Create Amazing Passive Income Streams in Retirement with These 3 Stocks

Investors looking to prepare for retirement may be looking to accomplish one of a few different goals. To start, retirees will certainly want to ensure their nest egg won’t run out in retirement – doing so will require some decent growth and appreciation over time. And for those concerned about the rising cost of living, creating another passive income stream to supplement social security may not be a bad idea, and it’s one that investors of all stripes should consider as early as possible.

The reality is that there are a number of excellent fixed income opportunities for investors in such a camp, focusing on yield. With the Federal Funds rate set where it is, the good news for those looking to create ongoing passive income streams that provide meaningful income won’t have a shortage of options to choose from.

But for those investors looking to replicate a high-quality bond portfolio using stocks, here are three of the top options I think are worth considering right now. 

Realty Income (O)

One of the top passive income investments I continue to come back to as a great option for those nearing retirement is Realty Income (NYSE:O). This REIT is unlike many of its peers in this sector due to one key attribute. This REIT pays monthly dividends, which make for the kind of stable and steady passive income stream so many investors are after. 

With a current monthly distribution of $0.268 on a share price of a little more than $56, this is a stock that provides a meaningful dividend yield of around 5.7%. That’s the kind of monthly dividend income many investors want to see, supported by a rock-solid portfolio of some of the best real estate assets in the U.S., U.K and Europe.

Realty Income’s focus is on satisfying demand at the premium end of the market, with many analysts touting the company’s growth prospects as a key reason to own this stock here. The company plans on investing $4 billion in 2025, maintaining this investment rate over time as it looks to bolster its growth and dividend increase profile over the long-term.

With a track record of 665 consecutive monthly payments made, this is a reliable monthly dividend payer I think is worth owning right now.

Fortis (FTS)

Another company I’ve been pounding the table on for some time is Canadian utility giant Fortis (NYSE:FTS). The company’s status as a premier utility provider for key North American markets means that the 3 million+ residential and commercial customers Fortis services are only likely to grow over time. And with a strong presence in its core markets, Fortis has proven its ability to convince regulators to raise prices to justify reinvestment in the core regions the company services.

With a valuation multiple of roughly 20-times earnings, Fortis isn’t cheap in a conventional sense. But there’s a reason for this relative multiple premium compared to its peers – Fortis has provided more than 50 consecutive years of dividend growth, making its distribution highly sought-after. With around 70% of its earnings paid out in the form of dividends, and ample cash flow growth on the horizon, there’s reason to believe that Fortis will continue to provide dividend growth for decades to come. 

That’s one of the key reasons why Fortis stock tends to bounce off of nearly any dip, and continue higher in the fashion it has. For those seeking a combination of income, stability and long-term growth, Fortis remains a top pick of mine for long-term investors. 

iShares 20_ Year Treasury Bond ETF (TLT)

For investors who may not have noticed (or read the headlines), the 30-Year U.S. Treasury, often considered the “long bond” by institutional investors, just breached the 5% level once again. This move comes as inflation expectations are picking up, with Trump’s trade policies and the potential deficit effects from tax cuts continuing to weigh on investors’ estimations of how quickly inflationary pressures are likely to die down. 

One beneficiary of this current environment (for investors who believe that interest rates are more likely than not to trend toward zero over time) is the iShares 20+ Year Treasury Bond ETF (TLT). This ETF, as its name suggests, tracks longer-duration Treasury bonds (those issued by the U.S. government).

While concerns around the ultimate risk profile of government debt has been changing (not for the better of late), there’s still much less risk owning these income-producing assets than most stocks overall. Thus, investors will notice that TLT won’t be a game-changer in the capital appreciation department over most long durations. That’s a good thing for those seeking portfolio stability, but potentially a headwind for those looking to create a dividend portfolio with capital appreciation upside. 

That said, in terms of providing portfolio ballast, there are few options in the publicly-traded markets I think does a better job than TLT. Given where bond yields are right now, this is a top pick of mine as part of a well-diversified portfolio. 

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