It's the dream of every Australian to retire early yet have enough passive income to continue living the life they've always dreamed of.
Passive income can come from an ownership stake in a business, rental income from property investments, interest on term deposits, or – my favourite – from blue chip dividend stocks.
Although the latter is often perceived as 'risky', it's arguably the best way to grow your wealth over the long term (10 years or more).
Whilst each of the following stocks may not be a great buy today, all three deserve a spot on your watchlist because when prices do fall (and they will!) you should be ready to capitalise on the opportunity.
- Macquarie Group Ltd (ASX: MQG) is Australia's leading investment bank. It derives 65% of income from overseas markets. Although the bank is pushing into 'annuity style' businesses like mortgages and funds management, Macquarie's capital markets facing businesses are cyclical in nature. Given that we're likely nearing a peak in global market activity, it's probably not the best time to buy Macquarie shares. However when prices do drop, make sure you consider adding Macquarie Group shares to your portfolio because it has a proven ability to grow profits and pay generous dividends.
- Carsales.Com Ltd (ASX: CAR) is the leading automotive listing website here in Australia. However through strategic investments it is also looking to grow overseas, particularly in emerging markets throughout Asia and South America, where it sees opportunity to disrupt existing operators and forge another market-leading position. With a highly scalable business model, it pays a handy 3.3% fully franked dividend.
- Scentre Group Ltd (ASX: SCG) is the owner of Westfield shopping centres in Australia and New Zealand. Scentre Group was formed from the spin off of Westfield Corp and Westfield Retail Trust and has performed strongly since listing on the ASX – its share price is up 25% in less than a year. In the year ahead, analysts are forecasting a 5.4% unfranked dividend.
Should you buy these three stocks?
At today's prices both Scentre Group and Carsales appear worthy of further consideration. However if I had to pick one, it'd be Carsales because it has proven to be a strong dividend-paying stock and backs it up with significant growth opportunities.
