Think your State Pension will be too small? Here’s a share I believe will help

Bryan Williams offers a suggestion to help swell your retirement fund.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Are you one of those people who dream of exotic dining on sun-kissed beaches in your twilight years? The bitter reality for many is that chomping on a plate of whelks will be a rare treat. To avoid this awful possibility, I suggest an investment in Keystone Law Group (LSE: KEYS) to pump up your pension pot.

Have you ever seen the words “disruptive business model” and “law firm” in the same sentence? Probably not, but in the case of Keystone Law, it’s certainly appropriate.

So what’s different?

In the past, newly qualified lawyers got a job in a law firm and toiled away for untold years until they had the opportunity to buy into the partnership of their firm.

Nowadays, things have changed because the cost of buying into a firm doesn’t give such a great return. Enter stage left Keystone Law Group. This company offers lawyers with existing clients the chance to become self-employed and receive 75% of the fee income they generate.

How’s the new model working out?

Well, from a standing start in 2002, the firm is now one of the top 100 law firms in the UK and is still growing rapidly. The last set of annual results showed a whopping 35% increase in revenue and an astonishing 57% rise in profit before tax.

Future growth also looks assured since the number of fee-generating lawyers increased by more than 20% in the last financial year.

Going forward

It is often quipped that there are two certainties in life: death and taxes. For me, there is a third. All of us, especially businesses, need the services of lawyers at some point in time. Herein lies another of the attractions of Keystone Law Group.

Can you believe that the total addressable market for Keystone’s services is a substantial £9 billion? Given that the company reported annual revenues at £42.7 million, there is room to grow to say the least!

Valuation

It is true that at first glance the price-to-earnings ratio looks a bit steep at 34. However, given the growth trajectory, I believe it’s more than reasonable.

The truly startling valuation matrices, though, concern profitability. Take the return on capital figure, which measures how effectively company cash is used to produce income. For Keystone, it’s almost 30%!

For comparison, one of the most profitable companies in the world, Microsoft, has a return on capital ratio of 19.5%, and this figure is considered laudable.

For dividend investors, there was further bounteous news in the annual report. In line with company policy, two thirds of profit after tax was distributed to shareholders. Considering the potential for capital gain, the current yield is a generous 1.7% at the time of writing.

To sum up

Keystone Law Group is changing the way legal services are delivered to both individuals and businesses and making a handsome profit in the process. I’m certain that an investment in Keystone will lead to long-term growth for people saving for a well-deserved retirement.


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 assessed. Consider taking independent financial advice.

Bryan has no position in any company mentioned in this article. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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.

More on Investing Articles

British Pennies on a Pound Note
Investing Articles

£5,000 invested in this 9p penny stock just 1 month ago is now worth…

This high-flying penny stock offers investors a lot of potential reward, as well as a fair bit of risk. Ben…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

After the FTSE 100 broke 9,000 points, does the UK market look overvalued?

The FTSE 100 went past 9,000 points this week but Mark Hartley says there are still bargains out there and…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Nvidia stock hit an all-time high this week. But could it be a bargain, even now?

After the Nvidia stock hit an all-time high this week, might it still be an attractive opportunity for our writer's…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As the FTSE 100 hits an all-time high, I’m following Warren Buffett’s advice!

Billionaire investor Warren Buffett is a font of stock market wisdom. Our writer reflects on his approach, as the FTSE…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

The FTSE 100 reached an all-time high this week. Is it too late to invest?

The FTSE 100 hit a new all-time high level over the past few days. Our writer explains why he thinks…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

Here’s how £9,000 in savings could be used to target £343 a month of passive income

Christopher Ruane sets out a passive income plan that he reckons could help someone make sizeable sums over time without…

Read more »

ISA Individual Savings Account
Investing Articles

How to build a Stocks and Shares ISA with a 6% dividend yield

It’s easy to build an investment portfolio with a high dividend yield today. But investors need to manage risk carefully,…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

How risky is switching from cash savings to a Stocks and Shares ISA?

The UK government is making moves to encourage cash savers to consider investing via Stocks and Shares ISAs. But what…

Read more »