When investing to increase your Social Security income in retirement, it makes the most sense to invest in companies that can perform consistently and pay out for years, so you don’t have to worry about managing your positions. In this vein, rapid growth is less important than being able to keep paying dividends, no matter how well or badly the economy is doing.
But you’ll probably want to pick a few companies that pay a big enough dividend to make a noticeable difference in your life given the amount of money you can invest, so low-yield stocks may not be as suitable. Let’s take a look at some passive income stocks with the stability and decent returns you need to increase your retirement benefits without taking too much risk.
viatris (VTRS -0.19%) makes a plethora of generics such as Zoloft, Xanax, Lipitor, and Viagra. Because people need their drugs for years, it generates relatively stable revenue over time, and in 2021 it brought in more than $17.8 billion in revenue.
In addition, it is constantly working to commercialize generic versions of patent-expired drugs, and will likely have about nine new products in play by 2026. This should ensure that sales continue to grow through the end of the decade and beyond – and it will also pave the way for dividend growth.
Right now, the 4.3% long-term dividend yield is quite attractive, and the payment will likely continue to rise alongside cash flow. Investors should also assume that the share buyback program will continue, increasing their returns. But it is important to recognize that Viatris is still a company that is gaining a foothold in the world.
Because it’s originally a spin-off of Pfizerthe company is still realizing cost synergies and reducing layoffs from the split, which could deliver $1 billion in savings by 2023. Aside from that, the current macroeconomic situation isn’t helping Viatris, especially in emerging markets, where quarterly net sales fell 10% year-over-year in the second quarter.
Nevertheless, the recent growing pains and economic struggles are unlikely to last forever, and both are contributing to the high dividend yield right now. So it is an attractive time to buy because of its passive income potential.
AbbVie (ABBV 0.40%) develops new drugs for applications in immunology, neurology, cancer and aesthetics, and it is also a dividend stock eminently. It made nearly $56.2 billion in revenue last year thanks to the sale of its drugs, and from 2013 to 2021 its diluted and adjusted earnings per share (EPS) grew at a compound annual growth rate of 19%, which is pretty good.
Next year, the company plans to bring eight of its drugs to market, while advancing many more through clinical trials and submitting a handful of data packages to regulators for consideration. And all of the above is more or less AbbVie’s long-term norm, so it’s a fairly stable company despite the ongoing need to develop new drugs and go through the expensive clinical trial process.
The long-term dividend yield is currently close to 4%. Dividend growth is a management priority and its payout has increased 120% over the past five years thanks to annual increases. In addition, yields could rise further soon, depending on what happens in 2023, when its arthritis drug Humira loses its patent protection.
Since Humira accounted for more than $5.3 billion in the second quarter alone, losing some of its contribution to generic competition will hurt AbbVie’s stock price. That will be (temporarily) painful for shareholders, but it also offers the opportunity to buy shares at a higher return and a lower price than would otherwise be available.
Management expects the company to grow again thanks to the newly commercialized drugs coming online by 2025 — and people who bought stock for its passive income potential in 2022 and 2023 will be the biggest beneficiaries when that happens. While there is a risk that sales growth may take longer to return than management hopes, AbbVie will eventually recover as long as AbbVie continues to make new drugs — and it will.