4 shares that could save your retirement


These dividend paying large-cap companies could be just the ticket for your retirement portfolio, writes The Motley Fool.

The economy’s still shaky. Investors are scared. The markets aren’t being friendly. How are you supposed to make money in an environment like this?

Stagnant to falling markets are never easy to navigate, especially coming off a big rally like we saw from the March 2009 bottoms.

Year to date, the S&P/ASX 200 index is down 4%. Many investors have seemingly lost interest in the market, dare we say become even bored.

To us, such thinking spells opportunity, with some neglected stocks trading at what looks like compelling dividend yields.

Even though they may not be glamorous, they’re the most likely candidates to get your portfolio ready for your retirement, or any other long-term financial goal you have.

Ding the bling

You won’t find the best shares to save your retirement on the list of top gaining shares over the past few months.

Sure, companies like Iluka Resources (ASX: ILU) and Bathurst Resources (ASX: BTU) have seen strong advances so far this year, but they are high risk stocks and not suitable for a retirement portfolio.

Nor should you automatically look for shares that have dropped enough to land in what seems to be the bargain basement.

Paladin Energy (ASX: PDN) and BlueScope Steel (ASX: BSL) are amongst the worst performing stocks so far this year. They might look more attractive to value hunters, but these companies are just as likely to continue to struggle as to shoot to the sky. Why take the risk?

Staring you in the face

Many retirees have ‘set and forget’ portfolios, often packed with old privatisation favourites like Commonwealth Bank (ASX: CBA) and Woolworths (ASX: WOW). Whilst such portfolios should have served them well over the past 15 odd years, they’ve been flat to down over the past 18 months as the stock market has stalled.

Just like you can’t drive by looking in the rear mirror, looking backwards and thinking about what might have been isn’t going to help your portfolio returns power forward into the future.

Instead, look at the market with a fresh mind and a fresh set of eyes. Sure, we are facing some economic headwinds, as evidenced by the dramatic profit warning from David Jones (ASX: DJS), but from a big picture, long-term perspective, things are still looking pretty good.

For example, take a look this small selection of blue chip shares. We wanted to focus on companies that paid dividends and were trading at reasonable valuations. Here are some of the shares we came up with:

Company Dividend Yield P/E Ratio
QBE Insurance (ASX: QBE) 7.7% 14
OrotonGroup (ASX: ORL) 7.2% 13
Metcash (ASX: MTS) 6.5% 13
ASX Limited (ASX: ASX) 5.7% 16

Data from Capital IQ, a division of Standard & Poor’s

All these companies are reasonably priced, without being red-light specials, and none of them have sky-high dividend yields that might indicate trouble is just around the corner.

Solid companies like these won’t show up on many investors’ radar screens, but that only makes them more attractive for the Fools disciplined enough to dig for them.

Get on the road to retirement

Right now, it’s just as important to preserve your capital as it is to make it grow. Fortunately, though, you don’t have to choose between one or the other.

With the right shares, you can both protect your portfolio and set yourself up for good-sized gains during the next bull market.

Of the companies mentioned above, Bruce Jackson has an interest in Commonwealth Bank and Woolworths. The Motley Fool has a calm and considered disclosure policy.

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