4 fully franked income stocks for a blue-chip retirement

There's nothing better than a steady income stream to help you relax in retirement.

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 June 20, 2014 8:26 am AEST

Most retirement planners want to own blue-chip businesses that provide a steady income stream. This provides a level of insurance against the swings of the sharemarket and the tax advantages of fully franked dividends helps you to enjoy life's luxuries with your retirement income. Don't bet against the continuing rise of the Australian property market either, and some of the businesses best positioned to cash in on this future trend are the banks. Here are a few to consider.

My pick of the big banks at current valuations is Australia and New Zealand Banking Group (ASX: ANZ), with its fully franked yield around 5% and earnings per share forecast to grow steadily out to 2016. Recent visitors to Asia may have noticed the proliferation of ANZ ATMs all over the continent, this a visible sign of the bank's strategy to grow profits through the Asian Century.

Bendigo and Adelaide Bank Limited (ASX: BEN) offers a 5.1% fully franked yield with earnings per share also forecast to steadily grow out to 2016. This means an increasing payout should be sustainable. With a regional focus the bank has a reputation for conservative management and shares are up 23% over the last year. It remains a solid bet for reliable retirement income.

Another regional bank is Bank of Queensland Limited (ASX: BOQ), it also offers a fully franked 5% yield with analysts forecasting steady dividend and earnings per share growth out to 2016. With a loyal regional customer base and potential for an uptick in a previously sluggish Queensland the business has been touching multi-year highs recently.

More value-oriented investors might want to consider National Australia Bank Ltd. (ASX: NAB), it trades on the lowest price-earnings ratio of the big four banks and offers a fully franked 5.8% yield. UK operations have been a major drag on profitability, however with UK economic growth now outpacing that of the US and the disaster-zone of continental Europe, NAB's outlook may be improving. If you're looking for one more cracking idea, then look no further…

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