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Forget Cash ISAs! These 5%+ dividend stocks could help you retire in luxury

These are tough times for individuals hunting for a bog-standard, no-nonsense Cash ISA in which to park their cash. There’s been a flurry of additional rate cuts in recent weeks by Britain’s major banks and building societies, leaving some pretty slim pickings for us savers to make a decent return on our hard-earned pounds.

According to Moneysupermarket the best-paying Cash ISA with no withdrawal restrictions right now, as offered up by the good people at Skipton Building Society, returns a paltry 1.36%. In an environment where inflation is running around 2%, this means that the value of your money is actually eroding in the time you have it locked up.

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It’s obvious, then, that stashing your money in one of these low-yielding accounts isn’t going to build you the sort of retirement pot that I’m sure you’ve always dreamed of.

6.6% yields!

My job here is not to spook you. It’s to give you ideas about how you can make the sort of fortune that will help you retire in comfort. And happily I’ve a number of great stocks I’d like to share with you that I believe could create some stunning returns and help you achieve your investment goals.

First up is utilities play Drax Group (LSE: DRX). It’s a share that I feel is being grossly undervalued by the market right now, as illustrated by its low forward price-to-earning ratio of 10.6 times and bulging 5.8% and 6.6% dividend yields for 2019 and 2020, respectively.

The power generation specialist’s share price surged last week amid rumblings that the European Commission was about to release £1bn to British firms to help them combat electricity outages. I would argue that it has much further to go given its position as one of the UK’s leading lights in the realm of low carbon energy, putting it in the sweet spot to benefit from ‘green’ government legislation in the years ahead.

An added bonus: in the near term I reckon Drax’s shares could rise as investors seek out classic ‘defensive’ shares amid signs of escalating strain in the global economy.

The FTSE 100 giant

I believe that St James’s Place (LSE: STJ) is another top income hero that’s trading much too cheaply right now.

The financial services giant has toppled by around a fifth from the summer highs above £11 per share, and it’s easy to see why the market has been spooked. Interim profits at the firm slumped by 29% to £81.5m, reflecting the challenging macroeconomic and geopolitical landscape affecting investor sentiment and broader financial markets.

I would argue, though, that this weakness represents a prime buying opportunity. And not just because, at current prices the FTSE 100 firm carries big dividend yields of 5.3% for 2019 and 5.8% for next year and a forward price/earnings-to-growth reading of 0.4 for 2020. In my view St James’s Place is in great shape to ride the booming market for investment advice in the UK, helped in part by the poor returns on offer from traditional savings products like Cash ISAs.

And through ongoing expansion (the number of advisers under its roof swelled a further 4% in the first half to just under 4,100) STJ is looking in good shape to ride this trend to the fullest.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.