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5 income stocks for a blue-chip retirement

If you plan on retiring in 10 years or more, then you should have some exposure to the Australian stock market.

You can gain exposure through a regular super account or by enlisting the services of a fund manager.

Alternatively, you can do it yourself through a personal broking account or self-managed superannuation fund (SMSF).

I prefer to invest my own money because I know my own interests are aligned (obviously) and I don’t pay fees. Plus, as an added bonus, you can always buy shares in the publicly listed fund managers anyway!

For example, shareholders in listed investment company WAM Capital Limited (ASX: WAM) can expect a generous fully franked dividend of 6.5 cents per share to hit their accounts next week. This takes the total yearly payout to 13 cents and places the stock on trailing dividend yield of 6.7%.

Before fees, expenses and taxes WAM Capital has returned an average of 18.2% per annum, since 1999. Since then, its share price is up 1,400% and it has paid out many dividends along the way.

Usually however the best time to buy listed money/fund managers is during a market crash or significant setback, so be patient and buy in when the market price is below net tangible assets (NTA).

For investors considering direct investment in individual shares, there are many potentially rewarding investment ideas currently on the market.

Four companies I’ve got my eye on right now are:

1. RCG Corporation Limited (ASX: RCG) – The owner of The Athlete’s Foot and distributor of exclusive footwear brands such as Merrel, Saucony and more. It trades on a dividend yield of 7.9% fully franked!
2. Cash Converters International Ltd (ASX: CCV) – The franchisor and operator of Australia’s premier second-hand goods stores and provider of payday loans. It trades on a forecast yield of 4.3% with full franking.
3. M2 Group Ltd (ASX: MTU) – The name behind brands such as Dodo, Eftel, Primus and Commander. Its shares change hands on a trailing dividend yield of 3.7% fully franked.
4. Credit Corp Group Limited (ASX: CCP) – Australia’s leading receivables management company is busy growing its business in new ways and in more places, such as the US. It yields 4.3% fully franked.

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I already own shares in Cash Converters (see my disclosure below) but think all of these businesses could provide good exposure to the stock market, provided you buy them at the right price of course!

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Motley Fool Contributor Owen Raszkiewicz happily owns shares in Cash Converters.   

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