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3 income stocks for a blue-chip retirement

In Australia, investors are lucky. We have a good economy, low levels of unemployment and a stable political system.

But what really separates us from the rest is something else.

It’s fully franked dividends, of course!

We can buy companies in the stock market, make capital gains and share in its profits. And at a discounted tax rate.

For retirees, or those approaching it, a regular dividend payment is paramount. In addition, although it may not be necessary for every stock you buy to beat the S&P/ASX 200 (ASX: XJO) (^AXJO), you’d like it to. Therefore buying modestly growing blue chip stocks is vital to having a stable income in retirement.

Below, I’ve identified three big companies with dividend yields above 4.5% and franking credits which every Australian retiree could consider holding for the long-term.

1. The best dividend stock is Telstra Corporation Ltd (ASX: TLS). Its growing presence throughout Asia and dominance in local markets puts it in an enviable position amongst its peers. With analysts and shareholders expecting a 29 cent payout in 2014, it currently trades on a forecast dividend yield of 5.3% fully franked.

2. Another strong Australian business paying a great dividend is Insurance Australia Group Limited (ASX: IAG). Domestically, its brands include CGU, SGIO, SGIC and Swann Insurance. Like Telstra, IAG is also pursuing international growth. Its forecast dividend yield is 6.0% fully franked.

3. Coca-Cola Amatil Ltd (ASX: CCL) is Australia’s bottler and distributor of brands such as Coca-Cola, Sprite, Jim Beam, Canadian Club, Kirks, Mount Franklin and many, many more. After suffering from the effects of a high AUD and wage and currency inflation throughout Indonesia (its number one growth market), it failed to hit its profit targets and shares subsequently fell. Now is the opportune time for savvy investors to buy its stock. Its forecasted dividend yield is 4.7%.

A BETTER dividend than these 3!

Each of these companies provide a reliable service to their customers and are renowned for strong dividend payments to shareholders. My pick of the 3 would be Coca-Cola Amatil however there’s one more dividend stock I think every investor needs to know about.

The top Motley Fool analyst has branded it the "BEST dividend stock of 2014" because it offers growing sales, accelerating profits and a grossed up dividend yield of 7%! Find out the name and code right now -- your copy of "The Motley Fool's Top Dividend Stock for 2014" is FREE. Simply click here!

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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