HomeMost PopularRetiring on Dividends: Discover Two High-Yield Options for a Secure Retirement

Retiring on Dividends: Discover Two High-Yield Options for a Secure Retirement

Actionable Trade Ideas

always free

yes you can, motivational inspirational message on sand

Co-authored by Treading Softly.

Retirement planning has evolved, and the traditional three-legged approach has become less reliable in todayโ€™s landscape. As company-defined benefit plans fade away, individuals are left relying heavily on Social Security. However, itโ€™s crucial to understand that Social Security is only designed to replace 30% of a retireeโ€™s income, making it insufficient on its own. In this article, we explore an alternative strategy โ€“ retiring on dividends โ€“ that offers stability and financial independence in retirement.

Why Retire on Dividends?

Retiring on dividends involves investing in income-generating assets that provide a regular stream of cash flow. This approach allows retirees to rely on multiple income sources, including dividend payouts, Social Security, and personal savings, to create a comprehensive retirement income plan. By diversifying income streams, retirees can mitigate the risk of over-reliance on a single source of funds and maintain financial stability throughout their retirement.

Pick #1: BGR โ€“ Yield 6.3%

Amidst economic uncertainties, one investment option that shines is BlackRock Energy And Resources Trust (BGR), a closed-end fund (โ€œCEFโ€) focusing on large-cap oil companies. With a NAV near its three-year high, BGR presents an attractive opportunity for income-focused investors.

BGRโ€™s investment strategy is fairly straightforward โ€“ it acquires shares of major oil companies such as Exxon Mobil (XOM), Shell PLC (SHEL), and TotalEnergies SE (TTE). These holdings comprise over 36% of its portfolio, ensuring stability and potential long-term growth.

Pick #2: HQH โ€“ Yield 11%

Another intriguing option for retiring on dividends is Tekla Healthcare Investors (HQH). This fund, with a history dating back to the 1980s, is currently trading at a remarkable 19% discount to its Net Asset Value (NAV).

HQHโ€™s sustained discount is a rare opportunity for income-focused investors to obtain shares at a significant markdown. Despite recent headwinds, historical data suggests that HQH has the potential for long-term outperformance in the healthcare sector.

Conclusion: Building a Secure Retirement

Retiring on dividends offers a stable and reliable income stream for a secure retirement. By diversifying income sources and investing in well-established sectors such as oil and healthcare, retirees can ensure sustained cash flow and financial peace of mind.

Itโ€™s important to recognize that relying solely on Social Security or a company pension plan is no longer sufficient. Embracing a multi-legged approach that includes dividend investments can provide the additional income needed to enjoy a comfortable retirement. Whether you choose BGR or HQH, these vetted options offer attractive yields and longevity to enhance your retirement income strategy.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.