{"id":73110,"date":"2025-10-14T03:07:09","date_gmt":"2025-10-14T03:07:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/73110\/"},"modified":"2025-10-14T03:07:09","modified_gmt":"2025-10-14T03:07:09","slug":"dont-count-on-dividend-stocks-alone-for-retirement-income","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/73110\/","title":{"rendered":"Don\u2019t Count on Dividend Stocks Alone for Retirement Income"},"content":{"rendered":"

Susan Dziubinski: Hi. I\u2019m Susan Dziubinski<\/a> with Morningstar. I interviewed Morningstar\u2019s director of personal finance and retirement planning, Christine Benz<\/a>, in early August for a special episode of The Morning Filter<\/a> podcast. Here\u2019s an excerpt from our conversation.<\/p>\n

Watch the full episode of The Morning Filter: The Biggest Risk Investors Face Today <\/p>\n

Plus, whether it\u2019s too late to invest in international stocks, who needs bonds, and what role dividend stocks should play in an investment portfolio.<\/p>\n

\"Susan<\/a>The Role of Dividend Stocks In Retirement Income<\/p>\n

Let\u2019s talk a little bit about dividend stocks. They\u2019re very popular with most of our readers on Morningstar.com. And they\u2019re also very popular of course with retirees who often will use dividend stocks to generate income in retirement. Talk a little bit about what you think specifically of that strategy, of the role dividend stocks play in retirement income.<\/p>\n

Christine Benz: Well, I would say I get it, because the bird in the hand is very comforting. Once you are separated from your paycheck, the idea of having stable sources of income or semistable sources of income is very, very appealing. Then the other thing I would point to is that dividend-paying companies typically are more financially stable than non-dividend-paying companies. There is a sense of financial wherewithal that you get from a dividend-payer. And then when we look at the historical data, we also see that dividend-payers have historically been a little bit less volatile, especially in periods of economic weakness, than companies that do not pay dividends.<\/p>\n

So those are some important factors lining up in favor of dividends. I can definitely see investors emphasizing dividend-payers in their equity portfolios, maybe going exclusively with dividend-payers, but I would augment them with some safer investments. Coming back to cash, coming back to a little bit in high-quality bonds.<\/p>\n

And you\u2019re protecting yourself in a few key scenarios. One would be that sort of market downturn if stocks are down and you have something else to pull your cash flows from in retirement, if you can pull from the cash or bonds, you can reinvest those dividends back into your dividend-payers when they\u2019re arguably a little bit inexpensive. So that\u2019s an advantage to having that safe buffer of assets.<\/p>\n

And then it\u2019s not unprecedented that even companies with really good track records of paying consistent dividends cut them. And kind of burned into my brain is that 2008 period, the global financial crisis, where banks, which had historically been a phenomenal source of long-run dividend payments, were forced to curtail their dividends during that period. So you want protection against an environment like that because in an environment like that, if you are a seller of your actual position, if you need to liquidate to meet your cash flow needs, that\u2019s just not a position you want to be in, which is why I would come back to augmenting my portfolio with a complement of cash and high-quality short- and intermediate-term bonds.<\/p>\n

Growth Strategies For Retirement<\/p>\n

Dziubinski: So then how would you recommend that investors think about the role of dividend stocks in their portfolio? Are there certain types of dividend stocks you think they should consider more so than other types?<\/p>\n

Benz: Yeah, I love dividend growth strategies. So there are a couple of exchange-traded funds that are kind of my go-tos for dividend growth. Vanguard Dividend Appreciation VIG<\/a> is a fund that I really like quite a bit. And one thing people will see when they look at these dividend growth strategies is typically you\u2019re not getting a dividend yield that is much higher than the broad market. So, so much for the bird in the hand. But you are getting a very stable, high-quality basket of companies that does tend to be less volatile.<\/p>\n

So I tend to like the dividend growers. That strategy appeals to me, but even there I would augment it with some non-dividend-growers, some non-dividend-payers, because we have market environments, and I think we\u2019re living through one currently, where the non-dividend-payers perform very, very well. So the large-cap tech names, for example, would tend to be underrepresented in a dividend growth strategy. So I would hold kind of a total market index, which is giving me exposure to those types of companies, alongside the dividend strategy.<\/p>\n","protected":false},"excerpt":{"rendered":"Susan Dziubinski: Hi. I\u2019m Susan Dziubinski with Morningstar. I interviewed Morningstar\u2019s director of personal finance and retirement planning,…\n","protected":false},"author":2,"featured_media":73111,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,85,46,266,267],"class_list":["post-73110","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-il","tag-israel","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/73110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=73110"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/73110\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/73111"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=73110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=73110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=73110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}