Taking steps to avoid falling into poverty once you enter retirement is a critical issue we cover regularly here at The Motley Fool.
Evidence suggests that many of us still overestimate how much the State Pension will actually give us once we retire, while great swathes of people also believe they’ll begin receiving the benefit earlier than they actually will.
Exacerbating the problem, millions of us remain content to park our savings in low-yielding products like a cash ISA which can actually erode the value of our cash over time. A much better way to build a nest egg for retirement is to invest in the stock markets In this article, I’m looking at a terrific FTSE 250 income stock that I think could help you on your way.
Revenues marching on
As a keen moviegoer as well as a shareholder, Cineworld Group (LSE: CINE) is a FTSE 250 company that’s very close to my heart.
It’s a share that’s still down from levels at which I bought into it during the broad stock market sell-off of October. But latest trading details this month reminded me of why I remain so bullish on it — group revenues boomed 7.2% on a pro-forma basis in 2018. That’s chiefly down to record box office takings in the US which pushed Stateside sales at Cineworld 8.6% higher year-on-year.
The firm’s earnings-boosting expansion across the Atlantic is something I’ve lauded in some detail before, but this isn’t the whole story. Its site expansion scheme in Britain and across its Central and Eastern European, and Israeli territories is also helping to drive the top line, as is the investment in new technologies such as IMAX and 4DX and broader refurbishment in its cinemas across the globe.
Not all heroes wear capes
Modern film fans’ attraction to the cinema is stronger than it has ever been before, despite the widespread problem of piracy and, more recently, the spread of streaming services like Netflix. This resilience makes it a great pick for those seeking sustained earnings and dividend growth in the years ahead.
Such staying power can also be attributed to the productivity of Hollywood’s conveyor belt of noisy, special-effects-laden crowdpleasers, a machine that shows no signs of slowing down any time soon (big titles including ‘Captain Marvel’, ‘The Lion King’ and ‘Star Wars: Episode IX’ are just a few slated for this year alone).
And so City analysts expect Cineworld to print a 21% bottom-line advance in 2019. Dividend chasers will toast an expected 13.5p per share full-year reward too, up from a predicted 11.1p for last year and a figure which yields a mighty 5.1%. An added bonus is that the screen operator also carries a dirt-cheap valuation, i.e. a forward P/E ratio of 10.4 times.
Cineworld is one of the best dividend bargains on the FTSE 250 right now, in my opinion. I believe that it has all the tools to help you make its shareholders a fortune for retirement.
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Royston Wild owns shares of Cineworld Group. 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.