The 3 Best Dividend Stocks to Buy for Retirement

The Fed’s efforts to reduce the multi-decade high inflation by raising rates four times this year have increased the chances of the economy slipping into a recession. After declining 1.6% in the first quarter, the U.S. gross domestic product decreased at an annual rate of 0.9% in the second quarter.

The economy's contraction for the two consecutive quarters makes many analysts believe that a recession has arrived. However, the U.S. unemployment rate dropped to 3.5% in July. The red-hot jobs data could give the Fed more confidence to continue its interest rate hikes.

An aggressive Federal reserve amid an inflationary environment is increasing the appeal of dividend-paying stocks. Particularly, if you are looking to add quality dividend-paying stocks to your retirement portfolio amid these uncertain times, Broadcom Inc. (AVGO),  BHP Group Limited (BHP), and Insperity, Inc. (NSP) could be wise choices now. 

Broadcom Inc. (AVGO)

AVGO designs, develops, and supplies various semiconductor devices worldwide. The company operates in two segments: Semiconductor Solutions and Infrastructure Software.

In May, AVGO and VMware Inc.(VMW) announced an agreement under which AVGO would acquire all of the outstanding shares of VMW in a cash-and-stock transaction. This is expected to drive greater value for the combined stakeholders.

On May 26, AVGO declared a quarterly dividend of $4.10 per share on its common stock, which was payable to shareholders on June 30. Its annual dividend of $16.40 yields 3.01%. The company’s dividend payouts have increased at a 17.9% CAGR over the past three years and a 34.8% CAGR over the past five years.

AVGO’s net revenue increased 22.6% year-over-year to $8.10 billion in the second quarter ended May 1. Its operating income grew 71.8% from the year-ago value to $3.39 billion, while its non-GAAP net earnings improved 34.2% year-over-year to $4.00 billion. The company’s non-GAAP net income per common share rose 37% from its year-ago value and was valued at $9.07.

Analysts expect AVGO’s revenue for the third quarter ended July 2022 to be $8.41 billion, indicating a 24% year-over-year growth. The company’s EPS for the same quarter is expected to increase 37.3% from the prior-year quarter to $9.55. Additionally, AVGO has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 12.4% over the past year and 9.4% over the past month to close its last trading session at $545.53.

AVGO’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

AVGO is rated an A in Growth and Quality and a B in Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #6 out of 94 stocks.

To see additional POWR Ratings for Value, Momentum, and Stability for AVGO, click here.

BHP Group Limited (BHP)

BHP, headquartered in Melbourne, Australia, operates as a resources company through its Petroleum; Copper; Iron Ore; and Coal segments. The company explores, develops, and produces oil and gas and mines metals and coal.

BHP recently submitted an indicative non-binding proposal to the Board of OZL to acquire 100% of the issued share capital in OZ Minerals Limited by way of a scheme of arrangement. BHP’s Proposal to acquire all of OZL’s shares for cash consideration of A$25.00 per share represents a compelling value proposition for OZL shareholders.

In July, BHP announced that it had entered into a memorandum of understanding with the Ford Motor Company (F) for a targeted multi-year nickel supply agreement. This might benefit the company.

On February 15, BHP declared an interim dividend of $1.50 per share on common stock. This company’s annual dividend of $6.00 yields 11.03%. BHP’s dividend payouts have increased at a CAGR of 43.7% over the past three years and 45.3% over the past five years.

For the half year ended December 31, 2021, BHP’s profit from continuing operations came in at $14.85 billion, representing a 50.1% year-over-year growth. Its total comprehensive income grew 114.9% from the prior-year period to $10.49 billion, while its net operating cash flows rose 41.7% from the same period the prior year to $13.28 billion. The EPS increased 143.4% from the prior-year period to 186.20 cents.

Analysts expect BHP’s revenue for the year ended June 2022 to be $65.44 billion, indicating a 7.6% year-over-year growth. The company’s EPS for the same quarter is expected to be $6.14.

BHP has gained 2.6% over the past five days to close its last trading session at $54.38.

It is no surprise that BHP has an overall B rating, which translates to Buy in our POWR Rating system.

BHP has a B grade for Stability and Quality. It is ranked #3 of 37 stocks in the B-rated Industrial - Metals industry.

Beyond what we’ve stated above, we have also graded BHP for Growth, Value, Momentum, and Sentiment. Get all the BHP ratings here.

Insperity, Inc. (NSP)

NSP provides human resources and business solutions to improve business performance for small and medium-sized businesses. The company provides its HR services through its Workforce Optimization and Workforce Synchronization solutions. Its offerings include Insperity Premier, a cloud-based human capital management platform.

On May 25, NSP declared a quarterly dividend of $0.52 per share on its common stock, which was payable to shareholders on June 23. Its annual dividend of $2.08 yields 1.90%. The company’s dividend payouts have increased at a 23.2% CAGR over the past three years and a 23.5% CAGR over the past five years.

For the fiscal 2022 second quarter ended June 30, NSP’s total revenues increased 20.8% year-over-year to $1.43 billion. Its operating income rose 37.3% from its year-ago value to $48.35 million. Adjusted net earnings and adjusted earnings per share came in at $44.89 million and $1.16, up 27.2% and 27.5% from the prior-year period.

Street EPS estimate for the fiscal third quarter (ending September 2022) of $0.95 reflects a rise of 6.5% year-over-year. Likewise, Street revenue estimate for the same quarter of $1.45 billion indicates an improvement of 20.1% from the prior-year period. Additionally, NSP has topped consensus EPS estimates in three of the trailing four quarters.

Over the past year, NSP’s stock has gained 7.2% to close its last trading session at $109.27. The stock has gained 6.1% over the past month.

This promising prospect is reflected in NSP’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.

NSP has a B grade for Value, Sentiment, and Quality. It is ranked #3 of 42 stocks in the B-rated Outsourcing - Business Services industry.

Click here to see the additional POWR Ratings for NSP (Growth, Momentum, and Stability).

AVGO shares were trading at $532.80 per share on Tuesday afternoon, down $12.73 (-2.33%). Year-to-date, AVGO has declined -18.72%, versus a -12.75% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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