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By Marshall Hargrave

In the eight decades prior to 2010, dividends accounted for a whopping 44% of the total returns achieved in the stock market. This article pulls together some dividend stocks that are ripe for building a retirement portfolio, based on dividend yield, volatility, and the chosen company's capacity to both grow dividends and sustain payouts.

Our ideal dividend paying stock has a yield of at least 3% and has a five-year dividend growth rate greater than 10%. Part of building a dividend stock portfolio includes having stability. We look for income investments with a beta of 0.7 or lower, which helps to reduce the impact of market volatility.

While looking for companies that have a solid history of dividend growth, we also look for stocks that can match their dividend growth with earnings growth. All the companies on our list expect to grow earnings over the next five years by at least 5% annually.

As the economy goes through the ebbs and flows of cyclical movements, our goal is to ensure that these dividend stocks will have the wherewithal to continue paying yield to investors-this includes having a payout ratio of around 60% or less.

The first stock on our list is McDonald's Corporation (MCD). Of our five dividend stocks, McDonald's has grown annual dividends the highest at 20% over the last five years, and also has the highest expected five-year earnings growth rate at 9%.

With the highest dividend yield (3.6%) and a beta of only 0.4, this is one of our top dividend stocks. The fast food chain operator is expected to continue to see moderate revenue growth - 1.7% in 2012 and 1.3% in 2013 - despite a less than stellar expected global economic growth. We like McDonald's prospects regardless of the economic backdrop. In a slowing economy, consumers will trade down, but with the fast food company's expanded menu that includes smoothies and espresso, McDonald's should be able to gain market share even in a bolstering economy. McDonald's was a top new pick of Bill Gates during 3Q.

Raytheon Company (RTN), the military contractor, also has the highest dividend in our list at a yield of 3.6%. The company's payout ratio is the lowest at 35%, but it does carry the highest beta at 0.7. Raytheon does trade in line with its industry at 10x earnings, but boasts an 8% expected five-year earnings growth rate that makes it a 'growth at a reasonable price' opportunity. Raytheon is up 18% year to date as the company has managed to beat earnings by 15% or more for each of the last four quarters. Despite expected cuts in the U.S. defense budget, future growth should be fueled by international increases and the ongoing Middle East arms race.

PepsiCo, Inc. (PEP) is a middle-of-the-road dividend stock on our list, and is a solid investment in all respects. The beverage company has a 3.1% dividend yield that is a payout of only 57%. Pepsi is looking to regain market share in the Americas after having focused on overseas recently. Pepsi's beta of 0.5 is indicative of its solid international diversification. Pepsi completed the purchase of Russian food company Wimm-Bill-Dann earlier this year, giving the company an even greater presence overseas. Driving the 8% projected EPS growth for the next five years will be the company's focus on serving as an industry leader for health-conscious consumers.

General Mills, Inc. (GIS) has a beta of only 0.15, making it a great choice for the investor looking to lower volatility and diversify the correlation of his or her portfolio. The food maker has one of the lower payout ratios on our list at 51%, and its dividend, currently yielding 3.3%, has grown by double-digits in each of the last five years.

The food manufacturer also has a controlling stake in the yogurt company Yoplait, which should help boost earnings as it enters the rapid growth Greek yogurt market. Despite continued weakness in the U.S., where General Mills saw a sales decline of 1% last quarter on a year over year basis, the company is performing well internationally. In this segment, sales were up over 25% last quarter on a year over year basis. Looking at the valuation, General Mills trades at only 16x earnings, below major competitors like JM Smucker (SJM) and Kellogg (K). General Mills was one of our top picks from the Invest for Kids Conference.

The Procter & Gamble Company (PG), the consumer products giant, has a dividend that yields 3.3% and a very low beta of 0.4. Procter & Gamble derives less than 40% of its sales from emerging markets, which will be a growth opportunity for the company as it enters new areas in the future. Trading at 19x trailing earnings, but 16x forward earnings, the products company appears cheap. Compared to its closest competitor, Colgate-Palmolive (CL), which is still one-fourth Procter's market cap, Procter trades at 2.3x sales versus Colgate's P/S of 2.9x. We believe that Procter & Gamble is an industry leading consumer staple company that should perform well in both a declining or rebounding economy. Billionaire Ken Griffin loves Procter & Gamble.

We believe that all of these dividend payers are well positioned for the long term. McDonald's has some of the best overall prospects related to its dividend, but is also cheap compared to other fast food chains like Yum Brands (YUM) and Jack in the Box (JACK). Meanwhile, our beverage and food companies Pepsi and General Mills should benefit from overall global population growth and a generally rising level of economic prosperity.

Procter & Gamble will be able to diffuse into emerging markets, as well as penetrate deeper into its current customer base with new product offerings. Raytheon should continue to generate large amounts of cash flow, with nearly $4 billion of cash on hand as of 3Q, as countries upgrade defense systems.

All the companies mentioned above operate internationally with a diverse group of customers, though the overwhelming theme of these five stocks is their ability to grow regardless of how the economy shakes out going forward.

Source: 5 Dividend Stocks For Retirement