Baby Boomers' 3 'Forever' Dividend Stocks

For baby boomers reassessing their income positions in August, building a paycheck-replacement portfolio that generates consistent dividends regardless of market conditions is crucial. A mix of dividend structures can help achieve this goal, with each serving a different purpose.

The first type is the defensive compounder, which anchors the base of the portfolio and provides stability. Procter & Gamble (PG) is an example of such a company, with a 136-year history of paying dividends. The most recent quarterly payout is $1.0885 per share, up from $1.0568, with a yield of 2.92%. The dividend record is impressive, with 70 consecutive years of increases.

Enterprise Products Partners (EPD) is another defensive compounder that offers higher cash yields through its fee-based pipeline model. The partnership has raised its quarterly payout to $0.56 per unit, an annualized $2.24, resulting in a dividend yield near 5.67%. In Q2, adjusted EBITDA reached $2.83 billion, up 17% year over year, and operational distributable cash flow hit $2.3 billion.

Ares Capital (ARCC) is the largest publicly traded business development company, offering a double-digit yield of 10.3%. The company has 17 consecutive years of stable or increasing regular quarterly dividends. With a portfolio spanning $29.35 billion across 619 companies and generating a weighted average yield on debt securities of 10.3%, Ares provides high-yielding income.

While these dividend stocks offer attractive yields, it's essential to consider the associated risks. For instance, Procter & Gamble carries a significant $34.2 billion in debt, and Enterprise Products Partners' K-1 filing complexity may be daunting for some investors.