3 hearty retirement stocks

We may not like it nor realise it until it matters, but the stock market will continue to be the best driver of Australians’ wealth many years into the future. Inside or outside of superannuation, making the decision to prepare yourself for retirement early in life cannot be overstated.

Even if your retirement nest egg isn’t as big as you’d like (believe me, it rarely is), or if you feel you don’t have as much time as you’d like to save before you retire, it’s never too late to start growing your wealth.

3 stocks to get you there

In retirement, many of us want regular income from our investments to avoid chewing through the lump sum we start with. This can come from the rental of property (which can require a large deposit and payment of management fees and ongoing costs), interest from a savings account, or dividends from stocks which include tax-effective franking credits.

Investing in growing companies with strong dividends has proven to be an extremely successful strategy for growing personal wealth over time. Here are three stable dividend stocks which investors can buy and hold for the long term.

1. BHP Billiton Limited (ASX: BHP) is Australia’s biggest and best miner. Unlike Rio Tinto Limited (ASX: RIO) which has a reliance on iron ore and history of writing off huge amounts of shareholders’ money, BHP has a diversified revenue base and strong balance sheets. This enables it to pay a consistent dividend. In the next year, it is forecast to pay a fully franked 3.5% distribution.

2. Westfield Retail Trust (ASX: WRT) owns a number of prominent Australian commercial properties. Being a property trust, it pays a consistent dividend and grows earnings modestly each year, in the next year it is forecast to pay a 6.4% dividend.

3. ResMed Inc. (CHESS) (ASX: RMD) is a global biotechnology company which produces respiratory products for sufferers of sleep apnoea and other related disorders. Although in the next 12 months it is forecast to pay a dividend equivalent to 1.7% of its current price, earnings are expected to grow well into the future, raising the prospect of bigger dividend yields over time.

A BIG dividend and increased earnings

Investors wanting to buy and hold stocks throughout retirement need to focus on more than just dividend yields. Growing cash flows and earnings are vital because without them a dividend will not be paid.

Whilst each of these companies have growing earnings per share, there's one ASX stock which pays a dividend of 7% grossed up and continues to grow faster than the above 3 companies. Our top analyst recently declared it, "The Motley Fool's Number 1 dividend stock for 2014". It has a long run way ahead and could be considered a great stock for retirement. Best of all, you can get it FREEDiscover The Motley Fool's #1 dividend pick in our newly updated report. Simply click here for your FREE copy right now.

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

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