Today, retirees are faced with a very tough situation.
This Wednesday, the March CPI report is expected to show 8.4% inflation, the highest in 41 years.
Morgan Stanley estimates we are now at risk of an inflationary spiral.
The good news is that the bond market doesn’t believe that the Fed will fail to get inflation under control, relatively speaking.
However, inflation of nearly 3% is now expected over the next 20 years and over the next 30 years, 2.5% inflation is slightly above the Fed’s 2% target.
Retirement dream stocks are companies that fulfill three criteria:
- High safety and dependability in all economic conditions
- A generous yield
- Long-term dividend growth that outpaces inflation over time
While interest rates have soared in recent months, they are still very low by historical standards, and adjusted for inflation are deeply negative.
Going out on the risk spectrum with bonds doesn’t help all that much.
- Junk bonds now yield 4.4% (still negative inflation-adjusted yield)
- An average credit rating of “B” means a 37% risk of default
But fortunately, there is an easy way to find the world’s highest quality 5+% yielding blue-chips, that can not only deliver generous and very safe income today, but long-term dividend growth that’s more than 3x the expected rate of inflation.
- All within a diversified and prudently risk-managed blue-chip portfolio
- That can withstand virtually anything the economy can throw at us in the coming years and decades
How To Find The Best High-Yield Blue-Chips In Any Economic Environment
The Dividend Kings Research Terminal has 12 specialty watchlists for virtually any kind of investing goal, time horizon, or risk profile.
Each watchlist can be sorted by 16 fundamental metrics, to help you find the best companies for your needs in seconds.
- In the next week or two, we’re unveiling a new super tool that will be even simpler and easier to use
Adam’s correction watchlist is my personal watchlist for all future market downturns.
- It’s the only watchlist I’m personally buying from in every pullback, correction, and bear market
- Green = potentially good buy or better
- Blue = potential reasonable buy
- Yellow = hold
- Red = potential trim/sell
By sorting by any fundamental metrics you want, you can put together a dream watchlist of the best companies for your specific needs, time horizon, and risk profile.
And that’s how I was able to very easily find the following 5% yielding retirement dream blue-chip bargains.
- The highest yielding blue-chip in each sector
10 Retirement Dream Stock Bargains You Won’t Want To Miss
(Source: DK Research Terminal)
Here we have 10 high-yield companies in every major sector of the economy, from three countries on two continents.
Why do I personally own them all and trust them with my future retirement savings?
Fundamental Quality You Can Trust In All Economic Conditions
Company | Quality Rating (out Of 13) | Quality Score (Out Of 100) | Dividend/Balance Sheet Safety Rating (out of 5) | Safety Score (Out Of 100) | Dependability Rating (Out Of 5) | Dependability Score (out Of 100) |
Magellan Midstream Partners (uses K-1) | 13 | 85% | 5 | 86% | 5 | 83% |
BASF SE | 10 | 76% | 4 | 74% | 4 | 75% |
British American Tobacco | 13 | 87% | 5 | 84% | 5 | 90% |
Main Street Capital | 10 | 69% | 4 | 64% | 4 | 79% |
Medical Properties Trust | 9 | 64% | 4 | 64% | 3 | 63% |
3M | 13 | 92% | 5 | 94% | 5 | 88% |
UGI Corp | 13 | 87% | 5 | 93% | 5 | 83% |
V.F. Corp | 13 | 98% | 5 | 100% | 5 | 100% |
Merck | 13 | 91% | 5 | 94% | 5 | 87% |
Qualcomm | 13 | 93% | 5 | 93% | 5 | 93% |
Average | 11.9 Super SWAN | 83.2% | 4.7 Very Safe | 83.7% | 4.6 Exceptional | 83.1% |
(Source: DK Research Terminal)
For context, the dividend aristocrats’ average 12.1/13 Super SWAN quality.
These high-yield Super SWANs basically match the aristocrats on quality and offer some of the highest safe yield on earth from a fully diversified portfolio.
How safe?
Rating | Dividend Kings Safety Score (153 Point Safety Model) | Approximate Dividend Cut Risk (Average Recession) |
Approximate Dividend Cut Risk In Pandemic Level Recession |
1 – unsafe | 0% to 20% | over 4% | 16+% |
2- below average | 21% to 40% | over 2% | 8% to 16% |
3 – average | 41% to 60% | 2% | 4% to 8% |
4 – safe | 61% to 80% | 1% | 2% to 4% |
5- very safe | 81% to 100% | 0.5% | 1% to 2% |
10 High-Yield Retirement Dream Stocks | 84% | 0.50% | 1.80% |
Risk Rating | Low-Risk (70th industry percentile risk-management consensus) – speculative | BBB+ Stable outlook credit rating 5.2% 30-year bankruptcy risk |
15% OR LESS Max Risk Cap Recommendation (Each) |
(Source: DK Research Terminal)
The risk of a dividend cut in a historically average recession is about 1 in 200 and the risk in a severe Pandemic or Great Recession downturn is about 1 in 56.
Company | Payout Ratio | Industry Safe Payout Ratio Guideline | Debt/Capital | Industry Safe Debt/Capital Guideline |
Magellan Midstream Partners (uses K-1) | 78% | 83% | 73% | 60% |
BASF SE | 86% | 60% | 25% | 40% |
British American Tobacco | 70% | 85% | 48% | 60% |
Main Street Capital | 95% | 95% | 45% | 50% |
Medical Properties Trust | 79% | 95% | 57% | 50% |
3M | 60% | 60% | 50% | 40% |
UGI Corp | 48% | 75% | 57% | 60% |
V.F. Corp | 78% | 60% | 57% | 40% |
Merck | 44% | 60% | 37% | 40% |
Qualcomm | 29% | 50% | 51% | 40% |
Average | 70.9% | 74.8% | 49.9% | 48.9% |
(Source: DK Research Terminal)
Safe payout ratios and sound balance sheets are just the beginning of how we determine whether a company’s dividend is dependable.
