Pensioner poverty is something we all need to get increasingly serious about. Approximately one in 20 of retired Britons is now living close to, or beyond, the breadline. I know somebody who’s close to turning 50 with hardly any savings to fall back on.
My first piece advice to them, however, was don’t panic. It’s still possible for anyone in this position to make a sizeable nest egg in the 15-or-so years between now and the State Pension age of 65. You just need to be a bit more careful with how you use your spare cash. Time isn’t on your side, after all, so picking dependable earnings generators which offer big dividends today is essential.
GlaxoSmithKline (LSE: GSK) is one Footsie share I expect to deliver exceptional shareholder returns over the next decade and a half as global demand for healthcare booms.
The patent expirations on key drugs that previously crushed earnings haven’t quite been put to bed, but investors can still look forward to solid profits growth at Glaxo as sales of its new medicines take off. During the first half, for example, the rapid growth of its recently-launched Trelegy and Nucala blockbuster brands pushed revenues at its Respiratory division 16% higher to £752m.
Its product pipeline is chock-full too, with 44 new medicines in development in fast-growing areas such as infectious diseases (including HIV), oncology and respiratory for investors to look forward to. And, judging from the steady flow of positive testing updates and regulatory approvals from across the globe, it seems as if the pharma giant’s back on the path of another golden era.
One last thing to celebrate. At current prices, Glaxo trades on a forward P/E ratio of 14.8 times and carries a big 4.6% corresponding dividend yield.
Another dependable, big dividend payer I reckon’s a top buy today for those approaching retirement is Taylor Wimpey (LSE: TW). It currently carries a forward P/E ratio of 7.9 times and a monster dividend yield of 11.2%, making it an irresistible buy (in my opinion at least) at today’s prices.
It’s possible the fallout of the Brexit saga could have significant negative effects for the UK economy through the next decade and thereafter, a situation that could keep property price growth hemmed in. But I’m confident the housebuilders can still thrive over the long term, given the country’s chronic homes shortage.
For decades now, government has failed to get a serious handle on the problem and there’s nothing to suggest anything is about to change. Indeed, recent Whitehall pledges to build 300,000 new homes per year by the mid-202s are already in tatters, thanks in part to the miles and miles of red tape still curtailing the creation of newbuild homes. What’s more, with ultra-low interest rates now the ‘new norm’, buyer affordability is likely to remain well-supported at least through the next decade, worsening that supply/demand imbalance still further.
Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, “10 Steps To Making A Million In The Market”.
The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide.
Royston Wild owns shares of Taylor Wimpey. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.