There is no overstating the importance of dividend stocks

There's simply no escaping it: The financial collapse of 2008 and the current near-zero interest rate environment have changed the investing landscape, and unfortunately, too many people near retirement age are taking all the wrong steps when it comes to getting back on track. Despite having less money, fewer pension opportunities, and a malfunctioning Social Security system, people are still shockingly confident about their futures.

There's simply no overstating the importance of stocks that pay dividends. They give investors a chance to earn income (which will help them pay bills and stay liquid) while also providing the potential for capital appreciation. In the portfolio that I manage for my mom, who is 65, I have about 80% of her stock allocation in dividend stocks. Three that I happen to really like are Waste Management (NYSE: WM), Sasol (NYSE: SSL), and Exelon (NYSE: EXC). All three pay dividends of 3.5% or more and are inherently defensive in their nature. Stocks like Exelon and Sasol have the ability to jump up as well because of their ties to oil and natural gas. Or, if you're looking for broader diversification, check out the SPDR S&P Dividend ETF, which includes many of the S&P dividend aristocrats.

Source: Motley Fool

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