As Australian investors we have a number of benefits over our international counterparts. Tax savings inside self-managed superannuation accounts and franking credits are two obvious examples.
These benefits have helped many investors grow their retirement nest egg exponentially over time. By investing in established, dividend-paying blue-chip companies, investors have carved out a fortune for themselves.
As I recently showed in this article, investors who want to double their stock portfolio in just 10 years, need only achieve an average annual return of 7.2%.
When you consider some of Australia's biggest companies such as Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC) pay grossed-up dividends of around 7% or more, then it mightn't be as difficult as you think to make a fortune of your own.
However, as savvy investors know, stock prices can also fall. And at a quicker pace than 7.2%pa! But since 1900, the Australian stockmarket has achieved an average annual return of 12%pa so, if we play our cards right, it appears there is potential for any of us to double our money in just 10 years.
Buy, Hold or Sell?
Given their recent run up in price, I don't believe any of the above companies are a standout buy at today's prices, which increases the risk of falling stock prices. But with interest rates stuck at only 2.5% (and possibly going lower), there are many obvious reasons why you should hold big dividend stocks in your portfolio.
