A FTSE 250 dividend growth stock I think is perfect for retirement

Royston Wild zeroes in on a splendid FTSE 250 (INDEXFTSE: MCX) dividend grower he’d buy today and feast off for decades to come.

| 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.

There’s no such thing as picking a guaranteed winner when it comes to the stock markets. It’s hard enough to predict where a company will be in five years’ time, let alone in the decades between now and when millions of us will be ready to retire.

But one thing that can always be banked on is our love of a hot beverage and something sweet to go with it. And this means Greggs (LSE: GRG) is a share I expect to continue thriving many, many years into the future.

Hot drinks have formed a key part of our diet since Samuel Pepys was supping the “China drink” in London tea rooms as far back as the 1660s and, as recent trading details from Greggs shows, our love affair with the beverage is going from strength to strength.

According to the FTSE 250 baked goods and drinks retailer, like-for-like sales in its company-managed stores ballooned 11.1% in the first 19 weeks of the year, a barnstorming result which reflected “increased customer visits have continued to drive strong trading in traditional categories and new products.”

It doesn’t matter that consumer spending power in the UK is under the cosh right now. The evergreen allure of Greggs’ traditional lines, combined with the low price point of its goods versus those of its rivals, such as Pret A Manger, means its till rolls continue to grow at a spectacular rate.

On a roll

It’s not all down to prices and paper cups of tea, though. You cannot underestimate the beneficial impact which Greggs’ menu-enhancing measures have had on sales, steps designed to cotton on to changing consumer trends and generate some excellent publicity, to boot.

Take the rollout (pun intended) of its much-publicised vegan sausage roll earlier this year, a move which has allowed it to ride the surge towards non-meat, non-dairy foods from Millennials in particular. Cue the media storm and Greggs stores subsequently running dry of their new statement product in the first few weeks of introduction.

This menu revamp has been years in the making, though, with new ranges of sandwiches, coffee blends, and healthy options all attracting legions of new customers. Consequently, the retailer picked up award after award for its new product lines.

Hot stuff

Greggs is clearly a share on the up and up, and I’m predicting even better things to come in the years ahead as it actively builds a network of almost 2,000 stores and doubles-down on manufacturing investment.

And clearly this bodes well for future profits growth and, naturally, for Greggs’ long-time progressive dividend policy to keep delivering the goods. The full-year payout was hiked 11% in the last fiscal year and City analysts are predicting further chunky rises in the medium term at least, from 35.7p per share to 39.2p this year and, again, to 41.8p in the next period.

Sure, subsequent yields of 1.8% and 1.9%, respectively, might not be the biggest. But if you’re seeking brilliant dividend expansion for many years to come, I reckon Greggs is a great horse to bet on today.

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.

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.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »