In Australia many share market investors will have the sensible goal of buying shares to provide as much income in retirement as possible. After all once a regular pay cheque stops rolling in retirees want income more than growth. A regular dividend payment will also help an investor sleep easy at night knowing that even if the value of their shares hits some tough times they can still expect some income. However, anyone with 3, 5, or even 10 years ahead of them before they reach retirement should probably look to stocks capable of growing their dividend payouts over time…
In Australia many share market investors will have the sensible goal of buying shares to provide as much income in retirement as possible. After all once a regular pay cheque stops rolling in retirees want income more than growth.
A regular dividend payment will also help an investor sleep easy at night knowing that even if the value of their shares hits some tough times they can still expect some income.
However, anyone with 3, 5, or even 10 years ahead of them before they reach retirement should probably look to stocks capable of growing their dividend payouts over time as these should generally offer the best returns.
Here are four to consider with strong track records, but remember strong past performance is far from a guarantee of good future returns and all these shares carry significant risks.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is an investment conglomerate with a significant shareholding in TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Australian Pharmaceuticals Industries Ltd (ASX: API). Its conservative investment style and strong management have delivered 18 consecutive years of dividend increases. FY 2018’s dividend came in at 56 cents per share placing the stock on a trailing yield of 2%. The shares are up 82% plus dividends in just 5 years.
The Ramsay Health Care Limited (ASX: RHC) share price is down around 19% over the past year as the private hospital operator’s UK and France operations posted some soft results on the back of tougher operating environments. Over FY 2019 the group is forecasting earnings per share growth up to 2%, with analysts forecasting flat dividends around $1.45 per share. This places it on a yield of 2.6%, with analysts forecasting a return to strong dividend growth in FY 2020 and FY 2021. Given its strong track record, competitive position and acquisitive growth opportunities it could be worth a look.
The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has been sold off recently on the back of investor concerns over slowing growth and the CEO selling shares. However, same store sales were up 2.9% over the first 17 weeks of FY 2019 and the group now trades on just 25x trailing earnings per share based on a share price of $45.77. Dividends have also quadrupled since 2012 and the share price pull back could be an opportunity to buy a business with an established track record of profit and dividend growth.
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Motley Fool contributor Yulia Mosaleva owns shares of Ramsay Health Care Limited and TPG Telecom Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks, Domino's Pizza Enterprises Limited, Ramsay Health Care Limited, and TPG Telecom 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.