Aviva plc, Standard Life Plc And Legal & General Group Plc Are Three Long-Term Income Plays

If you don’t have time to constantly check the market and conduct detailed research on your investments, the best strategy is to build a buy-and-forget portfolio. 

Companies with solid fundamentals that have a business model designed to stand the test of time make perfect buy-and-forget investments. 

Three top picks

Legal & General (LSE: LGEN)Standard Life (LSE: SL) and Aviva (LSE: AV) are three companies built with a long-term outlook in mind.

Managing pensions, savings and life insurance is a long-term process that takes plenty of skill to get right. Luckily, these companies have perfected the process over the past 200 years. Indeed, Legal & General, Standard Life and Aviva have all been around, in one form or another, since the early 1800s (Aviva can trace its history back to 1696).

Despite a few speed bumps, these companies have all produced impressive returns for shareholders since inception. 

What’s more, this trend is set to continue. The world’s population is ageing, and global wealth is growing, which means that an increasing number of people are searching for ways to invest their cash for the long term. 

Growing market 

Legal & General believes that over the next 15 years the value of savings in UK defined contribution pension schemes will nearly quadruple. It’s estimated that the value of defined contribution pension schemes will jump from around £700bn today to approximately £3.3trn by 2030, as more people take control of their own pensions. 

The key driver behind this trend will be workplace pensions, and Standard Life is the leading provider of workplace pensions in the UK. Standard’s defined contribution assets under management have risen by 50% since 2011. The company’s shift to a fee-based business model has led to a tripling of cash flow generated from operations since 2010.

Over the same period, the company’s dividend payout has increased at a steady rate of 7% per annum. Since 2010 Standard Life has returned 147p per share to investors, including the recent special dividend and over five years the shares have produced a total return of 180%. Based on the estimated growth of the UK pension market, the next five years could see a similar performance. 

Aviva’s shares have lagged Legal & General and Standard Life by 150% and 50% respectively over the past five years as the group has worked through some troubles. However, now the company is on the road to recovery. Costs are falling, profits are rising and Aviva’s recent deal to acquire Friends Life has help recapitalise the balance sheet, giving the company a solid foundation for future growth.  

Premium valuation 

Unfortunately, as Legal & General and Standard have bright futures ahead of them, they don’t come cheap. Legal & General currently trades at a forward P/E of 14 and supports a dividend yield of 5%. Standard Life trades at a forward P/E of 17.7 and supports a yield of 4.3%. However, sometimes you have to pay a premium for quality. 

Aviva, on the other hand, appears to be undervalued. The company currently trades at a forward P/E of 10.9 and is set to support a dividend yield of 4% this year. 

Foolish summary 

So overall, Legal & General, Standard Life and Aviva are all set to benefit from the increasing demand for pension management services, making them perfect buy-and-forget investments. 

But these are not the only companies that have all the traits required for a buy and hold investment. 

Our top analysts here at The Motley Fool have identified five other companies that they believe have all the qualities for you to buy and hold forever in your retirement portfolio. 

If you're interested in finding out more, download The Motley Fool's new free report entitled "5 Shares You Can Retire On"! 

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.