The share market is one of the riskier asset classes, sure, but it’s also the best performing over an extended period — by a long shot.
And while many investment companies will try to flog their ‘new strategy’ for market-beating returns, they all too often end up leading their investors down a rabbit warren full of excessive costs and commissions.
In all my years of investing, I’ve found only two strategies worth pursuing in the sharemarket:
- Buy to hold low-cost index funds or ETFs which track the market – Vanguard MSCI Index International Shares ETF (ASX: VGS), iShares Europe ETF (ASX: IEU) and the iShares Global Consumer Staples ETF (ASX: IXI) are three of my favourites.
- Buy to hold great dividend-paying stocks. Don’t be alarmed if you get some stock picks wrong, because if you’re good you should be able to outperform the market with 6 of 10 stock picks proving to be winners, according to legendary investor Peter Lynch.
Your instant 5-stock portfolio
If you’re inclined to ‘go it yourself’ and take option two above, here are five quality dividend-paying stock ideas to get you started.
- Telstra Corporation Ltd (ASX: TLS). Telstra is a dominant Australian business that is expected to pay a dividend of 5.3% fully franked in the next year.
- SEEK Limited (ASX: SEK). SEEK is the leading job ads website in Australia but is also growing strongly in foreign markets. Thanks to a recent fall in share price, it’s expected to pay a dividend equivalent to 3% fully franked in the year ahead.
- Flight Centre Travel Group Ltd (ASX: FLT). The immediate outlook for Flight Centre may be a little shaky, but at today’s discounted price it’s forecast to yield a 4.16% fully franked dividend.
- WAM Capital Limited (ASX: WAM). As a market-outperforming fund manager, WAM has established a verifiable track record of generating exceptional returns for shareholders. Last year, it paid the equivalent of a 7% fully franked dividend yield to shareholders.
- Cochlear Limited (ASX: COH). The hearing aid developer isn’t known for its dividends, but its defensive and growing earnings base. However, thanks to a recent sell-off in its shares, Cochlear is forecast to yield 2.55% in the year ahead.
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Returns As of 6th October 2020
Motley Fool contributor Owen Raskiewicz owns shares of Cochlear Ltd and has a financial interest in Flight Centre Travel Group Limited.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.
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