With a history dating back to the 1800s, General Mills ( GIS (opens in new tab), $68.42) and its predecessors have been involved with a diverse mix of businesses over time, including restaurants, apparel and toys. (And for those worried about a worst-case scenario for the market this year, FLO is also a solid pick for investors thinking about preparing their retirement portfolios for a recession (opens in new tab), as discussed by Simply Safe Dividends.) 1 brands in faster-growing organic and gluten-free bread categories, Flowers should remain one of the best retirement stocks for 2022. With an investment-grade credit rating, a reasonable payout ratio near 70%, and the No.

With excellent cash flow generation in all manner of economic environments, Flowers has managed to raise its dividend each year since initiating its payout in 2002. The baked goods business sells breads, buns, snack cakes and rolls under an umbrella of popular brands, including Tastykake, Nature's Own, Dave's Killer Bread and Canyon Bakehouse.Īs is the case with many consumer staples stocks, most of the categories Flowers competes in are very mature and enjoy predictable demand trends. Among the funds worth considering are those from M&G, Jupiter and Credit Suisse.Bread has remained a household stable for centuries, and Flowers Foods ( FLO (opens in new tab), $27.86) has been there to serve this basic need since its founding in 1919. These have been among the best performing funds in recent years as income shares have outperformed those with less generous dividends. Those who cannot afford, or do not want, to build up their own portfolio have plenty of income funds to choose from.

Hughes's favourite compa nies include chemicals group BOC, leisure group Rank and the electrical retailer Dixons, although he admits that prospects for Dixons depend on Christmas trading and the imminent decision of the Competition Commission on the sale of warranties with electrical goods. Ideally there should also be the prospect of growth at least next year, if not this. The key is to look for dividends that are well covered by earnings: two is the absolute minimum ratio and the higher the better. Growing or not, it is certainly worth locking in some of the generous dividends currently available. He still expects dividend growth to be around 1 or 2 per cent next year and thinks the stock market will struggle to progress from the current level until dividend growth accelerates. On the positive side, Richard Hughes, who runs M&G's income funds, thinks that most of the likely cuts have already been made - although there are still question marks over the pay-outs from companies such as LloydsTSB and J Sainsbury. That means dividend growth could lag behind the growth in earnings as companies try to rebuild dividend cover. Most companies like to ensure that their earnings are at least twice their dividend payouts, but plunging profits have cut the ratio to less than 1.8 times. With economic recovery still looking sluggish, fierce competition and over-capacity in many industries is making price rises difficult -if not impossible - and earnings growth is likely to be slow. While the remaining 50 did manage an increase, the impact of the cuts means that, overall, dividends from the FTSE 100 will struggle to grow this year. That is borne out by the interim reporting season: M&G Investments calculates that six companies in the FTSE 100, including Prudential, Six Continents (now demerged into InterContinental Hotels and Mitchells & Butler) and Abbey National, cut their dividends and 44 simply held their payments. The reason that the yield on companies such as LloydsTSB, Boots and Dixons is high is that the market is concerned that the dividend is not sustainable, while others - including the insurance companies and some of the banks - are not expected to increase their payments because of pressure on earnings. Of course, if the market - or individual shares - fall, you could also make capital losses. Buy some of these now and you not only lock into a decent income, you also stand to make capital gains if the stock market rises. Five banks, including LloydsTSB and Bradford & Bingley retailers such as Dixons and Boots, all three cigarette manufacturers, insurers Legal & General and Aviva - even Shell Oil - all offer yields of more than 4 per cent, higher than you could get in the average savings account. And there are still very attractive yields available from individual companies.

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