Creating future wealth is like building a house. A lot of planning needs to be done before construction starts and all the parts and pieces have to fit together.
Same thing for your retirement. If you don’t have a vision of what you want from it, you might be disappointed with the finished product. First comes the foundation, then comes the framework. (You can always tack on an extension later on, too)
If you want to start out with a firm foundation of earnings that can build up over the next several decades, then you need businesses that can last that long. Read about these three companies – they might be what you’re looking for.
— Westpac Banking Corp (ASX: WBC), the well-known big four bank, operates internationally and has a market capitalisation of $104.5 billion. Over the past ten years it has given shareholders a total return of an average 12.6% annually. Trading at 13 times earnings, it is in the middle of its past PE range. Its track record for raising dividends is about the best of the big four. Currently, it is paying a hefty 5.4% yield fully franked. It may not be a fast grower, but what we want is a steady, growing dividend payer. Westpac ticks that box.
— Transurban Group (ASX: TCL) owns, operates and manages toll road and tunnel infrastructure assets. Yes, it may sound thoroughly boring as a business, but it collects a little bit of cash from every motorist travelling on its road networks in Melbourne, Sydney and Brisbane. That’s every day for decades to come. There are costs and new developments which take money, but new roads create new streams of long-term cash flows. It pays a 4.5% partially franked yield. This is definitely the kind of long-term play investors should have in their retirement portfolio.
— Woodside Petroleum Limited (ASX: WPL) could fill that spot in your portfolio for exposure to the energy market. The $33 billion company has several producing LNG projects offshore near WA and is looking for other current projects to invest into. It has the economies of scale and the cash flows to fund big projects that can keep the oil and earnings flowing for many years. The stock yields a huge 5.8% fully franked and the company has a good history of raising dividends.
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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