3 Top Stocks for Retirees to Buy

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XLY Total Return Price Chart

The ETF has a gross expense ratio of 0.14%, so investors are getting exposure to a diversified basket of stocks for a conveniently low cost. The dividend yield stands at 1.34% at current prices. While this is not particularly high, many of the companies in the portfolio typically raise dividends on a regular basis, so investors in the ETF have solid reasons to expect growing dividends over time.

Tyler Crowe: One stock that stands out as a great investment for those in retirement is Magellan Midstream Partners . Unlike many other companies in the energy space that vacillate with the price of oil, Magellan's business of transporting and storing crude oil and refined petroleum products is mostly done under long-term, fixed-fee contracts. Therefore, the company owns a steady stream of cash from which it can pay a generous distribution that not only yields 4.6% today, but also has established a strong track record of routinely increasing its payout to investors over time.

Source: Magellan Midsteam Partners investor presentation.

What's more, Magellan's management has set some pretty conservative payout targets compared to other pipeline companies. This gives the company some extra cash to invest in growth projects that will lead to higher distributions in the future. While management doesn't give payout guidance several years out, its development projects will provide additional cash flows for several years in the future that should ultimately lead to strong payout growth.

It may sound scary for investors who are approaching retirement to invest in a company tied to the oil and gas industry right now, but Magellan isn't a typical company for this space. It's toll-booth-style revenue stream, and penchant for rewarding its investors with generous payouts, could make Magellan a great pickup for an income portfolio.

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The article 3 Top Stocks for Retirees to Buy originally appeared on Fool.com.

Andrés Cardenal has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. Tyler Crowe owns shares of Magellan Midstream Partners. The Motley Fool recommends Johnson & Johnson and Magellan Midstream Partners. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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