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Think your State Pension will be too small? Here’s a share I believe will help

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Are you one of those people who dream of exotic dining on sun-kissed beaches in your twilight years? The bitter reality for many is that chomping on a plate of whelks will be a rare treat. To avoid this awful possibility, I suggest an investment in Keystone Law Group (LSE: KEYS) to pump up your pension pot.

Have you ever seen the words “disruptive business model” and “law firm” in the same sentence? Probably not, but in the case of Keystone Law, it’s certainly appropriate.

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So what’s different?

In the past, newly qualified lawyers got a job in a law firm and toiled away for untold years until they had the opportunity to buy into the partnership of their firm.

Nowadays, things have changed because the cost of buying into a firm doesn’t give such a great return. Enter stage left Keystone Law Group. This company offers lawyers with existing clients the chance to become self-employed and receive 75% of the fee income they generate.

How’s the new model working out?

Well, from a standing start in 2002, the firm is now one of the top 100 law firms in the UK and is still growing rapidly. The last set of annual results showed a whopping 35% increase in revenue and an astonishing 57% rise in profit before tax.

Future growth also looks assured since the number of fee-generating lawyers increased by more than 20% in the last financial year.

Going forward

It is often quipped that there are two certainties in life: death and taxes. For me, there is a third. All of us, especially businesses, need the services of lawyers at some point in time. Herein lies another of the attractions of Keystone Law Group.

Can you believe that the total addressable market for Keystone’s services is a substantial £9 billion? Given that the company reported annual revenues at £42.7 million, there is room to grow to say the least!


It is true that at first glance the price-to-earnings ratio looks a bit steep at 34. However, given the growth trajectory, I believe it’s more than reasonable.

The truly startling valuation matrices, though, concern profitability. Take the return on capital figure, which measures how effectively company cash is used to produce income. For Keystone, it’s almost 30%!

For comparison, one of the most profitable companies in the world, Microsoft, has a return on capital ratio of 19.5%, and this figure is considered laudable.

For dividend investors, there was further bounteous news in the annual report. In line with company policy, two thirds of profit after tax was distributed to shareholders. Considering the potential for capital gain, the current yield is a generous 1.7% at the time of writing.

To sum up

Keystone Law Group is changing the way legal services are delivered to both individuals and businesses and making a handsome profit in the process. I’m certain that an investment in Keystone will lead to long-term growth for people saving for a well-deserved retirement.

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Bryan has no position in any company mentioned in this article. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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.