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4 shares for a blue chip retirement

Blue chips are meant to be some of the safest shares on a stock exchange, in a downturn they supposedly keep paying dividends and are the least likely to go bust.

I think some investors should look beyond the typical stocks like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC). They’re not bad, but they don’t offer much growth.

I think growth is key because if a business is not going forwards it’s very likely to go backwards sooner rather than later.

Here are four shares I’d buy for a blue-chip retirement:

Crown Resorts Ltd (ASX: CWN)

Crown is Australia’s leading resort and casino operator. It operates two large complexes in Perth and Melbourne, both of which generate significant earnings for the business.

The company has stepped away from the global stage in the last couple of years, offering shareholders a much simpler vision. It wants to be the best luxury destination in Melbourne, Perth and Sydney.

I think the company has put the recent troubles behind it. Once Crown Sydney and the new Melbourne hotel are complete Crown will be a key attraction in Australia’s two global cities. The growing number of tourists should be a positive boost for the business over the coming years.

Crown is trading at 20x FY19’s estimated earnings.

Challenger Ltd (ASX: CGF)

Challenger is Australia’s biggest annuity provider, it converts a retiree’s capital into a guaranteed source of income.

I like that Challenger now has several different products which it can use to grow its annuity sales, as well as its agreement with the large Japanese business MS Primary.

Australia’s ageing population should boost demand for Challenger’s products and I think it’s one of the best ways to play the ageing population theme.

Challenger is currently trading at 15x FY19’s estimated earnings.

Ramsay Health Care Limited (ASX: RHC)

Ramsay is the largest private hospital operator in Australia. It provides its patients with a high level of medical and hospitality care. As long as private health insurance premiums don’t become more exorbitant then Ramsay could have a long growth runway ahead.

I believe that the current share price weakness is a good long-term opportunity for investors to buy a slice of Ramsay. I’m particularly excited by management’s goal of expanding into a new geographical area over the next couple of years.

Ramsay is currently trading at 20x FY19’s estimated earnings.

Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC)

AFIC is Australia’s largest listed investment company (LIC). The main purpose of a LIC is to invest in other shares for shareholders. AFIC has been operating for nearly a century and it has been providing investors with a growing flow of dividends.

Indeed, the LIC aims to raise its dividend at a rate faster than inflation over time. It has a diverse portfolio and has grown or maintained its dividend each year over the past two decades.

AFIC is currently trading with a grossed-up dividend yield of 5.67%.

Foolish takeaway

I’d be happy to own all four shares in my portfolio if I were retired. At the current prices I would be most interested in buying Ramsay and Challenger because both have fallen in recent weeks but are on track for good growth in the next few years.

Another business that would make a good retirement stock is this leader in its field, which I also own in my portfolio.

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited, Crown Resorts Limited, and Telstra Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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 Scott Phillips.

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