Income, strength, and stability are the three core characteristics every retired person needs in their portfolio. Because retirees lack the luxury of a steady paycheck, dividends are the key to financial stability after one leaves the workforce. 

But what types of dividend stocks are best for retirees? Of course, any choice needs to possess the three core characteristics above, but there are other factors that make a dividend-payer truly unique. By far the most important is a genuine potential for price appreciation and growth. 

I drilled down three stocks that I think contain all three of these essential characteristics… 

1. AT&T (NYSE: T)
AT&T shares have suffered this year, with a nearly 10% price plunge due to slowing growth, competition, and a substantial debt load. The selling has placed this legacy telecommunication and data company deep in the value zone, setting up an ideal buy opportunity for yield-hungry investors.

#-ad_banner-#Long known as a dividend aristocrat, AT&T has increased its dividends for an astounding 30 years in a row. Currently yielding an impressive 5%-plus annually with a quarterly dividend of about $0.49 per share, the company is the seventh-highest-yielding name in the S&P 500. 

Boasting revenue of nearly $162 billion, gross margins of over 37%, and an enormous market cap of just under $236 billion, AT&T is a real monster of the corporate world. It’s this very size that has some investors concerned about the company’s long-term growth viability. 

I firmly think that these bearish investors are wrong and there is a bright future for AT&T. My reasoning is based on two factors: The Time Warner deal and the rollout of its 5G network.

AT&T has agreed to purchase Time Warner for over $85 billion in cash and stock. The acquisition will fill AT&T’s coffers with precious content like HBO, Warner Bros Studio, Turner Broadcasting, TNT, TBS, and other cable networks. 

The acquisition has been approved in 16 nations and is awaiting regulatory approval in Chile, Brazil, and the United States. Once approved, the acquired assets will enable AT&T to compete head-to-head with rival Comcast across several sectors. 

Next, the planned rollout of AT&T’s 5G network slated for 2018 or 2019 will provide the company with a huge edge going into the future. 5G will supercharge the burgeoning Internet of Things while revolutionizing speed and capacity of both fixed and mobile broadband. 

These two factors will help lift the shares out of their current malaise and propel gains long into the future. 

2. Iron Mountain (NYSE: IRM)
The recent Equifax breach has refocused investor attention on data management companies. Iron Mountain is a leading company in record management, data protection, recovery and information destruction services. It’s structured as a real estate investment trust (REIT), meaning that 90% profits must be distributed to shareholders as dividends. The REIT structure makes Iron Mountain an ideal stock for a retirement dividend portfolio.

I love the fact that the company is built on a recurring revenue stream. This is akin to a subscription model, where the majority of income is derived on a monthly basis as customers pay storage fees based on their volume. 

Also, Iron Mountain boasts a diversified revenue base with over 225,000 customers around the globe in a multitude of sectors. In fact, over 95% of Fortune 1000 firms utilize Iron Mountain. This sheer size helps further diversify the company’s income stream — no single client represents more than 1% of revenue. This protects IRM from individual client, geo-political, and even sector-wide risk factors. 

Finally, the company has undertaken an aggressive acquisition strategy, allowing it to quickly expand and gain new clients around the world.

The stock yields nearly 6% on a $2.20 per share annual dividend. And this figure keeps getting better: Iron Mountain just ramped up its dividend by 13%. In 2018, another 7% increase is planned. Long-term strategies include increasing the dividend by 4% annually from 2019 onward.

3. HCP (NYSE: HCP)
Another REIT on our list, HCP owns and manages a diversified portfolio of healthcare-related properties. The stock yields 5.3%. 

Healthcare is a growing industry in the United States. The nation’s aging population and rapid medical innovation will continue to power the sector higher over the long term. HCP is ideally positioned to capture this profitable trend.

The REIT is highly diversified across the healthcare sector, with a balanced portfolio of a wide variety of properties. It focuses on three distinct areas: senior care, life sciences, and medical offices.

In the second quarter of 2017, cash and equivalents increased to over $390 million from just $95 million same quarter last year. This cash pile, along with a $2 billion credit facility, will enable HCP to continue to create a stable dividend flow far into the future.

The stock is down just over 6% this year, giving investors a rare shot at a grabbing this reliable dividend payer at a discount.

Risks To Consider: No matter how secure an investment appears, anything can and does happen in the stock market. Creating a diversified portfolio for your retirement is the key to mitigating risk.

Action To Take: Consider adding one or more of the above stocks to your portfolio.

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