https://www.philosophicaleconomics.com/2017/03/a-value-opportunity-in-preferred-stocks/

[Paarslaars]

Strange STRF of STRK are not the first ones on your mind James.

[formthirteen]

Pipelines and royalties were my favorites when I was out hunting dividends during Covid: EPD, MPLX, BSM, DMLP. Also preferred stocks and closed-end funds at some point, e.g., FFH-PH.TO, if I remember correctly.

 

Today it's tobacco (BATS.L, STG.CO, etc.) and praying for special dividends from LRE.L and ELF.TO.

[Jaygo]

I use XEI.to

The performance is reasonable and it has a bit of the dogs of the TSX feel to it. Whoever runs the fund tends to buy the poor performers in the 60. It is much more diversified than just Utes and telcos. Pays monthly around 5% 

 

I use this a ballast in my kids RESP with about 20 moon shots and high growth stocks. Every month they get a div of 600 or so and I buy into one of the small caps with potential. 

[james22]

5 hours ago, Paarslaars said:

Strange STRF of STRK are not the first ones on your mind James.

 

Well, yeah, but I try to confine my cheerleading to the Crypto and MSTR threads.

[73 Reds]

13 hours ago, dipod said:

Quick question for the group;

Anyone allocate a certain portion of a retirement portfolio solely for dividend income?

 

My favorites so far are ET and EPD.

 

Running a series of informal experiments comparing this approach to selling cash secured puts on well selected, stable stocks. Obviously trading costs/taxes are higher with the later.

Any names outside of these you'd recommend? Looking into Canadian Telcos as well.

No, but if I did, it would be a basket of tobacco companies (PM, MO, BTI, etc..)

[bizaro86]

Not quite at your 6% (5.4% at present) but I think VICI is interesting for that. Owns (and land leases) a huge chunk of the stripnon very long term leases. They adjust for inflation, which is good, although about half have caps (bad). It's a REIT so carries a bunch of debt, but I think it's unlikely rates rise dramatically without inflation.

 

Biggest risk is management di-worsifying, imo.

[Spekulatius]

The problem with MLP, Reits etc is that the stocks tend to be cyclical too and capital market dependent (large debt)  and crash at the worst possible time . So they are useless as a source of funds for equity purchases in most bear markets.

[bizaro86]

12 minutes ago, Spekulatius said:

The problem with MLP, Reits etc is that the stocks tend to be cyclical too and capital market dependent (large debt)  and crash at the worst possible time . So they are useless as a source of funds for equity purchases in most bear markets.

 

I agree with this. But the question wasn't "what can I use to provide a counter-cyclical source of funds to redeploy" it was "what can I use to provide retirement income?"

 

I agree VICI would decline in a market rout, but also think it would continue paying the same distribution.

[dipod]

Many of these stocks would be in a “probably never sell” bucket. 

[SharperDingaan]

We maintain an entirely separate fixed income portfolio that is all bonds, and dividend paying stock; dividend payers as we expect share price appreciation, and not just dividend inflow.

 

Canadian tar sand stocks are the 'new tobacco', many have both div yields > 6% plus an active option market, and are far better run than tobacco. Do a simple screen on the TSX energy index to find the tickers. It is useful to use the option market to initiate swing trades via a call assignment. 

 

We ONLY hold CAD dividend payers within our CAD portfolio, and ONLY European dividend payers within our GBP portfolio, 'cause it simplifies taxation. We can hold a FFH because it is a CAD entity (paying a US dividend), we cannot hold an Exxon. Similarly we can hold a UBS as it is EU, but cannot hold a Petrobus (Brazil). 

https://www.theglobeandmail.com/business/article-trumps-new-bill-threatens-major-tax-increases-for-canadian-companies/

 

The expectation is that these are not traders; we want a low cost base, and expectation of a sporadic but growing dividend. Ideally the share price doubles within 7 years, and today's 6% cash yield grows to 8%. CAGR of around 17% per year [72/7 + (6+8)/2]. 50% capital repatriation roughly once every 5 years.  

 

SD

Edited May 27, 2025 by SharperDingaan

[Marco Van Basten]

9 hours ago, 73 Reds said:

No, but if I did, it would be a basket of tobacco companies (PM, MO, BTI, etc..)

@dipod.  I would NOT touch MO, BTI and PM are not cheap here in my opinion, and MO is a melting ice cube, and so is possibly BTI.  I would start with Ambev (6% dividend yield), should grow over time and currency is cheap.   I would look at Grupo Moctezuma in Mexico - superb cement producer, very well run, it is just somewhat illiquid, but 6% yield I believe as well.  There is also Clipper (CLPR) in NY, but it is very, very, very high risk, and management is in my opinion lining its pockets at shareholders' expense, so I would allocate 1%-2% of the portfolio to this.  Aena - the Spanish airport (for taxable account only due to a withholding tax in Spain.)  I would also make a very unorthodox suggestion.  There are companies like MSFT/MCO/SPGI that were very low yielding 10 years ago, yet grew their dividends at a such a rate they now yield 3-5% on the purchase price.  If you can find such companies, it make sense to buy them for the dividend portfolio since they will yield more to you in 10 years then a 3% yielder today that barely grows.  SUI - a trailer park REIT, which is yielding around 3-3.5% today, but will probably double the dividend over the next decade.  

