5 income stocks for a blue-chip retirement

Income-seeking investors would do well to consider these options at current prices.

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published May 27, 2014 5:31 am AEST

If you're looking to build a quality income-paying portfolio to provide in retirement then its important to spread the risk amongst different sectors of the market. This should protect your portfolio from too much exposure to any single part of the economy and its cycles. Here are five income builders offering good value at today's prices.

Suncorp Group Limited's (ASX: SUN) fully franked yield is 4.8% with analysts forecasting 2015's payout to be more than 10% over that delivered in the current financial year. Dividends have effectively doubled since 2011 and trading on 14.9 times forecast earnings for 2014 now looks an opportune time to add it to your portfolio.

Infrastructure stocks are a godsend to income investors and gas transporter APA Group's (ASX: APA) 5.1% yield and consistent payouts make it one of the most reliable options going for prudent investors. APA may also represent a cunning approach in gaining holistic exposure to the growth of Australia's LNG industry.

Overseas exposure is important to diversify a portfolio away from too much leverage to the domestic economy and industrial services business Orica Limited (ASX: ORI) has a high percentage of its earnings from overseas to tick that box. The business offers a 4.6% yield and if the Australian dollar trends down against other major currencies over the long term then offshore income will translate into better future profits.

Real estate is another quality source of income for investors and Mirvac Group (ASX: MGR) with its heavy exposure to the high-performing Sydney and east coast property markets look a solid investment. Current yield is 5% with analysts forecasting steady dividend growth out to 2016.

Telstra Corporation Ltd (ASX: TLS) looks highly likely to payout 29 cents per share this financial year placing it on a 5.44% yield when selling for $5.33. Moreover, the business has a cash horde to invest for growth or potentially payout more to shareholders. Under the impressive stewardship of David Thodey it looks an outstanding option.

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