I was intrigued to read recently that TPG (one of the world’s biggest private equity groups) has taken the unusual step of asking investors in its $19bn flagship fund if it can have an extra year to spend an additional $3bn of unspent capital.
Indeed, the fund is even offering to waive various management fees so as to obtain the consent it seeks from its limited partners.
Clearly, TPG is struggling for things to buy and, although private equity groups may have a very different investment universe to Fools like us, I seem to be coming across quite a few private investors who are also faced with a similar problem.
Of course, it is of little surprise since the FTSE 100 is currently trading on a price-to-earnings (P/E) ratio of 14.8. Naturally, many investors will feel that there is, therefore, not much worth buying.
Well, not all of the market is too pricey…
One stock that I’m excited about is Royal Dutch Shell (LSE: RDSB) (NYSE: RDS-B.US). It had a slightly disappointing set of results recently, which saw shares fall but, in my view, the market overreacted because Shell remains a compelling investment.
Clearly, a large number of private investors are going to be concerned about the Bank of England’s decision to raise the inflation target from 2% to 2.5%. This is akin to accepting that inflation will be higher in future than it has been in the past. Therefore Shell’s yield of 5% is extremely welcome.
In addition, Shell trades on a P/E that is nowhere near the FTSE 100 P/E of 14.8. In fact, Shell’s P/E is less than two-thirds of this at 8.6. Furthermore, this compares favourably to the oil and gas sector that has a P/E of 12.7.
So, if you want to buy a high-yielding stock at a good price, Shell should be top of your list. In fact, there are 5 other stocks that should be on your list too and you can view them by clicking here for an exclusive report.
It’s completely free and the companies featured are most accurately described as ‘5 Shares You Can Retire On’.
> Peter owns shares in Shell.
