Baby Boomers heading towards retirement, watch out!
The HSBC bank recently wrote in its Future of Retirement report that Australians are some of the worst prepared for retirement in the world. Let’s be blunt, the fourth worst globally, with a wide gap between what we will have saved and what will be necessary to spend in retirement.
The report even projected a period as little as 10 years before some Australian retirees’ funds will run out after retiring. That definitely won’t be long enough with people now commonly living well into their 80s and 90s.
Now is always the best time for making and investing as much money as you can. The key advantage investors have is they can build retirement portfolios that keep paying an income of dividends that doesn’t stop when you leave work.
On top of that, if you load up on stocks that grow their dividend payments regularly, the seemingly small dividend at present may even double or triple over the coming decades.
To get started now on securing your financial future, I would look at these two stocks.
1) Challenger Ltd (ASX: CGF) helps customers invest for their own future and retirement with products such as annuities and investment management. The stock pays a very healthy 4.5% yield partially franked, yet on top of that has a great track record for growing dividends. Over the past 10 years, dividends have increased four times from 5 to 26 cents per share. If they can keep up a steady dividend growth pace, shareholders will be richer for it.
2) SEEK Limited (ASX: SEK) isn’t a blue-chip stock yet, but it is a fast grower. The operator of the market-leading job search website seek.com.au pays out about 61% of its earnings as dividends, so a great net profit gain means a good chunk of that goes to shareholders’ bank accounts. To illustrate, over the next two years SEEK is forecast to raise earnings as much as 22% annually. Over the same time, dividends are projected to rise almost 15%. Fast growers can become very juicy dividend stocks in the future, so have this one on your watchlist.
Where to invest $1,000 right now
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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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