The Dividend Kings

If you are worried about volatility of the market, you can't be blamed. Don't think you have to invest in growth stocks just to make money; this type of investing isn't for everyone. But remember the bottom line: you have to be in the market to beat inflation and survive.

The best way is to invest a portion of your portfolio in dividend-paying stocks.. Not only do they provide you with a recurring stream of income, but they also offer growth opportunities. Your portfolio needs to keep pace with inflation to allow you to maintain the lifestyle you're used to.

Worried that dividend stocks won't be able to grow at a meaningful rate? Intel (NASDAQ:INTC) is more often thought of as a tech giant than a dividend payer. Yet the company has increased its payouts over the past five years by $901.3T. On an annualized basis, its dividend-adjusted price has increased by $161.3T over the past 20 years, which is far higher than the S&P 500's dividend-adjusted return.

You might think Intel is a fluke? Professor Jeremy Siegel has shown that from 1957 to 2003, when dividends are reinvested, the 100 highest-yielding stocks in the S&P outperformed the market by an average of three percentage points. With a $1 million portfolio, that’s an extra $30,000 a year on average, just by investing in dividend payers.

The "S&P 500 Dividend Aristocrats" consists mainly of the best of the best dividends in the world. Only the cream of the crop can make it into this selection, so there are some very strict requirements to get in:

• Minimum market capitalization of $3 billion.
• Minimum trading volume averaging $5 million to ensure liquidity.
• The company must have increased its dividends for at least 25 consecutive years.

Finding companies that have increased their dividends for a quarter century is not an easy task. These companies have had to prove that they can sustain cash flow and withstand economic downturns in order to consistently return money to shareholders. Not only have these companies had a long history of distributing cash to shareholders, but they have also demonstrated the ability to grow their dividends well above inflation (typically 3%-4%). Additionally, most of these stocks beat the S&P hands down. So not only do the Aristocrats offer huge income, which you will obviously need as a retiree, but they also increase the value of your portfolio.