During retirement you deserve to be worry-free and get on with doing all the things you've always wanted to do, such as seeing the world and spending more time with your family. For many Australians it cannot come soon enough.
However, unfortunately for some of us there's a big chance we'll never get to retire. Last year, banking giant Suncorp Group Ltd (ASX: SUN) found one in every three baby-boomers (those born between 1946 and 1964) have less than $100,000 saved for their retirement. Unsurprisingly, 25% of them expect to work into their 80s!
So how can you retire on time (or sooner) in the next 10 to 20 years? It's perhaps easier than you think and can be summed up with two words: save and invest. The advantages of doing so are obvious.
As an example, in the past 30 years, the Australian stock market has turned $10,000 into $270,000. So with that in mind, here are three dividend-paying companies you can consider adding and holding in your share portfolio for the long term.
1. BWP Trust (ASX: BWP)
OK, BWP probably isn't a household name we recall seeing or hearing about, however, it operates in one of Australia's most trusted industries. Real estate. It leases commercial properties to companies such as Wesfarmers Ltd's (ASX: WES) Bunnings Warehouse and has a number of multi-tenanted showrooms which boast Super Retail Group Ltd's (ASX: SUL) Boating Camping Fishing (BCF) and Harvey Norman Holdings Limited (ASX: HVN) stores. Thanks to long-term contracts and reputable customers it's one of the best dividend-paying stocks in the S&P/ASX 200 (ASX: XJO) (^AXJO). Its dividend yield is 5.9%.
2. Telstra Corporation Ltd (ASX: TLS)
Telstra is a rock-solid dividend-paying stock. It has huge profit margins and monopoly-like dominance in a number of industries, affording it huge cash-flows and long-term advantages. With overseas earnings growing rapidly, there is significant potential for capital gains in the medium-to-long term. Its dividend yield is 5.5%.
3. Coca-Cola Amatil Ltd (ASX: CCL)
As a result of macroeconomic headwinds such as the high-Australian dollar, increased labour costs and a depreciating Indonesian rupiah, CCA's earnings have recently come under pressure. However, the short-sighted nature of investors selling out of the company at current prices has provided a great entry point for long-term investors. Although dividends are expected to drop in the next year, it still trades on a forecast dividend yield of 4.7% with 75% franking.
Foolish takeaway
If you're thinking about self-funding your retirement and have more than seven years before you plan to do so, now is the time to start looking at buying and holding shares. For long-term investors there are a number of advantages which can be gained from investing in the Australian stock market. For example, dividends are normally franked, capital gains implications are reduced (if stocks are held for a number of years) and quality companies' share prices are likely to appreciate in value. So start taking advantage of your financial future today and don't be the one in three!
