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7 shares to retire on in 2014

For investors entering the retirement stage of their lives there are many decisions they have to make and questions they have to ask themselves. Amongst the multitude of issues is how much regular income does a retiree need from their savings and investments to provide them with sufficient cash flow to cover their living expenses.

Some investors choose to diversify their exposure to the market by buying both listed investment companies (LIC) and large, solid dividend paying companies. Using this approach means that an investor is effectively outsourcing some of the stock picking for their portfolio to the mangers of the LICs, whilst also still making some high-conviction stock selections of their own.

Argo (ASX: ARG) and Australian Foundation (ASX: AFI) are two highly regarded LICs. Their portfolios are weighted towards large-capitalisation stocks and they both have a long history of paying dividends. These two LICs can provide investors with an easy way to own a selection of ‘blue chip’ companies listed on the ASX.

WAM Capital (ASX: WAM) and Australian Leaders Fund (ASX: ALF) are also highly regarded LICs, however their focus is on smaller companies thereby providing investors with exposure to the small and mid-cap sectors of the ASX. Both stocks also provide regular dividends to shareholders.

Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) are highly appealing businesses. Woolworths commands a dominant position in Australian retailing – a position it is likely to retain for many years to come. Wesfarmers is also a major retailer but also offers investors exposure to other industries plus a management style which looks to create shareholder value through its conglomerate approach to business. Both stocks have defensive earnings streams which can provide investors with steady dividends.

AMP (ASX: AMP) has been beaten-up and is out-of-favour with the investment community at present. Its sheer size and industry presence means AMP should continue to command a significant share of the domestic wealth management market in the future. While the company is presently out-of-favour, in time this will likely change, which could make 2014 an appropriate time to add AMP as a long-term portfolio holding.

Foolish takeaway

Defensive businesses are sensible investments for retirees. Regularly adding quality, defensive stocks to a portfolio at attractive prices is one way for many investors to enjoy a happy retirement.

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See all posts by Tim McArthur
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