Forget the cash ISA! This FTSE 250 dividend stock yielding 5% could help you to retire rich

This FTSE 250 (INDEXFTSE: MCX) income hero is a much better investment choice than stashing your money in a cash ISA, Royston Wild believes.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

We at The Motley Fool spend no little time warning our audience of the perils of dumping their hard-earned money in a cash ISA, or indeed any cash-based savings account, and then expecting to receive a handsome nest egg by the time they come to retire.

The scourge of inflation is back to plague savers and while it has fallen back recently — it dropped 30 basis points to 2.4% in September — it still soars above the best-yielding cash ISAs currently on the market. And it’s quite possible that inflation will rise again as Brexit-related fears keep the pound under pressure.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

In good health

I believe that a much better way to protect your savings is by investing in dividend hero Assura (LSE: AGR).

The FTSE 250 business, which buys and develops primary healthcare properties in the UK, is required to distribute 90% of taxable profits to its shareholders in the form of dividends due to its classification as a real estate investment trust. And so investors have enjoyed bulky payout growth in recent times as the bottom line has swelled, Assura lifting the annual dividend more than 9% in the 12 months to March 2018 alone to 2.46p per share.

With brokers expecting a 10% earnings uplift in fiscal 2019, the dividend is predicted to rise to 2.6p too. Another 7% profits improvement next year leads to suggestions of a 2.8p reward as well. And as a consequence, yields for these years ring in at a stonking 4.6% and 5% respectively.

M&A mammoth

Of course, stashing your wealth in stocks and shares rather than a cash ISA carries a higher degree of investment risk. However, it could be argued that Assura’s healthcare-related operations make it a much stronger defensive pick than many other companies currently on the market.

And what’s more, the healthcare play continues to expand heavily to keep earnings on an upward tilt. Between April and September it forked out some £108m to snap up 39 medical centres and two developments, and as of the end of last month, it boasted a total annualised rent roll of £96.9m versus £91m as of March 2018, it announced at the start of October.

Back then, chief executive Jonathan Murphy commented that “we have good momentum in the business, with a strong pipeline of opportunities” and he wasn’t exaggerating. Just a few days after October’s release, Assura said that it had forked out another £50m on another three health centres, including £30m on the Stratford Healthcare Centre in Stratford-upon-Avon. Its broad range of facilities — which includes “a GP surgery, renal unit, pharmacy, dentist, physiotherapy centre, rehabilitation centre, mental and sexual health services” — makes it one of the biggest primary healthcare centres in the country.

As of today, Assura has 559 surgeries and similar facilities on its books, and it has the financial firepower to keep boosting the rent roll with additional acquisitions. Right now it’s a great pick for both growth and income investors, in my opinion, and more than worthy of its slightly-toppy forward P/E multiple of 20.7 times.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 top stocks to buy before the market rebounds

Edward Sheldon highlights three beaten-up stocks he'd buy before global stock markets stage a recovery from their 2022 declines.

Read more »