5 BIG dividend stocks for retirement

In the midst of low interest rates, a hard but necessary budget and volatile consumer confidence, older Australians are being forced to take action to secure a comfortable retirement.

It’s now up to you. You have to do what you can to build the retirement you’ve always wanted. However according to Suncorp Group Ltd (ASX: SUN) and REST Industry Super, most Australians are worried about their final years and that they won’t be able to afford the retirement they desire.

The share market has proven it can be one of the greatest engines to drive your wealth higher over time. Here are five stocks which could help you look forward to retirement.

1. Telstra Corporation Ltd  (ASX: TLS) has growing overseas revenues, an excellent 5.3% dividend yield and a reputation as the best telecommunications company in Australia.

2. Coca-Cola Amatil Ltd (ASX: CCL) bottles and distributes famous beverages throughout Asia-Pacific. Its share price recently dropped significantly following missed earnings guidance and increased competition. However the fall has provided long-term investors the opportunity to buy its stock cheaply. It is forecast to pay a 4.6% dividend.

3. Insurance Australia Group Limited  (ASX: IAG) is one our best insurers and includes brands such as NRMA, CGU, GIO and SGIO. It trades cheaply and, although earnings can be lumpy, is expected to pay a 6.1% fully franked dividend.

4. BHP Billiton Limited (ASX: BHP) pays a modest 3.5% dividend but has excellent cash flows thanks to its low production costs. Lower iron ore prices present short-term headwinds, however over time, the group’s exposure to petroleum, copper and potash provide good growth prospects.

5. M2 Group Ltd  (ASX: MTU) is the owner of names such as Dodo, Primus, Eftel and Commander. In addition to further acquisitive growth, its push into energy provides an opportunity to grow earnings in the long term. Based on Morningstar’s analysts’ consensus forecasts, it currently trades on a P/E ratio of 12 and 3.8% dividend yield.

The best retirement stock of all

Each of these companies are forecast to grow earnings and dividends in coming years, but could just as well do the opposite. If you’re approaching retirement, diversifying your portfolio is essential to mitigate losses and maximise your chances of success.

Although these blue-chips are great businesses, a strategy many successful investors have used to beat the market, is to include top growth stocks in their portfolio. Currently there is one TOP growth stock which The Motley Fool's top analyst has given a firm 'BUY' rating. Best of all: It's yours FREE. Simply click here for your copy of "The Motley Fool's Top Stock for 2014."

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

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