Set and Forget: 3 Dividend Stocks Perfect for Your IRA

Dividend stocks provide essential passive income for many investors. For those heading into retirement, this is especially true. Companies that pay dividends are generally more stable, with consistent and predictable cash flow growth allowing such companies to return capital to shareholders.

For the long-term investor, such companies are often better bets from a risk perspective. Those entering or nearing retirement may want to know that their capital is safe. Thus, for those with capital preservation needs, focusing on dividend stocks over higher-risk growth stocks may be the right choice.

Thus, plenty of dividend stocks are in the higher-risk category. Companies that pay out dividend yields of 7% or more may be at risk of a dividend cut, or the market may believe such companies simply can’t maintain their yield over the long term. Those are companies investors may want to avoid, particularly those who are aiming for the safer pockets of the market.

With that in mind, three top dividend stocks for those looking to build out an IRA may want to consider these right now.

McDonald’s (MCD)

Source: Nixx Photography /

Amid this period of relatively high inflation, McDonald’s (NYSE:MCD) has remained resilient. The company has provided investors with impressive growth, making it a standout stock. Its international comparable store sales rose by 11.7% this past quarter, attracting higher customer traffic despite price increases. The company also achieved a 14% increase in net sales, reaching $6.5 billion in revenue.

For investors seeking truly defensive dividend stocks, McDonald’s is a great place to look. As of mid-August, MCD stock provided investors with a $1.52 per share quarterly dividend, amounting to a 2.1% yield. That’s not much to write home about. However, considering the company’s 46-year dividend growth streak continued in 2022, this is a company that’s proven its worth as a dividend growth champion.

So long as consumers continue to view McDonald’s as an affordable luxury in times of tight budgets, MCD stock will remain a top holding of many institutional investors. This is among the best defensive options for investors seeking both reasonable yield and growth over the long-term.

Occidental Petroleum (OXY)

Person holding cellphone with logo of American company Occidental Petroleum Corp. (OXY) on screen in front of website. Focus on phone display. Unmodified photo.

Source: T. Schneider /

Warren Buffett is one of the greatest investors of all time.

And as it happens, Mr. Buffett is a big fan of Occidental Petroleum (NYSE:OXY), recently increasing his stake in the energy giant to nearly 25%, a $12 billion bet on its future. He sees potential in its long-term sustainability efforts, and the investment might yield gains amid volatile oil markets.

Despite advancements in renewable energy, global oil consumption and prices remain stable. OPEC predicts a 23% demand growth by 2045, benefiting well-managed companies like Occidental Petroleum.

Buffett’s confidence goes beyond figures. He lauds OXY’s leadership and strategic prowess. Its 7.35% total yield and low valuation at 1.9-times forward sales make it appealing for value investors. With strong cash flow and low break-even assets, Occidental is well-positioned for enduring success amid oil price volatility.

Johnson and Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.

Source: Alexander Tolstykh /

Healthcare giant Johnson & Johnson (NYSE:JNJ) stands as an attractive long-term option for investors due to its stable and profitable business. With a 10-year track record of consistent net income and strong metrics like a 25.5% operating margin and a 17.46% return on equity, J&J shines among its peers.

With a 62-year history of rising dividends and a robust healthcare business, Johnson & Johnson is recession-resistant. The upcoming spinoff of the consumer health segment is expected to boost revenue. The company’s enduring portfolio and a 92% dividend payout ratio make JNJ stock a solid long-term investment.

I think the company’s spinoff of specific consumer brands via its Kenvue (NYSE:KVUE) IPO, as well as its settling of specific ongoing lawsuits, positions the company well for continued sustainable growth over the long-term. When factoring in JNJ’s dividend, this is a long-term gem worth buying on dips from here.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.