In one of my more recent articles I took at look at three FTSE 100 income shares that could leave your retirement plans in tatters.
Chin up, though. Britain’s elite share index is packed with stocks that should keep paying inflation-busting dividends in the near term and beyond, like the three outlined here.
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A right royal beauty
Royal Mail (LSE: RMG) is not having the best of it, the effects of a cooling UK economy exacerbating the structural decline in the letters market, as seen from the 6% decline in the company’s letters volumes in the quarter to July 24.
This doesn’t deter me, however. I am really excited by the rate at which parcels volumes continue to grow (up 7% in the UK at Royal Mail during the last quarter) and are likely to continue doing so as online shopping goes from strength to strength.
I am really excited by the prospect of exploding revenues in Europe, in particular. At its GLS division on the continent, volumes jumped 10% in Q1, and Royal Mail is still expanding here to boost future business levels.
Right now, Britain’s oldest courier can be picked up on a forward P/E ratio of 12.2 times. This, allied with a bulky 5.4% dividend yield, makes it an unmissable buy right now.
A sparky selection
National Grid (LSE: NG) is another Footsie-listed share you can rely on to make you a mint by the time you retire.
The company, which maintains Britain’s power transmission grid (as well as in some parts of the eastern seaboard of the US), is not immune to regulatory problems of course, but the risks are not as high as for the likes of Centrica and SSE which are beset with claims of ripping off their customers.
In fact, National Grid got some good news from Ofgem today when it confirmed that it will keep the cost of equity range of between 3% and 5% in the five years from April 2021, providing the business with great visibility over the medium-to-long term.
The high costs of keeping the country’s lights on creates the odd moment of earnings turbulence, but National Grid can largely be banked on to provide decent returns owing to the essential nature of its services. A prospective P/E ratio of 14.3 times makes it a steal considering these qualities, while a juicy 5.8% dividend yield adds a pretty tasty cherry on top.
Build a fortune for your retirement
I’m convinced that Persimmon (LSE: PSN) should also provide you with brilliant returns by the time you come to hang up your work gloves.
The fallout of the 2016 European Union referendum may mean that the rampant house price growth of yesteryear may now be nothing but a mere fossil. However, given successive governments’ failures to build the houses that the country desperately requires, I am not expecting the homes shortage to be solved any time soon. The supply/demand imbalance is here to stay, keeping demand for new-build properties like those of Persimmon bubbling over.
City analysts certainly aren’t expecting profits growth to cease at Persimmon, meaning that it can be picked up on a forward P/E ratio of just 9.1 times. Throw a bumper 9.5% dividend yield into the equation and I reckon the builder is a great share to buy now and to hold for your autumn years.