There are very few things in life more comforting than waking up each morning and knowing your money is working harder than you are. For retirees, the name of the game isn’t chasing moonshots—it’s preserving wealth, minimizing risk, and generating income that you can count on no matter what the market throws at you.
That’s why I don’t dabble with crypto, meme stocks, or penny stock fantasies when it comes to retirement planning. What I do instead is look for income machines—companies with a history of consistent dividends, strong cash flows, economic moats, and management teams that understand the importance of rewarding shareholders.
Today, I want to share two of my favorite stocks for buying income for life—the kind of income that keeps paying you through bear markets, wars, pandemics, and political nonsense. These two retirement-friendly companies are what I consider “set it and semi-forget it” plays: Johnson & Johnson (JNJ) and Realty Income (O).
Why Income Investing Is the Ultimate Retirement Strategy
Before we dive into the stocks, let’s talk about the strategy. Retirement isn’t about maximizing returns anymore; it’s about optimizing income with the lowest reasonable amount of risk. Dividend-paying stocks offer a beautiful middle ground. You get:
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Passive income, often quarterly.
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Potential tax advantages (qualified dividends).
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Inflation protection (with dividend growth).
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Long-term capital appreciation—if you pick right.
In fact, research consistently shows that dividend-paying stocks outperform non-dividend payers over long periods, and with less volatility. But the key isn’t just to chase the highest yield—it’s to find companies that can sustain and grow their dividends.
With that in mind, let’s break down my two retirement rock stars.
Retirement Stock #1: Johnson & Johnson (JNJ) – The Defensive Dividend King
Ticker: JNJ
Dividend Yield (as of May 2025): ~3.3%
Dividend Growth Streak: 62 years
S&P Credit Rating: AAA
Payout Ratio: ~45% (post-Kenvue spinoff)
My Nickname: “The Dividend Cockroach” – survives everything
Why I Love JNJ for Retirement
Johnson & Johnson isn’t sexy. It’s not the next AI revolution. You’re not going to double your money in 12 months. But if you want income stability and resilience, this is a fortress.
JNJ has paid a dividend every year since 1944 and raised it for 62 straight years—that’s longer than many people live. It has weathered lawsuits, recessions, interest rate hikes, inflation, and generational changes in healthcare. And guess what? It’s still standing tall.
The Power of Diversification
JNJ’s strength lies in its diversified business model. Post the Kenvue spinoff (which offloaded the consumer health segment—think Band-Aid and Tylenol), JNJ is laser-focused on:
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Pharmaceuticals – blockbuster drugs like Stelara, Darzalex, and Tremfya.
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MedTech – surgical robots, contact lenses, and orthopedics.
This blend provides both growth and defensive ballast. Even when consumer sentiment tanks, people still need heart surgeries and cancer treatments.
Balance Sheet Royalty
JNJ is one of only two U.S. companies with a perfect AAA credit rating, the other being Microsoft. That’s higher than the U.S. government. If you’re a retiree, you want to sleep well at night. JNJ’s fortress balance sheet helps you do just that.
Dividend Sustainability
With a ~45% payout ratio, JNJ has plenty of room to raise its dividend even if earnings growth slows. The 5-year dividend growth rate is around 6%, which comfortably outpaces inflation.
If you reinvest the dividends, the compounding gets real. A $10,000 investment in JNJ 20 years ago would be worth over $90,000 today with dividends reinvested. That’s what I call aging gracefully.
Retirement Stock #2: Realty Income (O) – The Monthly Paycheck Machine
Ticker: O
Dividend Yield (as of May 2025): ~5.7%
Dividend Growth Streak: 31 years
Dividend Frequency: Monthly
S&P Credit Rating: A-
My Nickname: “The Rent Collector of America”
What Makes Realty Income Special?
Realty Income isn’t just another REIT. It’s a Monthly Dividend Company®—yes, they actually trademarked that. And for good reason. Since 1994, Realty Income has paid over 640 consecutive monthly dividends, and raised its dividend for 31 consecutive years.
