7 Income Stocks All Retirees Should Own

Includes: DUK, JNJ, KMP, MDLZ, PEP, PG, T
by: Parsimony Investment Research

In a low interest rate world, retirees are experiencing dwindling incomes from their risk-free assets (e.g. government bonds and cash equivalents). Many retirees are looking for relatively safe vehicles that provide yield.

The effective federal funds rate is close to 0% and the federal funds rate drives short-term interest rates.

Retirees should seek to build a deep and diversified portfolio of income assets to protect themselves in their retirement. Below are a number of low beta, U.S. equities that retirees should investigate for their portfolios.

These names provide attractive cash dividends in a low growth world. The stocks below provide investors with dividend yields of greater than 3.25%. In addition, these names provide a list of stable dividend payers with relatively modest payout ratios. The payout ratio is dividend paid / net income. Lower payout ratios indicate an ability to increase dividends. Note: KMP is an MLP and it is required to make minimum distributions (which is why the payout ratio is relatively higher).

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AT&T Inc. (NYSE:T)

  • Total Debt / EBITDA: 1.8x
  • Price / Earnings: 14.3x
  • Dividend Yield: 6.3%

Duke Energy Corporation (NYSE:DUK)

  • Total Debt / EBITDA: 4.0x
  • Price / Earnings: 14.3x
  • Dividend Yield: 5.1%

Johnson & Johnson (NYSE:JNJ)

  • Total Debt / EBITDA: 0.9x
  • Price / Earnings: 15.2x
  • Dividend Yield: 3.7x

Kinder Morgan Energy Partners (NYSE:KMP)

  • Total Debt / EBITDA: N/A
  • Price / Earnings: N/A
  • Dividend Yield: 6.1%

Kraft Foods Inc. (KFT)

  • Total Debt / EBITDA: 3.4x
  • Price / Earnings: 18.7x
  • Dividend Yield: 3.4%

Pepsico, Inc. (NYSE:PEP)

  • Total Debt / EBITDA: 2.0x
  • Price / Earnings: 15.8x
  • Dividend Yield: 3.3%

Procter & Gamble Co. (NYSE:PG)

  • Total Debt / EBITDA: 1.8x
  • Price / Earnings: 15.5x
  • Dividend Yield: 3.4%

Disclosure: I am long T, JNJ, KMP.