Know Your Actual Yield Requirements

Last week, I said that my bare minimum for yield is 3.5%, and I usually look for over 4% for a long-term wealth builder. Bob wrote in to say that 3-4% won’t cut it for most retirees, and I agree 100%. But that’s not the general consensus across the internet.

A quick Google search of best dividend stocks for retirees gives you a wide range of results. The first article I clicked on touted “3 Stable Dividend-Paying Stocks That Are Perfect for Retirees.” The three were Procter & Gamble (PG), ExxonMobil (XOM), and Johnson & Johnson (JNJ), with yields of 2.9%, 2.7%, and 2.1%, respectively.

There are still advisors and writers in the business recommending stocks and funds that pay out below 3%. That’s why part of my mission is to get my readers the “yields they deserve.”

I have our core portfolio broken down into two segments: Wealth Builders and Income Generators. The first group is stocks you intend to hold for years or even decades to come. A 3.5-4% yield can work for them as long as they offer the security of a long-term holding. We want a stable dividend to compete with the safety of a CD. Companies with a stable dividend history usually have a lower yield, but that’s a tradeoff we’re willing to accept.

Then we’ll hold these companies for as long as we can and re-invest the dividends. The compounding effect starts to really kick in around years 7-12. Plus, we can generally count on long-term share price appreciation as well, which we don’t get with a CD.

If you’re a retiree, this is a good place to park money to build wealth if you don’t need it to generate income for you right now.

Let’s get back to Bob’s comment and talk about Income Generators.

Know Your Math

According to the BLS Consumer Expenditure Survey, Americans 65 and older spend $61,400 annually, or about $5,100 a month. To earn that amount of investment income you’d need:

• $2 million at a 3% yield

• $1.2 million at a 5% yield

• $877 thousand at a 7% yield

To know the math for your situation, divide your annual expenses by the yield percentage expressed as a decimal: 0.03 for 3%, 0.05 for 5%, 0.07 for 7%.

Knowing your individual math is important for planning, even though it might be scary to face your current situation. There’s no solution if you haven’t identified the problem.

The main job of Income Generators is to cover your expenses as much as possible without taking on too much risk. That’s generally the trade-off. Higher yields come with more risk, which can mean trading in and out of positions more frequently. We need to find that balance for secure income streams.

However, if you are behind on hitting your future goals, you might want to turn to Income Generators. You can still reinvest the dividends and get the benefit of compounding even thought you might not hold these for the long haul.

Personally, I don’t need any of my income right now, so I reinvest all my Wealth Builders and Income Generators. Usually, I don’t reinvest my Opportunity or speculative holdings.

My Favorite High Yielders

The first step is to know the realistic numbers for your situation. You’ll also have to be honest with yourself about your risk tolerance and ability to watch your stocks. One way to get higher yields is to accept more risk.

Here are two of my favorites that are fairly low maintenance.

First up is Hercules Capital (HTGC) which currently yields 12.6%. It’s been a weird couple years for private equity and business development companies (BDCs). Overall, borrowing has slowed down. Liquidity events such as prepayments are outpacing new borrowing, causing the assets these companies hold to shrink.

This has been one of my favorite BDCs for over a decade and is one of the top 3 holdings in my personal portfolio. I like that it focuses on investments in technology and life sciences companies. It has not been immune to decreases in its NAV (net asset value), and its tech exposure caused it to slide with the recent correction in software companies.

HTGC set a new all-time record for debt and equity commitments in the first quarter of 2026. The $1.81 billion was split between 16 new companies and expanded commitments to 12 current portfolio companies. Limited originations remains a struggle across the industry, but HTGC continues to find opportunities.

The second one is an exchange traded debt. These opportunities don’t come up that often, but I’m keeping an eye out when they do. The Pitney Bowes 6.7% Notes Due 2043 trade under ticker PBI-B, PBI.B, or PBIprB, depending on your broker. The best way to find them is to enter “Pitney Bowes” in the search box and let the options populate. I do not recommend owning the regular shares.

I generally don’t recommend bonds or notes because they aren’t as easy to trade, but these trade just like a stock. These notes have a face value or par value of $25 and a maturity of 2043. The notes currently trade for around $19.60. The discount to par means we will collect a yield of 8.6% instead of 6.7%.

I first recommended these to Yield Shark readers back in June 2023 when Pitney Bowes was going through an activist investor takeover. We managed to grab shares at a big discount for a double-digit yield. Despite shares being below my original target yield, I do think we’ll be able to collect these interest payouts until 2043. Please note that these are less liquid than common shares, so use a limit order for any trades.

For more income, now and in the future,

Kelly Green