Meredith Corporation (MDP), Lockheed Martin Corporation (LMT): The 4% Withdrawal Rule Versus Required Minimum Distributions, Part One

One option

This is a great place for a retired person to invest in equities that offer a measure of safety against stock market downturns – in other words, dividend-paying stocks, my favorite kind.

I’ve been investigating and writing about dividend stocks for a while, so here I present three of my favorites. Please see my individual company analysis for more details.

Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is up 48% since I selected it in early January, yet its dividend yield has remained at 3.1% thanks to a 50% increase last week after the company reported 2Q earnings. If you’re looking for a company that is committed to growing its dividend, you can’t do much better than this. Since 2011, the dividend has doubled, while the payout ratio has remained low at 39%.

Meredith Corporation (NYSE:MDP) is up 18% since I selected it in January. It yields 4.0%. The last increase in the dividend was for 1Q 2013, Meredith Corporation (NYSE:MDP) has been paying and raising dividends for 19 years, and the 5-year dividend growth rate is 15.5%, while the payout ratio remains a reasonable 60%.

Lockheed Martin Corporation (NYSE:LMT) has not increased in share price as impressively as my other two picks, but it more than makes up for that in dividend increases. Lockheed Martin Corporation (NYSE:LMT) management has demonstrated a clear commitment to dividend growth; the dividend has doubled since 2010. The company has been paying and raising dividends for 10 years, and the 5-year dividend growth rate is 22.8%. The share price is up 10% since I selected it for my Perfect Dividend Portfolio in January.

So there are three great dividend-growth companies that offer a terrific option for a retiree: exposure to stock market price appreciation, plus the safety of a regular and growing dividend.

I do have another suggestion for retirees looking to invest “extra” money – please see Part Two, wherein I discuss some terrific recommendations for stock selections in a taxable account that offer tax-deferral on high-yielding income generators.

The article The 4% Withdrawal Rule Versus Required Minimum Distributions, Part One originally appeared on Fool.com and is written by Karin Hernandez.

Karin Hernandez is long Cracker Barrel Old Country Store, Meredith Publishing and Lockheed Martin. The Motley Fool recommends Cracker Barrel Old Country Store. The Motley Fool owns shares of Lockheed Martin. Karin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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