Safe Dividend Stocks When Using the 4% Rule

The 4% rule is a general rule of thumb used by financial experts to determine how much individuals should be withdrawing from their retirement account each year. This is considered a safe and sustainable rate for a retiree with a long life expectancy. So how does one generate a safe and reliable income stream of at least 4% in an environment where 10 year T-bills are paying around 3%, investment grade bond yields are still near historical lows, and money markets and CDs are paying next to nothing?

High quality dividend stocks can provide the income retirees need along with the safety and reliability they desire. Furthermore, selecting dividend paying companies who also have a history of raising their dividend payments annually will provide increases in a retiree’s income each year thus protecting themselves from the damaging affects of inflation. The 4% Portfolio is designed to provide a smarter way for retirees to follow the 4% rule without having to sell a portion of their stock portfolio each year.

Source: Guru Focus

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