It's important that investors remain grounded and realistic in their expectations of achievable returns. Generally the longer someone has been investing, the more they come to realise what is and isn't achievable. In contrast, investors new to the stockmarket are more likely to 'swing for the fences' with expectations that they will earn enormous returns on every trade.
As I highlighted recently in this article, investors need only make a mid-single digit return, compounded for many years to achieve a comfortable retirement……
In fact to double your money within ten years only requires a 7.2% return compounded annually!
Given the S&P/ASX 300 Accumulation Index has achieved an annualised return of 8.9% over the past decade, an investor could actually have done worse than the market average and still doubled their money.
With the above returns in mind, here are three stocks which have the potential to help investors achieve a return of at least 7.2% per annum (pa) over the coming ten years.
Vertically integrated gas producer, electricity generator and retailer Origin Energy Limited (ASX: ORG) has provided shareholders with a Total Shareholder Return (TSR) of 12.9% pa for the past decade. With an unfranked yield of 3.5% and plenty of earnings growth set to occur as APLNG begins to flow. There appears a decent chance that a TSR of above 7.2% can be achieved over the next decade.
Ansell Limited (ASX: ANN) is a global manufacturer of health and safety protection products. For the past decade the firm has achieved a TSR of 11.5% pa. With an unfranked yield of 1.8%, investors will be looking for most of their returns to be achieved through share price appreciation. With a solid earnings growth outlook and the company trading on a reasonable multiple this again looks achievable.
Leading international medical diagnostics company Sonic Healthcare Limited (ASX: SHL) has achieved a TSR of 11.4%pa in the last 10 years. With the stock currently trading on a partially franked yield of 3.8%, it only needs to achieve share price appreciation of approximately 3.4% pa. This growth rate would appear quite possible given the multitude of opportunities to expand its business.
