When you reach retirement you don't want to stress every day about how your stocks are doing or which ones to buy and sell. I think a good idea would be to own shares that you can happily own for the next decade without much worry.
Traditionally the best buy-and-hold shares were blue chips. However, the likes of Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS) have found it difficult to meaningfully grow earnings per share, which isn't good for future market-beating returns.
I think the following three businesses would be much better for retirees to own:
Australian Foundation Investment Co. Ltd (ASX: AFI) (AFIC)
AFIC is the largest listed investment company (LIC) in Australia. It's been around for many decades and has paid a reliable dividend for a very long time.
If you still want exposure to Australia's large blue chips then this is the right investment for you as it owns the big four banks, Telstra and BHP Billiton Limited (ASX: BHP) as its biggest holdings.
AFIC is currently trading with a grossed-up dividend yield of 5.63%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is one of the best stocks you could hold forever in my opinion. Its investments are diverse and long-term focused, its management own a large percentage of shares and it has been steadily increasing its ordinary dividend every year since 2000.
With large investments in businesses like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW), Soul Patts should have a long-term growth runway.
Soul Patts is currently trading at 14x FY18's estimated earnings with a grossed-up dividend yield of 4.45%.
WAM Research Limited (ASX: WAX)
WAM Research is one of the LICs run by Geoff Wilson and his high-performing investment team. This LIC focuses purely on researching the underlying quality of potential investments as opposed to taking advantage of market opportunities like WAM Capital Limited (ASX: WAM) does.
I prefer WAM Research to WAM Capital and it also has a bigger profit reserve to pay dividends.
WAM Research has grown its dividend every year since the GFC and currently has a grossed-up dividend of 7.86%.
Foolish takeaway
I think all three would be great additions to any portfolio, or could replace a lot of shares currently in a portfolio. At the current prices, I think Soul Patts is the best value but WAM Research may still be the most likely to outperform the market over the short-term and long-term.
