With approximately over 10,000 individuals retiring daily, baby boomers are increasingly reviewing their retirement planning goals. For each individual or couple entering or nearing retirement, the overall passive income goal needed to supplement one’s retirement income may vary. However, with the average social security payment coming in at around $1,900 per month (according to 2024 data), and given where the cost of living is, that may simply not be enough to fund one’s lifestyle when the time eventually comes to enter one’s golden years. 

For those looking for a bit more wiggle room, and roughly triple this number with a bit more than $4,000 per month on top (I picked $50,000 per year since it’s a nice round number), let’s dive into what that would take with the following three stocks.

I will note that each of these dividend-focused stocks pay out an average yield of 3.99%. That’s the current yield of an evenly-distributed portfolio of these stocks, but as I’m going to mention in this article, investors can expect some dividend growth moving forward.

But assuming a 4% yield on a portfolio of these three stocks, investors would need to have roughly $1.25 million invested to see a $50,000 a year income. For those with a few years to plan, that’s a number to shoot for, and it’s a good exercise for young investors to have something to aim at as well.

Let’s dive into why I think these three stocks could be worth adding as major portfolio positions for those seeking meaningful passive income in retirement.

Key Points About This Article:

• Every household’s retirement goals are different, but having some sort of target for passive income in retirement to supplement social security payments can be a worthwhile exercise.
• Here’s what investors would need to invest in these three stocks to generate passive income of $50,000 per year, excluding capital appreciation from these positions of course.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Realty Income (O)

Realty Income (NYSE:O) has consistently paid dividends for 652 months, making this among the top dividend stocks I like for its monthly distributions. Most stocks pay dividends quarterly, but real estate investment trusts (REITs) like Realty Income make these payouts monthly, which can be great for those looking to pull passive income from their portfolios in retirement.

With a 4.3% dividend yield, this fund has provided consistent and durable monthly income, alongside solid capital growth since its inception in the early 1990s. For investors seeking a way to gain exposure to the real estate market (whether or not one owns their own primary residence), this REIT is certainly a great option to consider.

Another think I like about this particular REIT is the fact that the current payout ratio is just a hair above 75%. Many other funds have much higher payout requirements, but this relatively low ratio provides added stability to the REIT’s ongoing yield.

Fueled by rising rents and a 104.9% re-capture rate on re-leased units, this is a real estate play I think investors can consider, even with where interest rates currently are and the state of the housing market.

Exxon Mobil (XOM)

Oil and gas giant Exxon Mobil (NYSE:XOM) is a company I’ve long touted in the past as a solid long-term investment idea. The company’s status as the leading company in this sector can provide portfolio diversification into energy in a way others can’t. And with a dividend yield of 3.31%, this company’s total return should be meaningful, once capital appreciation is factored in.

I think there are plenty of factors which suggest the company could see accelerated growth in the coming years. With the Trump presidential victory, the “drill, baby, drill” discussion is back for Wall Street and Main Street investors alike. Taking advantage of this trend may require adding exposure to companies with plenty to gain from drilling development within the U.S. market. Exxon Mobil is certainly one such company.

This fully integrated energy giant generally is built to withstand volatility in terms of energy prices, something I tend to like. There will be volatility ahead. In energy markets, this is a sure thing. Thus, owning a company like Exxon that can weather whatever storms may come is a big plus.

With more than 25 consecutive years of dividend increases, it’s important to note that this dividend income passive investors lock in today will likely grow. In my view, this is a top divided stock to own for a myriad of reasons, and it’s atop my buy list right now.

Coca-Cola (KO)

Offering a 2.98% forward yield with a 68% payout ratio, Coca-Cola (NYSE:KO) remains a top dividend stock in its own right.  The beverage giant is a top portfolio holding of many world-class investors such as Warren Buffett for good reason. Indeed, in terms of dividend-paying blue-chip stocks that are reliable (and provide consistent dividend growth), Coca-Cola has to be among my top picks.

Now, the beverage market is one that many have been calling saturated for some time. However, Coca-Cola has continued to report strong results in past quarters, outperforming earnings and revenue expectations despite slowing case volume growth. Revenue continues to rise in key markets such as Latin America, North America and Asia Pacific but has seen declines in its emerging markets business as well as its bottling segment. We’ll have to see if the company can turn these results around, and that’s something I’m going to pay close attention to.

That said, for those concerned about volatility in the markets, Coca-Cola is among the more stable names I think is worth adding on weakness. This is about as defensive a business as they come, with a top-tier dividend that can be relied upon. That’s worth something in today’s market.

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