5 stocks to retire on rich

Over the past 114 years, the Australian stockmarket has done something incredible.

Something which means many Australians have gone into their later years more financially secure.

It has achieved something which no other market has.

It has generated an average annual return of 12%. Although that could sound boring, it turns $1 invested back in January 1900 into over $395,000 today!

However, with just a 7.2% average annual return, it’s possible for ordinary investors, like you and I, to double a stockmarket portfolio in just 10 years.

So if you’re planning to retire anytime beyond the next five years, I suggest you start to consider what’s possible within the Australian stockmarket.

To make things easier, I’ve identified five dividend-paying stocks which I believe could be your ticket to a wealthier retirement.

1. BHP Billiton Limited (ASX: BHP) is expected to pay a solid 3.3% fully franked dividend this year. However with a focus on cost cutting and increasing production of key commodities, BHP’s earnings per share are tipped to grow strongly in coming years. So too is its dividend.

2. Village Roadshow Ltd (ASX: VRL) is the name behind Village Cinemas, producer of films such as The Great Gatsby and owner of theme parks such as Warner Bros. Movie World and Sea World. In FY15 analysts expect the company to pay a dividend equivalent to 4.2% fully franked.

3. Computershare Limited (ASX: CPU), whilst not forecast to pay a big dividend, is expected to growing earnings strongly in coming years and increase its payout. Computershare is a dominant company with defensive qualities which will also benefit from rising interest rates.

4. Bentham IMF Ltd (ASX: IMF) is a litigation funder for cases which exceed $5 million. Although, depending on case settlements, its earnings can be lumpy and dividends can be missed, the stock trades on a low valuation and management have a proven ability to drive shareholder wealth over time.

5. Cash Converters International Ltd (ASX: CCV) is growing rapidly. But the business is more than just a well-run second-hand goods dealer. It is busily growing its personal loan business (both online and in store), expanding its Carboodle business and increasing the store count internationally. Is it forecast to pay a handy 3.7% fully franked dividend yield, to complement its growth prospects.

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If I were planning to retire in five or more years, I’d be happy to buy these companies today for their growth characteristics and dividend income. Whilst they could fall in value tomorrow, each of these companies have strong brand recognition and their management teams have proven they’ve got what it takes to grow the company over time, despite market setbacks – greatly increasing our chances of achieving the market’s average or, at least, a 7.2% yearly return.

Whilst I already own Cash Converters and IMF there's another cheap but growing small-cap ASX stock with a 7% grossed-up dividend yield which I'm thinking of buying right now. Our top analyst recently dubbed this ultra-promising small-cap, "The Motley Fool's Top Dividend Stock For 2014 - 2015". Best of all: You can get the name and code of our favourite dividend stock for free! Simply click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.

Motley Fool Contributor Owen Raszkiewicz owns shares in Cash Converters International and Bentham IMF.  

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