14 High-Yield Dividend Stocks to Buy for the 4% Rule

Financial planners often recommend the 4% rule as a guideline for determining the annual amount that a retiree can withdraw from portfolios without depleting their nest egg over a 30-year retirement.

Stacks of one hundred US dollar banknotes, illustration.
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Financial planners often recommend the 4% rule as a guideline for determining the annual amount that a retiree can withdraw from portfolios without depleting their nest egg over a 30-year retirement. And high-yield dividend stocks are a critical component of executing this strategy.

Financial adviser William Bengen devised the 4% rule after evaluating stock and bond data across several decades and discovering that a pattern of 4% yearly withdrawals provided reasonable security without bleeding a portfolio dry for at least 30 years, even through occasional market downturns.

The concept is simple: Draw down 4% of the portfolio value in the first year of retirement, then a matching amount (adjusted for inflation) in each subsequent year. Bengen himself later updated the number from 4% to 4.5%.

It's a good starting point for planning a comfortable retirement, but investors must consider a couple factors when applying it. For instance, the 4% rule doesn't account for big one-time purchases that might push your spending growth above the rate of inflation. It also assumes future market performance will resemble past results.

That said, income from your investments can count toward that amount, so if you draw a high (and preferably growing) yield from your portfolio, it means you'll only need minimal price appreciation to remain on track.

Here are 14 high-yield dividend stocks to buy that yield 4% or more. These picks have other qualities that are beneficial to retirees, too – some feature much lower volatility than the broader market, and many are consistent dividend raisers whose payouts may keep up with or even outrun inflation.

Data is as of Nov. 12. Stocks listed by yield. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

Lisa Springer
Contributing Writer, Kiplinger.com

Lisa currently serves as an equity research analyst for Singular Research covering small-cap healthcare, medical device and broadcast media stocks.