Redditors Are Buying These 8 Dividend Stocks For Early Retirement

Young Americans have always been allured by the idea of leaving their 9-to-5 grind and enjoying the prime of their lives by the beach and doing what they love. But in recent years, this idea has seen a dramatic rise in popularity. In a recent survey conducted by the Federal Reserve Bank of New York, 45.8% of the respondents said they would likely be working after age 62. This metric averaged 55% between March 2014 and March 2020, according to the bank.

The early retirement movement gained prominence during the COVID-19 pandemic as millions of Americans started working from home and saving money from stimulus checks. In October 2021, St. Louis Federal Reserve economist Miguel Faria-e-Castro estimated that a whopping three million Americans retired early due to the pandemic. However, this phenomenon, also known as ‘The Great Resignation,' reversed as inflation began to impact American households.

Early retirement communities such as Reddit’s /FinancialIndependence are still growing. Investing in dividend stocks is often pitched as one of the quicker and safest ways to retire early on Reddit. We scoured several discussion boards on Reddit to see the most popular dividend stocks recommended by investors on the platform for retirement based on their personal experience.

Pfizer

Pfizer Inc PFE is a notable dividend stock popular among Redditors looking to live off dividends. Pfizer shares are down about 7% over the past year. The stock yields around 6%, which is high compared to the sector average of about 2.3%. Redditors think Pfizer is going through a post-COVID slump, but it’s poised to rebound on the back of strong growth catalysts in the pipeline. During the first quarter, Pfizer’s revenue from non-COVID products saw an 11% operational growth year-over-year. Pfizer has increased its dividend for 14 straight years.

Philip Morris

With 16 consecutive years of dividend growth and a 5% yield, the tobacco company Philip Morris International Inc PM is a top choice for many Redditors who live entirely off dividends. Amid a decline in the popularity of traditional tobacco products, Philip Morris is aggressively expanding into tobacco-free products. The company plans to generate about two-thirds of its net revenues from nontraditional products by 2030. The company posted strong Q1 results in April and updated full-year 2024 guidance. Adjusted EPS in the quarter came in at $1.50, surpassing estimates by $0.09, while revenue jumped 9.7% YoY to $8.8 billion, beating the consensus estimate by $350 million. Philip Morris expects its organic revenue growth in 2024 to total somewhere between 7% and 8.5%, up from its previous forecast of 6.5% to 8%.

Main Street Capital

Texas-based business development company Main Street Capital Corp MAIN is one of the most popular monthly dividend stocks among Redditors in retirement and dividend communities on the social media platform. Main Street has been paying dividends consistently since 2007 and has upped its dividend every year since 2014. 

Main Street’s management said during the Q1 earnings call that the company’s net investment income in the quarter was 54% higher than the monthly dividends the company paid to its shareholders and 9% more than the total dividends paid to shareholders. Total investment income in the March quarter came in at $131.6 million, easily beating the Street’s consensus of $127.9 million.

Altria

Reddit’s retirement and dividend communities love Altria Group Inc MO because of its dividend yield (over 8%) and impressive dividend growth history (54 consecutive years of increases). Retail investors on Reddit believe the stock is undervalued and poised to grow due to recreational marijuana and tobacco-free product growth.

Last year, Altria completed its $2.75 billion acquisition of NJOY Holdings, an e-vapor products company. Analysts believe growth from the oral tobacco category and vaping products could offset declines from the smokable products segment.

Altria’s valuation is indeed depressed. The stock trades at a forward P/E of 9.05, much lower than the industry average P/E of 17.24.

IBM

International Business Machines Corporation IMB is one of the most talked-about stocks in Reddit retirement and dividend communities since many Redditors living off dividends have the tech stock in their portfolios. IBM is that sweet spot between dividend income and stock growth, as some Redditors think the company’s cloud and AI business has the potential to boost IBM’s share.

IBM has 29 years of consecutive dividend growth and yields 3.95%. In April, IBM increased its quarterly dividend by 0.6% to $1.66 per share. During the same month, IBM said it would buy HashiCorp. for $6.4 billion. The company stated the acquisition would allow it to expand its hybrid cloud platform for AI. Bank of America analyst Wamsi Mohan said IBM has the ability to drive HashiCorp’s growth across its customer base.

Realty Income

California-based REIT Realty Income Corp O is one of the top monthly dividend stocks, having raised its dividends for 29 straight years. Redditors are fond of this high-yield (5.9%) dividend growth stock. Realty Income hiked its monthly dividend by 0.2% on June 11 to $0.263 per share. The company has also increased the lower end of its 2024 earnings guidance. It now expects adjusted FFO per share in the year to come in between $4.15 and $4.21, up from its prior guidance of $4.13 to $4.21.

Apple

Despite having a low yield, Apple Inc AAPL is one of the favorite dividend stocks on Reddit, as retail investors on the platform believe the iPhone maker is a solid addition to a diversified dividend portfolio. With excess cash and rising competition, Apple prioritizes shareholder returns more than ever. It has raised dividends every year over the past decade. Earlier this year, Apple hiked its dividend by 4%. It’s still a growth stock, with many analysts betting that Apple’s AI plans will bear fruit. The stock jumped to new highs after Apple’s latest AI-related announcements during the annual Worldwide Developers Conference.

In the latest note, TF International Securities analyst Ming-Chi Kuo praised Apple’s AI move and said the company could have a competitive edge over peers as it has "successfully defined on-device AI."

Coca-Cola

Coca-Cola Co KO has over six decades of dividend growth, a solid business, and a 3% yield. Redditors believe this old-school, "boring" dividend stock is important for any balanced dividend portfolio. Coca-Cola’s organic revenue during the first quarter jumped 11% year-over-year.

The company’s defensive business makes it an all-weather dividend stock. In May, Goldman Sachs said in a note that Coca-Cola is one of the stocks "insulated" from headwinds from wavering consumer spending amid rising inflation.

Looking For Higher-Yield Opportunities?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. 

For example, the Jeff Bezos-backed investment platform just launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. 

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