Last week I highlighted how simple it is to double your stock portfolio in 10 years with compound interest, what Albert Einstein described as, “the eighth wonder of the world”.
In the article, I used the renowned dividend payer, Telstra Corporation Ltd (ASX: TLS), as an example of how your wealth could grow exponentially over time with relatively little capital gains.
If I had $50,000 to invest in dividend stocks today, I would use the same principle I outlined before and look to add a number of reliable companies to my long-term portfolio, with the aim of doubling its size in just 10 years. Here are three I’d buy right now…
1. Entertainment: Village Roadshow Ltd (ASX: VRL). Village does everything from blockbuster movies like The Great Gatsby to the running of iconic tourist attractions such as Warner Bros. Movie World, Sea World, Wet’n’Wild, Paradise County and Outback Spectacular. It trades on a forecast dividend yield of 4.4% fully franked with analysts expecting further increases in coming years.
2. Food and Beverage: Coca-Cola Amatil Ltd (ASX: CCL) is the exclusive bottler and distributor of products from The Coca-Cola Company to Australia and five neighbouring countries including Indonesia. A price war between Coles and Woolworths and rival Schweppes coupled with ongoing woes for its SPC Ardmona business has resulted in CCA missing earnings guidance. This has taken the fizz out of its shares and provided long-term investors an excellent opportunity to buy its stock on the cheap. Analysts are forecasting a partially franked dividend of 4.6%.
3. Legal Services: Slater & Gordon Limited (ASX: SGH) is Australia’s biggest listed law firm, but probably isn’t the first company you think of when dividends are written about. However, Slater & Gordon is rapidly growing in the UK market and although it currently trades on a forecast dividend yield of just 1.5% fully franked, growing earnings per share will deliver higher dividend payouts, overtime. Indeed, with a payout ratio of just 25% and $180 million in retained earnings, there’s plenty of room for improvement.
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Each of these dividend stocks are at the top of my buy list (I already own Coca-Cola warrants and Slater & Gordon shares) and present as viable income alternatives to overpriced big bank and supermarket stocks. If I were to pick one to purchase right now, it’d be Slater & Gordon.
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 is long Jun 2016 $5.41 Warrants in Coca-Cola Amatil and owns shares of Slater & Gordon.
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