Barron's has a recent post about quality dividend stocks for retirement. They pick their top 10 favorites. 10 for the Money by Vito J. Racanelli

Special Report on Retirement: Folks approaching retirement should consider buying high-quality, dividend-paying stocks to bulk up their portfolios. Here are our top 10 picks.

Which companies are worthy of a retiree's income portfolio? Barron's has selected 10 for the A team, plus a second 10 that didn't quite make the cut, but easily could have.

Before we get into specifics, a little more background: A study of 1,000 Americans done by Scottrade in January found that 75% of the polled baby boomers --Americans born anytime from 1946 through 1964 -- fear that full retirement won't be an option for them.

If there is a silver lining, it's that it is probably an auspicious time for buying and holding large-cap, high-quality, dividend-paying and dividend-growing stocks. "Right now, you can find leading blue-chip, high-quality stocks at below-average multiples that are raising dividends," says John Carey, a fund manager at Pioneer Investments.

Banco Santander (STD)
With many of the biggest U.S. and European banks in trouble or under pressure, this Madrid-based giant offers financial strength and geographic diversity. In 2009, once again it will probably be one of the world's most profitable banks.

Chevron (CVX)
Big integrated energy outfits like this American oil explorer offer both a dollar hedge (because crude rises when the dollar falls) and exposure to two of the world's most important commodities: oil and natural gas.

Intel (INTC)
The premier maker of microprocessors, semiconductor chips, and sundry other computer and communications gear is involved in cyclical businesses, but that's about the worst you can say about it. Intel is the 800-pound gorilla in the industry, and its manufacturing-scale and global-reach advantages would be hard to replicate, even in the tech world, where change happens quickly.

Johnson & Johnson (JNJ)
This is perhaps the quintessential dividend stock. While J&J was named the most respected company in a recent Barron's poll, its stock doesn't get the respect it deserves. J&J manufactures everything from Tylenol and Band-Aids to high-tech orthopedic hip replacements and coronary stents, and numerous pharmaceuticals.

McDonald's (MCD)
Because its shares haven't done much in the past two years, few may know that the home of the Golden Arches has been the best-performing Dow industrial stock since 2002, up about 300% in that span. That's when the world's biggest fast-food chain slowed its expansion and redeployed its prodigious cash flow toward upgrading existing restaurants and menus, adding salads and fruits that customers wanted. All this boosted same-store sales sharply. McDonald's continues to add new items, such as premium Angus burgers and McCafe coffee.

Nestlé (NSRGY)
Like J&J, the Swiss behemoth is steady and solid as the tortoise in the race with the hare. The world's largest food processor boasts wide product diversity and geographic reach, in the West and in fast-growing emerging markets, where the company is making a big push. Its balance sheet is probably the strongest in the food industry, giving it the wherewithal to undertake bolt-on acquisitions.

Novartis (NVS)
This leading manufacturer of drugs -- from cardiovascular medicines like Diovan to oncology and neuroscience compounds, as well as vaccines and diagnostic tests and over-the-counter products such as Excedrin -- also gives international exposure and would help diversify a retirement portfolio away from the dollar. The Basel, Switzerland-based firm's American depositary receipts have a dividend yield of 3.2%, and the payout has risen, on average, 15% annually over the past five years.


PepsiCo (PEP)
In the never-ending cola wars, PepsiCo is our selection because it offers a bit more sales growth than Coca-Cola (KO), which made our second list. PepsiCo is expanding in fast-growing markets like Russia and China, and through the introduction of new products like naturally sweetened beverages, in an already-diverse portfolio, according to Bahl & Gaynor's McCormick.


Procter & Gamble (PG)
Cincinnati-based P&G is another of the U.S.'s great franchises, with a widely diverse manufacturing, product and customer base around the world. It would be difficult to find a country where it doesn't either make or sell one of its laundry, beauty-care, food or health-care products. The stock is just below the market multiple and little changed for the year, with a 2.8% yield, the highest it's been in some time, notes Pioneer's Carey. "It's a strong company in a lot of business areas."

Verizon Communications (VZ)
This telecom has the highest dividend yield in our bunch, 6.2%, because many investors fear it eventually won't be able to replace revenue from the industry's ongoing loss of land lines. But through its Verizon Wireless joint venture with Vodafone (VOD), Verizon is the largest U.S. wireless-service provider, notes Darren Pollock, a portfolio manager at Cheviot Value Management. "Verizon continues to add wireless subscribers at a good clip, even without the ability to offer hot products like Apple's iPhone." Its network is generally considered the most reliable in the U.S.

Disclosure: The Div Guy owns STD, JNJ, PEP and PG at the time of this post.