Everyone aspires to be financially stable – after all even though money can't buy love it can buy many things in life. In an environment where returns from savings accounts are low and salary appreciation is slow given the poor job market, we need other ways to grow our wealth and secure our financial future.
Investing has long been a successful way of building wealth with an average return of 10% per year. However with the huge number of stocks to choose from it can be difficult to determine which ones are worthy investments. Below are four good prospects to get you started.
Bega Cheese Ltd (ASX: BGA)
Bega owns the iconic Bega brand, Australia's number one selling cheese brand. It also owns Tatura which sells lactoferrin, infant formula and other dairy products.
The company recently broke into the Chinese market, which is perfect timing since China's demand for milk and other dairy products is set to boom as the growing middle class adopts "westernised" diets and the one-child policy was abolished in 2013. In fact the country's demand for dairy products is expected to double by 2020.
The signing of the Australia-China FTA has further helped its cause, meaning that its 1.6% dividend could grow substantially in coming years.
Insurance Australia Group Ltd (ASX: IAG)
IAG is a giant in the insurance market, owning the well known NRMA insurance brand amongst others.
The company recently restructured its Australian operations so that it is product aligned rather than brand aligned. This move is expected to generate annualised cost savings of $230m by the end of FY2016. The acquisition of the former Wesfarmers insurance portfolio will also power growth in the future. Not only is this expected to strengthen the company's market-leading positions in its key markets of Australia and New Zealand, it is also likely to reduce their loss ratio by enhancing the benefits of risk pooling.
The future looks bright for the company, and now might be a good time to capitalise on its generous 6.1% dividend yield.
Slater & Gordon Ltd (ASX: SGH)
Slater & Gordon was a strong performer last year and it could continue its run this year. The company successfully expanded into the UK market in 2012 and estimates it now has 5% of the personal injury litigation market, their core competency. It has also successfully branched out into general law to diversify its revenue stream. Continued growth is likely to come from further acquisitions as the industry consolidates. It will also benefit from increased brand awareness by converting these acquisitions to the well known Slater & Gordon brand.
Japara Healthcare Ltd (ASX: JHC)
Residential aged care operator Japara will benefit from the strong fundamental trends of a rapidly aging population and a predicted large supply shortage in aged care places. The company's strategic focus to provide specialist care in Dementia is likely to set it apart from its competition, with the condition expected to be Australia's number one disability by 2016 and the number of suffers to nearly quadruple by 2050. With the CEO holding a 6% stake in the company this is likely to bring a stronger alignment of interest between management and shareholders, increasing the focus on long-term profitability.
If you're looking for other tips to secure your financial future, then be sure to check out The Motley Fool's brand-new guide to getting rich.
