If your goal is to provide a reliable source of income in retirement, it is imperative that you have quality dividend stocks in your portfolio.

According to S&P Dow Jones Indices, since 1926, dividends have accounted for approximately 32% of the total return of the S&P 500, while capital gains have accounted for 68%.

To build a portfolio that will give you regular income, you can build a portfolio with stocks from companies that consistently increase their dividend payments. These companies typically operate mature businesses that can provide stability and growth for your portfolio.

With these characteristics in mind, we’ve selected three companies that promise growth and regular income for those who already have a retirement investment portfolio and those who are just about to get one.

1. Johnson & Johnson

The first company in our selection is Johnson & Johnson (NYSE:JNJ). The global pharmaceutical giant is a prime example of a company that retirement portfolio holders should invest in. Shares of Johnson & Johnson ended Tuesday’s session at $175.

Johnson & Johnson – weekly timeframe

Johnson & Johnson has handled volatility much better than many other companies this year. Supported by stronger-than-forecast quarterly results, Johnson & Johnson stock is up more than 2% YTD, while the S&P 500 index is down more than 5.2% over the same period. Now is a good time to buy given that COVID-19 is having less and less of an impact on the company’s operations.

In terms of rewarding investors, few can compete with Johnson & Johnson, which has increased its quarterly dividend for 58 consecutive years.

This puts Johnson & Johnson in an elite group known as the “dividend kings.” This group includes those companies that have been increasing dividends for at least 50 years. Johnson & Johnson pays $1.06 per share on a quarterly basis for a dividend yield of 2.42% on an annualized basis.

What makes the company even more attractive is the fact that healthcare stocks provide steady, growing income, as the services offered by companies in the sector remain vital even during recessions. On top of that, turmoil in the economy doesn’t usually affect the release of new drugs and medical devices.

2. Bank of Nova Scotia

Buying quality Canadian banking sector stocks has done investors well in recent years. The strength of the Canadian economy and a robust regulatory system provide the sector with a solid foundation.

One of the top yield leaders among Canada’s top six banks is currently Bank of Nova Scotia (NYSE:BNS), the country’s third-largest bank. It’s potentially a good asset for any long-term retirement portfolio. Shares of Bank of Nova Scotia ended Tuesday’s session at $74.58.


Bank of Nova Scotia – weekly timeframe

Canada’s top six banks typically pay out 40% to 50% of their profits in dividends each year, making them highly attractive to retirement portfolio holders. In addition, Canadian banks are likely to benefit from the economic recovery from the pandemic and a surge in demand for commodities, which provide a large share of the country’s exports.

Bank of Nova Scotia CEO Brian Porter has successfully restructured the international business, selling off smaller units as well as those with weak results, and emphasizing larger, more promising markets.

These changes seem to have paid off. As revealed in the bank’s latest report, international business profits are up 43% year-on-year thanks to a reduction in non-interest expenses.

The continued growth allows Bank of Nova Scotia to increase its dividend. Payouts have been raised 43 of the last 45 years, one of the best rates for Canadian companies. Bank of Nova Scotia currently pays a quarterly dividend of $0.80 per share for a dividend yield of 4.27% per annum.

3. Mcdonald’s

Another reliable way to provide yourself with ever-increasing retirement income is to buy shares of global fast food restaurant chain McDonald’s (NYSE:MCD). The company has smoothly increased its payout every year since 1976, when it began paying dividends. Shares of McDonald’s ended Tuesday’s session at $238.12; the stock has fallen 11.1% since the beginning of the year.

McDonald’s – weekly timeframe

The fast food giant has many of the qualities that retirement portfolio holders want to see in companies, namely a competitive advantage over rivals, a robust revenue model and an excellent track record when it comes to rewarding investors.

On the short horizon, McDonald’s stock is not particularly attractive given the current circumstances – rising commodity prices, rising labor costs and the Russia-Ukraine conflict. In addition, the company’s latest quarterly results were worse than expected. Nevertheless, investors with a buy-and-hold strategy should take advantage of the current downtime and guarantee themselves a steadily increasing dividend.

Analysts at Oppenheimer last week lowered their target price on McDonald’s shares to $280 from $290, noting that investors should buy the drawdowns. The analysts added that heightened Russia/Ukraine risks have already been fully factored into the quotes.

McDonald’s pays a quarterly dividend of $1.38 per share. Based on the current share price, the dividend yield is 2.32%. The company pays out 73% of its earnings in dividends, which means it will be able to continue to increase its payout.