While retirees often focus on income stocks primarily, investors can often achieve better returns by owning a diversified portfolio of defensive, growth and income stocks.
Here are ten stocks retirees can consider for their portfolios:
1. Commonwealth Bank of Australia (ASX: CBA) – Australia’s biggest bank has been a proven performer for a very long time and should be a part of most portfolios already. Although it is the most expensive of the big four banks, it offers the most stable dividend and is currently yielding close to 5%.
2. QBE Insurance Group Ltd (ASX: QBE) – It appears as though QBE might have finally turned the corner thanks to a significant strategic review. The company is also investing its huge cash holdings in more growth assets that should provide better investment returns and more profits for shareholders.
3. Ramsay Health Care Limited (ASX: RHC) – Ramsay is possibly the highest quality healthcare stock on the market. Although the shares trade at a premium to the rest of the market, investors can expect strong earnings growth for many years to come thanks to a number of tailwinds in the sector.
4. Challenger Ltd (ASX: CGF) – The annuities sector is expected to grow strongly over the next five to ten years and Challenger is the dominant player in the sector. The shares trade at a discount to the rest of the market and offer a dividend yield of around 4.5%.
5. Santos Ltd (ASX: STO) – Although it is not without risk, Santos provides exposure to a potentially large growth opportunity. The collapse of the oil price has seen Santos’ share price hammered but investors with a long time horizon should see this as a buying opportunity. The company will soon be shipping huge amounts of LNG abroad and investors should benefit from this through a higher share price and increased dividends.
6. Woolworths Limited (ASX: WOW) – It appears as though most of the negative short term headwinds have been priced into the stock. Woolworths still has excellent defensive qualities and investors can still expect to receive a dividend yield around 5%.
7. Crown Resorts Ltd (ASX: CWN) – The share price has come under pressure recently as the Chinese government cracks down on gambling in Macau. The long-term prospects for Crown still remain positive however, with new projects being developed in a number of countries. Investors gain exposure to a company with defensive qualities as well as an attractive growth profile.
8. Sydney Airport Holdings Ltd (ASX: SYD) – The share price has retreated recently giving investors a more attractive value proposition. Sydney Airport provides investors with defensive earnings and growing dividends. At the current share price investors can expect to receive a dividend yield of around 5.1% and that is expected to grow as more passengers travel through the airport.
9. Ainsworth Game Technology Limited (ASX: AGI) – Although sales have slowed in Australia, international growth has been strong and this will be the driver for growth in the future. Investors can expect a dividend yield of around 4% and management are expecting strong growth into FY16.
10. Lifehealthcare Group Ltd (ASX: LHC) – A small-cap healthcare company with a bright future. Lifehealthcare distributes high end medical equipment in Australia and New Zealand. It is well placed to take advantage of the growing need for healthcare services as a result of the ageing population and new technology. Investors will have exposure to a fast growing healthcare company with loads of potential.
There you have it! Ten stocks you can consider for your retirement portfolio.
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Motley Fool contributor Christopher Georges owns shares in Ramsay Health Care Limited, Lifehealthcare Group Limited and Ainsworth Game Technology. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.