3 Top Dividend Stocks for a Better Retirement

By The Motley Fool9 days ago

The right dividend stock can be a fantastic addition to your retirement fund. Stable businesses with high dividend yields will satisfy investment income requirements while letting you rest easy at night. Those are two of the most important requisites for retiree investment portfolios.

Remember, these aren't high-flying, risky growth stocks that go through steep declines periodically. These stocks hum along, slow and steady, kicking off valuable cash distributions to shareholders each quarter.

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Illinois Tool Works

Illinois Tool Works (NYSE: ITW) is a large industrial company with diverse operations across seven different segments. It produces commercial appliances, automobile components, construction equipment, chemicals, food equipment, and measurement electronics. This Fortune 200 member and Dividend Aristocrat is a leader across a huge portfolio of products, creating a wide economic moat with scale and brand strength. That sort of resilience and consistency is a great start.

Illinois Tool Works endured a difficult 2020 as revenue fell 10% from 2019. Results were more encouraging in the back half of the year with a return to positive growth. Management is predicting a bounce-back year in 2021. They call for double-digit revenue and earnings-per-share (EPS) growth along with profit-margin expansion. Importantly, they also expect free cash flow in excess of earnings, so those accounting profits are turning into cash that can be returned to shareholders. Having weathered the storm, there are blue skies ahead for the company.

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