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Embrace 'Dividend Aristocrats' for a Regal Retirement


Over the past 25 years there have been wars, recessions, even a terrorist attack on the United States. Yet, over that period of time, Coca-Cola, ExxonMobil, Wal-Mart and other Dividend Aristocrat stocks have managed to increase the dividend payment annually. At present, there are more than 50 of them. It is difficult to come up with any bond that has increased its interest payment annually over the past 25 years.

The yields from "Dividend Aristocrats" can be much higher, too.

Currently, the yield on a five-year Treasury security is under 1.50%. Bonds from Coca-Cola that mature in September 2016 have a yield to maturity of 1.06% and 0.73%. The dividend yield from Coca-Cola is now 2.98%. For Exxon-Mobil, the dividend yield is 2.81%. Wal-Mart has a dividend yield of 2.58%.

While Coca-Cola bonds that mature in September 2016 are certainly stable, the interest payment will not increase. History dictates that the dividend income to the shareholders of Coca-Cola, ExxonMobil, Wal-Mart and other Dividend Aristocrats will continue to grow. For income and security, it is difficult to find a better investment for long-term objectives than Coca-Cola, ExxonMobil and Wal-Mart. Sure, the prices will drop, but as income investments, there is no reason to sell. The dividends have a history of increasing even in adverse market and economic conditions.

I believe it is far better to buy Dividend Aristocrat stocks for the long term to generate retirement income rather than the "Age in Bonds" theory.

At the time of publication, Jonathan Yates did not have a position in any of the stocks mentioned in this article.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Stock quotes in this article: KO, XOM, WMT 
Jonathan Yates has written for numerous publications including Newsweek and The Washington Post. He is a former general counsel for a publicly traded corporation. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

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