[Junior R]

4 hours ago, SharperDingaan said:

We maintain an entirely separate fixed income portfolio that is all bonds, and dividend paying stock; dividend payers as we expect share price appreciation, and not just dividend inflow.

 

Canadian tar sand stocks are the 'new tobacco', many have both div yields > 6% plus an active option market, and are far better run than tobacco. Do a simple screen on the TSX energy index to find the tickers. It is useful to use the option market to initiate swing trades via a call assignment. 

 

We ONLY hold CAD dividend payers within our CAD portfolio, and ONLY European dividend payers within our GBP portfolio, 'cause it simplifies taxation. We can hold a FFH because it is a CAD entity (paying a US dividend), we cannot hold an Exxon. Similarly we can hold a UBS as it is EU, but cannot hold a Petrobus (Brazil). 

https://www.theglobeandmail.com/business/article-trumps-new-bill-threatens-major-tax-increases-for-canadian-companies/

 

The expectation is that these are not traders; we want a low cost base, and expectation of a sporadic but growing dividend. Ideally the share price doubles within 6 years, and today's 6% cash yield grows to 9%. CAGR of around 19.5% per year [72/6 + (6+9)/2]. 50% capital repatriation roughly once every 4-5 years.  

 

SD

I thought some of the EU countries still have withholding tax for Canadians?

[dipod]

5 hours ago, SharperDingaan said:

We maintain an entirely separate fixed income portfolio that is all bonds, and dividend paying stock; dividend payers as we expect share price appreciation, and not just dividend inflow.

 

Canadian tar sand stocks are the 'new tobacco', many have both div yields > 6% plus an active option market, and are far better run than tobacco. Do a simple screen on the TSX energy index to find the tickers. It is useful to use the option market to initiate swing trades via a call assignment. 

 

We ONLY hold CAD dividend payers within our CAD portfolio, and ONLY European dividend payers within our GBP portfolio, 'cause it simplifies taxation. We can hold a FFH because it is a CAD entity (paying a US dividend), we cannot hold an Exxon. Similarly we can hold a UBS as it is EU, but cannot hold a Petrobus (Brazil). 

https://www.theglobeandmail.com/business/article-trumps-new-bill-threatens-major-tax-increases-for-canadian-companies/

 

The expectation is that these are not traders; we want a low cost base, and expectation of a sporadic but growing dividend. Ideally the share price doubles within 6 years, and today's 6% cash yield grows to 9%. CAGR of around 19.5% per year [72/6 + (6+9)/2]. 50% capital repatriation roughly once every 4-5 years.  

 

SD

Thank you for this.

[dipod]

2 hours ago, Marco Van Basten said:

@dipod.  I would NOT touch MO, BTI and PM are not cheap here in my opinion, and MO is a melting ice cube, and so is possibly BTI.  I would start with Ambev (6% dividend yield), should grow over time and currency is cheap.   I would look at Grupo Moctezuma in Mexico - superb cement producer, very well run, it is just somewhat illiquid, but 6% yield I believe as well.  There is also Clipper (CLPR) in NY, but it is very, very, very high risk, and management is in my opinion lining its pockets at shareholders' expense, so I would allocate 1%-2% of the portfolio to this.  Aena - the Spanish airport (for taxable account only due to a withholding tax in Spain.)  I would also make a very unorthodox suggestion.  There are companies like MSFT/MCO/SPGI that were very low yielding 10 years ago, yet grew their dividends at a such a rate they now yield 3-5% on the purchase price.  If you can find such companies, it make sense to buy them for the dividend portfolio since they will yield more to you in 10 years then a 3% yielder today that barely grows.  SUI - a trailer park REIT, which is yielding around 3-3.5% today, but will probably double the dividend over the next decade.  

Yeah staying off tobacco for personal reasons. I think if the tariff issues continue, more of these "decent growth, decent now dividend, will become better in the future" opportunities will open up.

[dealraker]

9 hours ago, Spekulatius said:

The problem with MLP, Reits etc is that the stocks tend to be cyclical too and capital market dependent (large debt)  and crash at the worst possible time . So they are useless as a source of funds for equity purchases in most bear markets.

Correct.

[SharperDingaan]

3 hours ago, Junior R said:

I thought some of the EU countries still have withholding tax for Canadians?

 

Our GBP portfolio is domiciled in the UK, hence GBP versus EU tax treaties apply. Pulling the strings from Canada does not affect that. As it is mostly our London RE, we also have little exposure to the EU other than via our UBS.

 

The reality of course is that what happens in the US affects the entire world; but the more that Trump isolates the US, the progressively better off we will become. If the US loses reserve currency status, we do really well.

