One of the main challenges in picking stocks for a retirement portfolio is getting the right mix of growth potential and longevity.
Indeed, while growth is a basic requirement for all companies and for all investors who wish to retire that little bit earlier, longevity is also crucial because the investments in a retirement fund tend to be for the long term. Sometimes it’s tough to find a good mix of the two.
However, BHP Billiton (LSE: BLT) (NYSE: BBL.US) looks as though it contains a strong mix of the two, with earnings growth (as I have mentioned previously) set to be 20% in the current financial year.
In addition, BHP Billiton seems to offer longevity, through it being financed in a sensible manner and it having a fair degree of discipline when it comes to leveraging up the balance sheet.
Evidence of this can be seen in the company’s debt to equity ratio, which currently stands at 49%. This is a moderate level and shows that the company is attempting to balance the twin needs of shareholders in terms of the company being sustainably financed but also offering above-average returns too.
Indeed, BHP Billiton has delivered an impressive level of returns for shareholders in each of the last 5 years, with return on equity averaging 25% per annum over the period. This is highly impressive and highlights the strong returns that are available to shareholders.
Furthermore, these returns have been delivered during a tough time for BHP Billiton, with the global economy slowing down and China reducing demand for the commodities that the company supplies. To generate these levels of returns (and to have a return on equity of at least 15%) during this period is highly encouraging for longer term investors because it shows that the company can still provide above average returns during tough trading conditions.
Of course, trading conditions will vary over time but the last 5 years have shown that BHP Billiton could be a stock for all seasons. With a high degree of longevity and 20% earnings growth forecasts thrown in, this company could help you to retire early.
