Retirees: These Dividend Stocks Come With Recession Protection

Retirees may be freaking out right now, but don’t! Consider these high yielding dividend stocks for passive income while the markets recover.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 7, 2022 4:45 pm EST

Retirees may be suffering right now, watching all their hard work over the years go down the drain when it comes to creating savings. While it’s likely you still have plenty of cash on hand if you’ve been saving a while, it can be very hard to consider taking out anything. Even if you need the cash imminently.

That’s why dividend stocks are a necessary part of many a retiree’s portfolio. They provide you with passive income no matter what the market is doing. That is, if you choose the right dividend stock.

If you choose the wrong one, a dividend may be suddenly cut. So today, I’m going to go over two safe dividend stocks for retirees to consider long term, creating passive income that’s here to stay.

protect, safe, trust — Image source: Getty Images

BMO stock

A great option during a downturn is to buy up a Big Six Bank. Amongst the Big Six Banks, today I would consider Bank of Montreal (TSX: BMO). BMO stock has a long history of growth. In fact, it’s been around for about 200 years! So, that’s certainly some solid proof this company isn’t going anywhere.

But while history is nice, the future is what you should care about. In that case, BMO stock is still a winner. The bank has been expanding in the United States, in particular through its purchase of Bank of the West across the west coast of the country. This geographical growth provides new revenue streams that investors can look forward to.

Now for the passive income you receive from these banking dividend stocks. Their dividend yields are all fairly high, but BMO stock is one of the highest with a yield at 4.26% as of writing. Furthermore, you have some solid fundamentals to latch onto. The stock currently trades at 6.5 times earnings, and 1.3 times book value.

Therefore, with shares trading at about $129 as of writing, an investment in BMO stock today of $10,000 would bring in annual passive income of $443, as an example.

NorthWest REIT

Real estate investment trusts (REITs) are a great way to lock in dividend stocks for passive income. However, there have been some problems over the last few years. Whether it’s the housing sector or the pandemic moving in on growth, it’s a hard industry to figure out.

That is, unless you look at essential services, such as healthcare. And that’s exactly what you get with NorthWest Healthcare Properties REIT (TSX:NWH.UN). NorthWest stock is a solid choice for diversification, both within the healthcare sector, but also globally.

In fact, this diversification comes from acquisition after acquisition for NorthWest stock. It’s why the company hasn’t grown its dividend. However, given that dividend is at 8.07%, I would not be too concerned. Retirees would be happy for that growth to continue for the next few years, knowing that dividend isn’t going anywhere.

And again, it’s a solid deal trading at 8.3 times earnings, and 0.97 times book value. Furthermore, it would take just 93.6% of its equity to cover all its debts! All tallied, at just $10 per share, a $10,000 investment would deliver annual income of $800.