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

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.

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.

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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.