If JNJ is the dependable utility knife, Realty Income is the Swiss watch of income.
The Business Model That Works Like Clockwork
Realty Income owns over 13,000 properties across the U.S. and Europe, leased primarily to:
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Drugstores (Walgreens, CVS)
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Dollar stores (Dollar General, Dollar Tree)
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Convenience stores and gas stations
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Big-box retail (Home Depot, Walmart)
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Industrial and logistics tenants (Amazon)
Their business model is built on triple-net leases—which means the tenant pays for property taxes, insurance, and maintenance. Realty Income just sits back and collects the rent.
With an average lease term of 10 years or more, built-in rent escalators, and 98% occupancy, this is about as close to real estate autopilot as it gets.
Why Monthly Dividends Matter
If you’re retired, budgeting is critical. Monthly dividends allow you to match income to expenses—think of it as getting a paycheck. And since the yield is near 6%, a $200,000 position could potentially give you $950/month in passive income. That’s a serious supplement to Social Security.
Resilience in Rate Hikes
Yes, rising interest rates hit REITs hard in 2022–2024. But Realty Income responded with smart moves:
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Diversifying into Europe
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Buying industrial properties
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Deleveraging the balance sheet
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Securing long-term, fixed-rate debt
The result? They're now better positioned for a more stable rate environment. And when rates eventually decline, REITs like Realty Income will likely outperform.
Why These Two Stocks Work Together
Pairing JNJ and Realty Income gives you a beautiful blend of growth and yield.
This mix allows for income diversity, sector diversification, and different cash flow rhythms. One grows faster, the other pays more. Both are sleep-well-at-night stocks with long-term track records of shareholder friendliness.
What About Risks?
No investment is risk-free. Let’s be honest about that.
JNJ Risks:
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Litigation – Always a risk in healthcare, especially with ongoing talc cases.
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Patent cliffs – Pharma companies must continually innovate.
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Regulatory pressure – Drug pricing is always in political crosshairs.
Realty Income Risks:
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Interest rates – Rising rates compress valuation multiples.
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Tenant concentration – Though diversified, a few tenants (like Walgreens) make up a big slice of rent.
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Retail apocalypse? – Overstated, but brick-and-mortar risk is always there.
But here’s the key: both companies have proven resilience over decades. These are not meme stocks—they’re income machines that adapt and endure.
The Power of Reinvesting vs. Withdrawing
Let’s run a quick example.
Let’s say you invest $100,000 split 50/50 into JNJ and O.
That’s nearly $375/month. If you reinvest, you could be compounding 4.5%–5.5% income annually, even in a flat market.
But if you withdraw, that’s still a steady stream of cash to cover part of your retirement living expenses—without having to sell shares.
What If the Market Tanks?
JNJ and Realty Income aren’t immune to price volatility, but their dividends tend to remain stable even during corrections.
During the 2008 financial crisis:
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JNJ kept paying and growing its dividend.
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Realty Income didn’t cut either—it actually increased its payout.
That’s what you want from retirement stocks: not just survivability, but reliability.
Final Thoughts: Build the Retirement You Deserve
You’ve worked hard. You’ve saved. Now your money should do the heavy lifting.
Buying income for life isn’t about chasing fads. It’s about choosing the most durable, shareholder-friendly companies that pay you consistently, with room to grow. Johnson & Johnson and Realty Income may not dominate headlines, but they dominate retirement portfolios.
I’m not saying they should be your only holdings—but if you’re building a retirement dividend portfolio, I’d be hard-pressed to find a better 1-2 punch for reliable income and low-stress living.
Whether you want monthly deposits from your "rent collector" (O) or quarterly checks from the "dividend cockroach" (JNJ), these are stocks you can own for decades—and maybe never sell.
You’re not just buying shares. You’re buying freedom. Stability. Peace of mind.
And that’s what retirement should be about.