Investing

Baby Boomers: Build Your Passive Income Streams With these 3 Dividend Stocks

Chris MacDonald

Published: February 19, 2025 3:37 pm

Baby boomers looking to set up their portfolios for a relaxing and rewarding retirement have plenty of factors to consider.

With interest rates still remaining relatively high, there are now a number of great options available to baby boomers looking to create meaningful passive income streams in retirement. For those looking at fixed income securities (such as bonds and products provided by other alternative asset classes like real estate), achieving yields in excess of 5% is more than possible today. That’s quite the departure from the yields many such products offered over most of the past two decades, with Treasuries trading at sky-high levels and yields for long-term bonds remaining very muted.

That said, investors who have put capital to work in dividend-paying stocks have outperformed those in the bond market by a rather wide margin of late. Aside from the fact that these investments provide capital appreciation upside potential over the long-term (as well as dividend growth potential), there are other reasons why certain dividend stocks are worth buying relative to bonds.

Here are three of my top picks for baby boomers looking to build a reliable passive income stream in retirement.

Key Points About This Article:

• Here are three top dividend stocks baby boomers may want to consider to build out their income-generating portion of their portfolios in retirement.
• Aside from the capital appreciation and dividend growth potential these companies provide, there are other reasons why investors may want to consider these names right now.
• 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.

Pfizer (PFE)

In 2022, Pfizer (NASDAQ:PFE)  became the first healthcare company to achieve $100 billion in annual sales. The company’s surging revenue tied to its leading Covid-19 vaccine led to widespread bets that Pfizer’s time in the sun could continue, and its long-term growth trajectory may (finally) once again be robust.

Of course, with the pandemic now in the rear view mirror and slowing sales from the company’s vaccine division (and impending patent losses on some of the company’s key drugs), Pfizer’s stock price has stagnated. Since its late-2021 high, Pfizer’s stock price has declined roughly 60% to current levels, which has caused significant pain for investors who bought this stock near the peak.

The good news is plentiful for investors looking to put fresh capital to work in a world-class large-cap pharma company. Pfizer’s price-earnings multiple has now declined to just 8.7-times (on a forward basis), with the company’s stock price offering a very attractive yield of 6.7%. In other words, for investors who expect Pfizer to survive, this is a stock to own. For those who think the company can make the right moves to diversify its pipeline and take on strategic acquisitions to bolster its position in the market, this is a screaming buy here.

Some investors have been calling for a dividend cut for years, but Pfizer is one of the blue-chip dividend stocks I’d anticipate will do everything in its power to protect and grow its dividend over time. For these reasons, this is a top dividend stock I think baby boomers may want to consider owning right now for the long-haul.

Verizon (VZ)

With a 6.9% dividend yield, Verizon (NYSE:VZ) ranks among the S&P 500’s top income stocks. However, like Pfizer, this relatively high yield has come alongside growth and competition-related struggles.

Verizon’s 5G rollout missteps and mature smartphone market have led to flat revenue and declining EPS. Heavy debt and limited financial flexibility, compounded by its $20 billion Frontier Communications acquisition, make the stock less appealing for income investors seeking stronger alternatives.

That said, Verizon is advancing AI growth with its 5G network, enabling fast, secure edge computing for devices like phones and laptops. Its collaboration with Nvidia brings AI to private networks, including FIFA’s 2026 World Cup. With the AI edge market expected to grow from $27 billion in 2024 to $270 billion by 2032, Verizon is positioned to drive innovation in areas like self-driving cars and IoT.

The company’s Q4 revenue rose 1.7% year over year, driven by 568,000 net postpaid phone additions and 408,000 broadband additions, bringing total broadband connections to 12.3 million, a 15% increase. Mobile wireless revenue grew 3.1% to $20 billion, marking 18 consecutive quarters of sequential growth. Perhaps more notably for dividend investors, the company’s debt fell by $8.5 billion to $117.9 billion. And it’s worth pointing out that the company’s $20 billion Frontier Communications acquisition (set to close next year) is expected to shape Verizon’s competitive edge and future stock performance.

I think this is a dividend stock baby boomers can sleep well at night owning, particularly for those comfortable with averaging down during dips.

Fortis (FTS)

Canadian utility giant Fortis (NYSE:FTS) remains one of the top dividend stocks I’m bullish on right now. The company’s shares price has dipped slightly of late, but the company still remains the best-performing stock on this list, for a number of key reasons.

Of course, utility stocks remain in focus as key picks-and-shovels plays for investors looking to gain exposure to the rising electricity usage tied to AI and other electrification trends. And with a dominant position in a number of key markets (mainly in Canada), Fortis is a relatively overlooked name I think is worth considering due to its debt reduction and dividend growth initiatives. 

The company plans a $26 billion capital program to grow its rate base from $38.8 billion in 2024 to $53 billion by 2029. New assets are expected to boost revenue and cash flow, supporting annual dividend increases of at least 4%. With 51 consecutive years of dividend hikes, Fortis offers investors a 4% yield at current prices.

Over the past year, Fortis  insiders increased their holdings, signaling confidence in the company’s prospects. I think baby boomers may be well-rewarded by doing the same right now.