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.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.
- ALL ORDINARIES finishes higher Monday: 10 shares you missed – October 30, 2017 4:44pm
- Are these the secrets behind Australia’s best ASX investors? – October 30, 2017 3:43pm
- My Aussie Share Market Investing Do’s of 2017/2018 – October 30, 2017 1:13pm