Despite a greater focus on side hustles and passive income, Millennials are collectively less engaged in the stock market than their Gen X counterparts. But that’s starting to change.
Investors aged between 29 and 44 potentially still have decades ahead of them, which is a long time to let returns grow and compound. The big question though, is what to invest in.
Buying the dip
The best time to buy shares is when other investors are staying away, causing prices to fall. And that’s the case with FTSE 100 distributor Bunzl (LSE:BNZL) right now.
The stock has fallen 30% since the start of the year, but the chance to buy It with a 3.32% dividend yield is one investors haven’t had for a very long time. And I think it’s well worth a look.
Increasing competition combined with rising input costs has been – and remains – an important risk for the firm in terms of margins. And this is why the stock has been falling.
Over the long term, however, Bunzl has some key strengths for dealing with these challenges. The most important is its scale, which makes it quicker, cheaper, and more reliable for customers.
Despite the recent issues, these remain firmly intact. And the company’s continued focus on acquisitions should help increase this advantage further over time.
Bunzl’s strategy has allowed the firm to grow its dividend by roughly 100% over the last 10 years. If this continues, the stock could be a great passive income investment for the long term.
Real estate
The other stocks that stand out to me are real estate investment trusts (REITs). Opportunities in this sector have been going away recently, but I think there are still some worth considering.
One is Segro, which has a 4.5% dividend yield. The company owns a portfolio of warehouses and distribution centres, which is an asset class that should benefit from strong long-term demand.
There has been a lot of building in this industry recently, making oversupply a possible risk. But the FTSE 100 firm’s properties are located in key areas, giving it a durable advantage.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
At the other end of the scale is Supermarket Income REIT. There hasn’t been as much interest in building supermarkets recently, but that’s partly because demand isn’t surging in the same way it was.
Tesco and Sainsbury make up more than 75% of the firm’s total rent, which is a risk. But over two-thirds of contracts are secured for the next decade, indicating a degree of long-term stability.
The current dividend yield is an eye-catching 7.45%. If the company can maintain this, investors stand to do very well even without much in the way of growth.
Millennial investing
Being born in 1988 makes me a Millennial and – like every generation – that comes with certain challenges. House prices are higher, wages are stagnant, and student debt is huge.
We also, however, have some big advantages and one of these is better access to the stock market. The rise of investing apps and online brokerages makes investing easier than it was 20 years ago.
I think this is a real opportunity for Millennials to start building investment portfolios. As a generation, we might be behind Gen X, but there’s still plenty of time to catch up.
