If you invest in companies with the intention to hold them for more than 10 years, it's better to buy a great company at a good price than a good company at a great price. Quite simply, it comes down to the fact that (sometimes) you have to pay up for quality merchandise.
Investing is no different. However, it shouldn't be used as an excuse to go out and get anything. For example I'm not 100% convinced that paying the current market price for Ramsay Health Care Limited (ASX: RHC) or Domino's Pizza Enterprises Ltd (ASX: DMP) would be a wise move.
For investors focused on generating a reliable income stream in retirement it's important to pick up the right companies at the right price, not stocks with a lot of hype surrounding them. Here are three great companies you should look to add to your retirement portfolio today.
1. Telstra Corporation Ltd (ASX: TLS) should be added to savvy investors' portfolios for both its generous 5.4% fully franked dividend yield and exceptional growth prospects, both domestically and in Asia. Telstra will be the direct beneficiary of the dependence on networked devices such as mobile phones, tablets, wearables and cloud computing.
2. Transurban Group (ASX: TCL) is less well known, but an exceptional defensive business. It is the owner of toll roads such as Citylink, Hills M2 and, most recently acquired the Queensland Motorways portfolio. It is forecast to pay a 4.3% partially franked dividend in the coming year.
3. Washington H Soul Pattinson & Co. Ltd (ASX: SOL) is Australia's version of Warren Buffett's Berkshire Hathaway. More than 100-years-old, WHSP is a fantastic company to buy and hold for decades given its diversified exposure across many industries and substantial holdings in smaller public companies. It is forecast to pay a 3.2% fully franked dividend.
The best ASX dividend stock is here!
All of these companies are suitable for retirees looking for a stable income stream and modest earnings growth. Each are run by very competent managers and have a history of returning excess funds to shareholders.