 

SD

 

Edited May 26, 2025 by SharperDingaan

[73 Reds]

15 hours ago, Marco Van Basten said:

@dipod.  I would NOT touch MO, BTI and PM are not cheap here in my opinion, and MO is a melting ice cube, and so is possibly BTI.  I would start with Ambev (6% dividend yield), should grow over time and currency is cheap.   I would look at Grupo Moctezuma in Mexico - superb cement producer, very well run, it is just somewhat illiquid, but 6% yield I believe as well.  There is also Clipper (CLPR) in NY, but it is very, very, very high risk, and management is in my opinion lining its pockets at shareholders' expense, so I would allocate 1%-2% of the portfolio to this.  Aena - the Spanish airport (for taxable account only due to a withholding tax in Spain.)  I would also make a very unorthodox suggestion.  There are companies like MSFT/MCO/SPGI that were very low yielding 10 years ago, yet grew their dividends at a such a rate they now yield 3-5% on the purchase price.  If you can find such companies, it make sense to buy them for the dividend portfolio since they will yield more to you in 10 years then a 3% yielder today that barely grows.  SUI - a trailer park REIT, which is yielding around 3-3.5% today, but will probably double the dividend over the next decade.  

MO has been "melting" for decades.  Meanwhile it trades at 10X earnings and pays a 7% dividend.  I get those who won't buy tobacco companies for personal reasons but there haven't been much better dividend plays in the last 20 years and these companies aren't going away in my lifetime.

[Marco Van Basten]

5 minutes ago, 73 Reds said:

MO has been "melting" for decades.  Meanwhile it trades at 10X earnings and pays a 7% dividend.  I get those who won't buy tobacco companies for personal reasons but there haven't been much better dividend plays in the last 20 years and these companies aren't going away in my lifetime.

I have nothing against tobacco companies, I owned PM going into 2025, it was a gigantic position for me.  Look at volume declines in 1960, 1970, 1980, 1990, 2000, 2010 and 2025.  1-2% volume decline is manageable, 10% which is what Altria has been experiencing is not.  We will have to agree to disagree.  

[73 Reds]

Just now, Marco Van Basten said:

I have nothing against tobacco companies, I owned PM going into 2025, it was a gigantic position for me.  Look at volume declines in 1960, 1970, 1980, 1990, 2000, 2010 and 2025.  1-2% volume decline is manageable, 10% which is what Altria has been experiencing is not.  We will have to agree to disagree.  

My concern is not with volume declines but rather with management (i.e. the JUUL fiasco).  Still very viable for a dividend portfolio with room to continue increasing the dividend payout if management focuses on what they do best.

[winjitsu]

SRG Preferred is around 7-8% and you'll get a little bump once they liquidate and redeem the pref. Very well covered by the Real Estate.

 

CCLDO is a name I've held for the past year, 11% dividend is covered around 4x, net cash on balance sheet, slight decline in core business.

 

Edit: SILA is great at 6-7%. Medical Outpatient (MOB) NNN REIT, lower leverage than peers, management focused on prudent share management (one of the few reits reducing shares). Clean lever up story.

A few Canadian names I've own in the past:
NXR.UN and PRV.UN Industrial REITs closer to 8-10% dividend. Huge leasing spreads, tight markets.

HR.UN has most of it's value in it's US Class B multi-family portfolio but trades at 10 cap, with 6% yield

Edited May 27, 2025 by winjitsu

[Rainier]

I tend to view yields at this 6%+ level to be attainable either in 1) risky/depleting/cyclical situations (like OGM stocks) or 2) when there’s general macro uncertainty and everything drops in price. Obviously, higher quality companies yielding in the 3-4.5% range today are more reliable and there are plenty of companies that could be expected to increase up to 6% over the next 5-10 years without the potential volatility of a lot of the names I’m listing below.

 

Funds/ETF (Like most high yield funds, I struggle to see how they achieve much, if any, price appreciation. So I just view them almost like fixed income in the particular asset class. For a buy and hold forever mentality, they make a lot more sense when there’s a meaningful market correction where it’s possible to buy the normalized yield at a discount)

- BANX

- UTG

- AMLP (or equivalent)

 

Individual Companies (some of these OGM names are likely to be highly volatile)

- LTC

- EPR

- NVEC (the price has drifted higher recently, but it’s been 6-8% periodically in the past few years)

- PBR

- EC

- CRLFF

- SOBO

- FRHLF

- VTS

 

This is not investment advice. Please do your own research.

[Spekulatius]

PBR-A and ABEV are great dividend stocks from Brazil. I own both. PBR-A in particular is gift that keeps on giving.

Edited May 27, 2025 by Spekulatius

[LC]

The only use I see for dividends is to limit management's allocation options so they don't do stupid stuff. And sometimes even that doesn't work.

 

 

Why not ignore dividends, just buy good companies you think are growing in value, and sell a few shares every year to create your dividend? I.e. Buffett's advice from years ago?