NEW YORK (TheStreet) -- Investors in retirement or preparing for retirement have different needs than younger investors. Retired investors require a unique mix of safety, income and growth from their investments.
Dividend income supplements Social Security and other income in retirement. Income is not the only aspect of a successful investment, however. Growth is just as important. Investors in or near requirement should demand their investments grow dividend income at least as fast as inflation - and hopefully much faster. This gives you a boost in your standard of living each year.
The three stocks in this article all have paid steady or increasing dividends for 30 or more consecutive years. They all have exceptionally low stock price standard deviations. These 3 businesses also have strong competitive advantages that insulate them from the worst effects of recessions. In short, these are 3 high quality businesses that score high marks for safety. All 3 have rank highly using The 8 Rules of Dividend Investing.
Each of these businesses also has maintained a growth rate higher than the inflation rate for the last several years and has a dividend yield 3% or higher. These high yield stocks should provide income now and growth for future income.
General Mills (GIS)
General Mills is one of the largest packaged food manufacturers in the world, with a market cap of $33 billion. Its stock currently has a dividend yield of 3.1% and a stock price standard deviation of 17%. The company's stock offers investors both stability and high yield.
General Mills has paid dividends for 116 consecutive years, reflecting its sustained success over the last century.
General Mills also performed well during the Great Recession and the subsequent recovery, during which it grew adjusted earnings per share every year. The company's well-known branded food products are in high demand regardless of the overall economic climate.
General Mills' competitive advantage comes from its strong brands. It's best known for its cereal brands which include Cheerios, Chex, Wheaties, Lucky Charms, and Trix, among others. However, over the past several years, General Mills has also built a well-respected portfolio of healthy food brands, including Annie's, Cascadian Farms, Immaculate, LARA Bar and Food Should Taste Good. It's also a leader in the baking products industry with brands like Betty Crocker, Pillsbury, Bisquick, Gold Medal and Yoki. Other high quality brands that don't fit neatly into a category for General Mills are Haagen-Dazs ice cream, Progresso soup, Yoplait yogurt, Gardetto's and Nature Valley.
General Mills supports its portfolio of high quality consumer food brands with a sizable advertising budget. It has spent more than $800 million a year on advertising since 2010.
General Mills has grown shareholder wealth at 11% a year since 1995 -- not bad for a 'boring' packaged-food business. The company is targeting continued shareholder growth around this number. Annual growth will come from share repurchases and operating income growth (7% to 9%) as well as dividends (~3%). General Mills shareholders should expect total returns of around 11% over the long run, in line with the company's historical averages.