If I were to retire tomorrow, I would buy these two top dividend stocks

I want to continue maximizing my income even in retirement. One way I plan to do this is by buying the best dividend stocks.

I think it’s a necessity. Life expectancy is increasing. As such, we are spending more time in retirement than ever before.

I would like to focus on an income I can rely on, as dividends are never guaranteed. Some dividend yields look attractive, such as Vodafone‘s, but they are not reliable. Instead, I would focus on high quality FTSE 100 companies that offer stable cash flows and the potential for increasing returns.

If I were to retire tomorrow, these two stocks would be at the top of my list.

Consumer goods are robust

I want to kick things off Unilever (LSE: ULVR). The return is not the greatest at 3.7%. However, this payout has not been reduced in more than 50 years.

The stock has had a tear this year, rising 9.3%. That’s partly due to the company’s strong first-quarter results posted in April.

Over the period, underlying revenue growth increased by 4.4%. For the 30 Power Brands, which account for 75% of turnover, this increased by 6.1%.

What was perhaps more remarkable, however, was the fact that the company managed to raise prices while simultaneously increasing sales volume by 2.2%.

Considering the current economic climate, that’s impressive. And if I were to retire, I would want companies with strong pricing power that can deliver stable growth, such as Unilever, in my portfolio.

It is not immune to threats. Inflation remains a risk and while it can drive up costs, it could lead consumers to switch to cheaper alternatives. One competitor that comes to mind is the fast-growing Aldi.

But Unilever’s recent growth, in my view, underlines its ability. This kind of stability will come in handy to continue paying shareholders and hopefully increase the dividend.

Banking giant

Continuing the theme of targeting established, high-quality companies, my next pick would be Lloyds (LSE: LLOY).

The stock currently has a yield of 5.3%, more than covered by earnings. After a stellar performance in 2023, the major bank announced plans for a £2 billion share buyback programme.

Buybacks help reduce the number of shares in circulation. That, in turn, should help boost a company’s earnings per share.

I also think Lloyds shares offer great value for money at the moment. At 52p, this means the share has a price-to-earnings ratio of just 6.9.

Recent first quarter results showed profits fell 28% for the period. That is a concern. I expect this to be a theme in the coming months as interest rates start to fall. Although banks have enjoyed wider margins due to higher interest rates, this seems likely to come to an end.

But there are other factors that should help offset this, such as positive signs in the housing market. As Britain’s largest mortgage lender, the country should get some boost from a revival in the property sector.

UK house prices rose in March at the fastest annual pace since December 2022. Lloyds increased its forecast for house price growth this year. It now expects an increase of 1.5%.

I think Lloyds is well positioned to thrive in the coming years. That makes me think it would be a smart purchase if I were to retire.