Investing in the stock market is a great way for retirees to keep their wealth growing. Given the higher element of risk that the stock market carries however, it is a good idea for them to focus on strong, well-established companies that are capable of withstanding even the toughest economic conditions. It is even better when they offer a rock-solid dividend which can provide a regular flow of income.
Here are three stocks which a retiree should consider purchasing today…
- Veda Group Ltd (ASX: VED): The data analytics group only listed on the Australian Securities Exchange late last year and does not yet offer a dividend (although one is expected to be announced in the very near future). It does however boast a tremendous track record for growing revenues and earnings which was evident even through the Global Financial Crisis. I expect Veda will deliver strong returns to shareholders over the long term and personally own a parcel of shares.
- Westfield Corp (ASX: WFD): The company owns and manages all of Westfield's international shopping malls, except those located in New Zealand. With a solid management team at its spine, Westfield Corp will continue strengthening its balance sheet by focusing only on its most promising assets. Further, it is expected to yield 3.5%, which would only improve when the Aussie dollar eventually drops given payments are recorded in US currency.
- M2 Group Ltd (ASX: MTU): While many investors would choose Telstra Corporation Ltd (ASX: TLS) for exposure to Australia's telecommunications industry, M2 Group offers greater growth potential as well as a juicy dividend yield. While its growth has largely come from acquisitions of businesses like Dodo and Primus, it will now turn its attention towards growing organically as well as paying down debt. According to Morningstar's estimates, it will pay a total dividend of 24.4 cents per share, putting it on a fully franked yield of 3.7%.
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As good as low interest rates are for our stock market, they are not good for people who have most of their money cooped up in bank accounts – many of whom are retirees. In fact, this method is actually losing a lot of them money, given rising inflation and the taxes charged on any interest earned. As such, investors should not underestimate the importance of powerful dividends.
