As we get older, our investment goals may change. For example, when we are younger, we may be more focused on growth and taking on more risk. However, as we approach retirement, we may become more focused on income and reducing risk.

This was the case for me. When I was younger, I didn’t have the luxury of time to study my investments in detail. I made some good decisions and some not-so-good decisions.

For example, I invested in an investment-linked insurance (ILP) that didn’t perform well. After over 20 years, I decided to cash it out at a loss. This was a difficult decision, but I knew that I needed to make a change.

I decided to focus on dividend-yielding stocks. Dividends can provide investors with a steady stream of income, even if the stock price does not go up. This was important to me because I am approaching retirement and I needed to start generating income from my investments.

I also decided to take some of the money which I cashed out to travel. I believe that it is important to enjoy the good things in life, even when we are getting older.

I am still learning about investing, but I am confident that I am making better decisions now. I hope that my story will help others who are looking to change their investment goals as they get older.

There are many reasons why dividend-yielding stocks can be a good source of passive income. Here are a few of the most important ones:

Embracing Dividend-Yielding Stocks for Retirement

1. Steady Income Source: Dividend-yielding stocks offer a dependable source of passive income, allowing you to meet your monthly needs while safeguarding your financial stability.
2. Capital Preservation: Dividend stocks often come from established companies with solid financials. This stability can protect your capital against market volatility.

Guidelines for Selecting the Right Dividend Stocks

1. Dividend Yield: Aim for a healthy balance between dividend yield and sustainability. Too high a yield might indicate an unsustainable payout.
2. Dividend Growth: Focus on companies with a history of consistent and growing dividends. This demonstrates their commitment to rewarding shareholders.
3. Payout Ratio: A prudent payout ratio ensures that the company can maintain its dividend payments even during economic downturns.
4. Sector Resilience: Certain sectors—like utilities, consumer staples, and healthcare—are known for their reliable dividends. Explore these options for stability.

Benefits Tailored to Your Retirement Goals

1. Reliable Income Stream: Dividend payments can cover your expenses, offering a sense of financial security during retirement.
2. Peace of Mind: Knowing you’re invested in companies with strong fundamentals can alleviate worries about market fluctuations.
3. Inflation Protection: Dividend growth often outpaces inflation, helping you maintain your purchasing power over time.

Navigating Potential Risks

Given the external volatile situations, it will be prudent to take these measures to minimise/mitigate any unforeseen circumstances:

1. Diversification: Spread your investments across various companies and sectors to minimize the impact of potential dividend cuts.
2. Market Conditions: Be prepared for market ups and downs. Focus on the long-term benefits of dividends rather than short-term price fluctuations.
3. Due Diligence: Thorough research is key. Consult financial experts, explore reputable sources, and educate yourself to make informed decisions. Here are some of my go to source:

• https://simplywall.st/?view
• https://fifthperson.com/
• https://www.morningstar.com/

Dividend-yielding stocks can be a good source of passive income for investors approaching retirement. By carefully selecting stocks and doing your research, you can build a portfolio that will provide you with a steady stream of income in your golden years.

Here are some key points to remember:

• Dividend-yielding stocks can provide investors with a steady stream of income, even if the stock price does not go up.
• Dividends are typically taxed at a lower rate than ordinary income.
• Dividend-yielding stocks can be a good way to diversify an investor’s portfolio.
• Dividend-paying companies are often well-established and profitable businesses.

If you are approaching retirement and are looking for a way to generate passive income, dividend-yielding stocks may be a good option for you. However, it is important to carefully consider the risks before investing.

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