The Dividend King’s overall quality scores are based on a 243 point model that includes:
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Dividend safety
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Balance sheet strength
-
Credit ratings
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Credit default swap medium-term bankruptcy risk data
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Short and long-term bankruptcy risk
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Accounting and corporate fraud risk
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Profitability and business model
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Growth consensus estimates
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Management growth guidance
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Historical earnings growth rates
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Historical cash flow growth rates
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Historical dividend growth rates
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Historical sales growth rates
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Cost of capital
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Long-term risk-management scores from MSCI, Morningstar, FactSet, S&P, Reuters’/Refinitiv, and Just Capital
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Management quality
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Dividend friendly corporate culture/income dependability
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Long-term total returns (a Ben Graham sign of quality)
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Analyst consensus long-term return potential
In fact, it includes over 1,000 fundamental metrics including the 12 rating agencies we use to assess fundamental risk.
How do we know that our safety and quality model works well?
During the two worst recessions in 75 years, our safety model predicted 87% of blue-chip dividend cuts, the ultimate baptism by fire for any dividend safety model.
And then there’s the confirmation that our quality ratings are very accurate.
DK Zen Phoenix: Superior Fundamentals Lead To Superior Long-Term Results
Metric | US Stocks | 189 Real Money DK Phoenix Recs |
Great Recession Dividend Growth | -25% | 0% |
Pandemic Dividend Growth | -1% | 6% |
Positive Total Returns Over The Last 10 Years | 42% | 99.5% (Greatest Investors In History 60% to 80% Over Time) |
Lost Money/Went Bankrupt Over The Last 10 Years | 47% | 0.5% |
Outperformed Market Over The Last Decade (296%) | 36% | 52% |
Bankruptcies Over The Last 10 Years | 11% | 0% |
Permanent 70+% Catastrophic Decline Since 1980 | 44% | 0.5% |
100+% Total Return Over The Past 10 Years | NA | 87% |
Sources: Morningstar, JPMorgan, Seeking Alpha |
Basically, historical market data confirms that the DK safety and quality model is one of the most comprehensive and accurate in the world.
This is why I entrust 100% of my life savings to this model and the DK Phoenix blue-chip strategy.
Company | Long-Term Risk Management Consensus Industry Percentile | Risk-Rating | Risk-Management Rating | S&P Credit Rating | Credit Rating Outlook | 30-Year Bankruptcy Risk |
Magellan Midstream Partners (uses K-1) | 69% | Low | Above-Average | BBB+ | Stable | 5.00% |
BASF SE | 70% | Low | Good | A | Stable | 0.66% |
British American Tobacco | 82% | Low | Very Good | BBB+ | Negative | 5.00% |
Main Street Capital | NA | Medium | NA | BBB- | Stable | 11.00% |
Medical Properties Trust | 32% | Medium | Below-Average | BB+ | Stable | 14.00% |
3M | 87% | Low | Very Good | A+ | Negative | 0.60% |
UGI Corp | 67% | Low | Above-Average | NA | NA | 7.50% |
V.F. Corp | 71% | Low | Good | A- | Stable | 2.50% |
Merck | 82% | Low | Very Good | A+ | Stable | 0.60% |
Qualcomm | 78% | Low | Good | A | Stable | 0.66% |
Average | 70.0% | Low | Good | BBB+ | Stable | 5.2% |
(Source: DK Research Terminal)
S&P estimates the average risk of these high-yield blue-chips going bankrupt over the next 30 years at 5.2%.
Six rating agencies estimate their long-term risk management in the top 30% of their peers.
Long-Term Risk Management In Context
Classification | Average Consensus LT Risk-Management Industry Percentile |
Risk-Management Rating |
S&P Global (SPGI) #1 Risk Management In The Master List | 94 | Exceptional |
Strong ESG Stocks | 78 |
Good – Bordering On Very Good |
Foreign Dividend Stocks | 75 | Good |
Ultra SWANs | 71 | Good |
10 High-Yield Retirement Dream Stocks | 70 | Good |
Low Volatility Stocks | 68 | Above-Average |
Dividend Aristocrats | 67 | Above-Average |
Dividend Kings | 63 | Above-Average |
Master List average | 62 | Above-Average |
Hyper-Growth stocks | 61 | Above-Average |
Monthly Dividend Stocks | 60 | Above-Average |
Dividend Champions | 57 | Average |
(Source: DK Research Terminal)
In a scary world full of risk, these high-yield blue-chips know how to adapt, overcome, and thrive.
More Evidence These Are High-Yield Blue-Chips You Can Trust
Company | Dividend Growth Streak (Years) | ROC (Greenblatt) | ROC Industry Percentile | 13-Year Median ROC |
Magellan Midstream Partners (uses K-1) | 20 | NA | NA | NA |
BASF SE | 1 | 16% | 66% | 18% |
British American Tobacco | 23 | 194% | 75% | 175% |
Main Street Capital | 14 | NA | NA | NA |
Medical Properties Trust | 9 | NA | NA | NA |
3M | 64 | 50% | 86% | 57% |
UGI Corp | 34 | NA | NA | NA |
V.F. Corp | 50 | 82% | 91% | 54% |
Merck | 10 | 115% | 93% | 52% |
Qualcomm | 18 | 345% | 97% | 262% |
Average | 25.0 | 91.4% | 82.2% | 71.3% |
(Source: DK Research Terminal)
Ben Graham considered a 20+ year dividend growth streak to be a sign of excellent quality.
Read More: 10 High-Yield Retirement Blue-Chip Bargains You Won’t Want To Miss