You'd be forgiven for feeling a little mixed up now.
Just as the general economy is sluggish from the void left by the mining industry's lessened financial contribution, the S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) is near multi-year highs, ready to break through the psychological 6000 level.
Will the economy follow the stock market's lead and turn up, or will the rising ASX inevitably be pulled down? No one can say really.
It's better just to stick with what stock pickers do best – finding quality stocks of stable companies that can continue paying a solid dividend and grow earnings.
Now, if you are looking for the stocks that will propel your retirement portfolio, you don't want to blindly chase the stocks that have advanced the most recently. You may find that you are paying too big of a premium for a hot stock. The chance to make a big gain yourself may be past.
At the other end, the stocks that have fallen greatly may look cheap, but they could be cheap for a reason. Fortescue Metals Group Limited (ASX: FMG), for example, is at lows not seen since the depths of the GFC. Still, the iron ore miner and other mining juniors are trapped under the weight of a collapsing iron ore market, which could still get worse from here. That's no bargain and your retirement investments could be in jeopardy.
You'll hear many of the same names suggested as dividend stocks – the blue-chips, the big four banks and the industry leaders. Everyone knows these and, frankly, have already bought into them.
But experience shows that many times the best shares for the future are less familiar stocks that come out of nowhere. The Commonwealth Bank of Australia (ASX: CBA) may be a solid company, yet how many more times could the stock possibly double over the next ten years? Smaller stocks have that chance of bigger gains.
To give you some ideas to think about, here are four mid-sized companies with decent yields and that are reasonably priced compared to their expected growth.
| Company | Price/Earnings to Growth (PEG) | Forecast Yield |
| Iress Ltd (ASX: IRE) | 1.17 | 4.20% |
| G8 Education Ltd (ASX: GEM) | 0.54 | 6.10% |
| Retail Food Group Limited (ASX: RFG) | 0.95 | 3.60% |
| IOOF Holdings Limited (ASX: IFL) | 1.99 | 4.90% |
These have good business track records and promising earnings growth potential. One or several of these could help generate future wealth and save your retirement.
