One proven way to secure growing income during your golden years is to buy quality dividend-growth stocks. 

Companies that increase their cash payouts quarter after quarter demonstrate that they can produce steady and reliable income for their investors, not just during the good times, but also during downturns and recessions.

Dividend growth stocks also offer a good avenue to beat inflation. Unlike bonds that pay fixed principal and interest payments, these companies provide a regular pay raise in the shape of dividends to boost your spending power. You can use that cash to reinvest and buy more shares or to meet your monthly expenses.

Below, we have put together a list of three such stocks that can be trusted to earn steadily growing income. Their dividend yields are, no doubt, low at this point as their share prices rose during the past year, but they are low-risk, high-quality names, suitable for a long-term retirement portfolio.

 1. Lowe’s

  • 5-Year Average Dividend Growth: 16.5%
  • Dividend Yield: 1.2%
  • Payout Ratio: 26%

The home-improvement giant, Lowe’s (NYSE:) is one of the best dividend-growth stocks for income investors.

The No. 2 home retailer in the U.S., it has been experiencing since the pandemic outbreak, which prompted stay-at-home workers to spend more money into their homes.

This trend is likely to endure as many companies look for a hybrid work model, where they will allow more workers to remain flexible. This, combined with low interest rates and the massive savings that Americans have accumulated during the pandemic, point to continued gains for home-improvement stocks.

Lowe's Weekly Chart.

Lowe’s Weekly Chart.

Lowe’s currently pays $0.8 a share quarterly dividend, which has grown, on average, 16.5% each year during the past five years. That kind of growth will likely continue. The company has a sustainable, low 26% payout ratio, leaving plenty of room for the retailer to distribute more cash to its shareholders.  

2. CN Rail

  • 5-Year Average Dividend Growth: 12.8%
  • Dividend Yield: 1.84%
  • Payout Ratio: 49%

Canada’s largest railroad company, Canadian National Railway (NYSE:) is another solid candidate to earn growing dividend income. What makes CNR attractive is that this railroad operator enjoys a unique competitive advantage within the North American economy.

CNR runs a 19,600-mile rail network that spans Canada and mid-America, connecting the Atlantic, the Pacific and the Gulf of Mexico. This wide economic moat makes CNR a stock that has the power to defend its business, while continuing to .

This combination of growth and income is hard to come by, as the majority of income stocks have passed their growth phase; the main reason investors like them is the regular income stream.

CN Weekly Chart.

CN Weekly Chart.

But in the case of CN Rail, the network is still in the middle of its massive expansion, triggered by a huge demand for its services. As part of its growth plans, CN Rail is in the process of acquiring US-based Kansas City Southern (NYSE:). The merger, if approved by the regulator, will create the first railway network spanning the U.S., Mexico and Canada.

CN Rail pays $0.51 a share quarterly dividend, which has grown about 13%, on average, annually, during the past five years.

3. McDonald’s

  • 5-Year Average Dividend Growth: 8%
  • Dividend Yield: 2.18%
  • Payout Ratio: 74%

Among global fast-food chains, McDonald’s (NYSE:) has a solid track-record when it comes to consistently rewarding investors. The company has raised its payout every year since 1976, when it first started providing a dividend.

McDonald’s has many qualities that retirees look for in a top income stock: the company has a global competitive advantage over rivals, a solid recurring revenue model and a great history of compensating its investors.

After struggling through the pandemic, when lockdowns hurt its restaurant business, the company is rapidly regaining its . In April, it raised its 2021 global sales outlook, saying it expects U.S. sales during the current quarter to outpace pre-pandemic levels.

McDonald's Weekly Chart.

McDonald’s Weekly Chart.

MCD pays quarterly dividends of $1.29 per share. That translates to an annual dividend yield of 2.18% at the current stock price. With a manageable payout ratio of 74%, the company is in a strong position to continue delivering dividend growth going forward.





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