Investing in your 50s is all about balance. On the one hand, you want investments that will boost your wealth over the next decade. On the other hand, you don’t want to be taking on too much risk with your money. After all, your retirement is at stake.
With that in mind, I’ve found two stocks that I believe are perfect for those in their 50s who are looking to build their wealth in the lead up to retirement. Both of these stocks offer the potential for capital growth and dividends over the next decade, yet are not too risky.
The first stock I’d like to highlight is FTSE 100 financial services group Prudential (LSE: PRU), which after its recent demerger from M&G, is now focused on serving the savings and insurance needs of the growing middle class in Asia, and providing retirement solutions to US retirees.
The reason I think Prudential is well suited to those in their 50s is due to the growth story associated with the rapidly-growing middle class in Asia. Over the next decade the proportion of the Chinese population with an annual income of $10,000 is forecast to rise from 35% to 60% which should result in much higher demand for financial products. The company is almost certainly likely to be bigger in a decade’s time than it is today. This should result in a higher share price, as well as higher dividends – a great result for investors.
I also like the fact that the shares are attractively valued right now and offer a healthy dividend yield. Currently, the forward-looking P/E ratio is just nine, and the prospective yield on offer is 3.1% (these figures may fluctuate a little as analysts adjust their forecasts after the recent demerger).
All things considered, for those in their 50s, I think Prudential is a great stock to buy and hold.
The next stock that I believe is well suited to those in this age bracket is Tritax Big Box (LSE: BBOX). This is a FTSE 250-listed real estate company that owns a top portfolio of large, strategically-located warehouses (big boxes). These warehouses are let out to leading retailers such as Amazon, Argos, and B&Q, who use them to store their goods before they’re distributed to customers. The group aims to provide its investors with an attractive, secure, and growing income stream, together with capital growth (ideal for those over 50).
Like Prudential, I believe that Tritax Big Box is almost certainly likely to be bigger in a decade’s time than it is today. The reason I say this is that, as the world continues to become more digital, the popularity of online shopping is only going to increase. Indeed, according to research from GlobalData, UK online spending is forecast to grow nearly 30% between now and 2024. That means that demand for strategically-located warehouse space from online retailers is likely to rise, benefitting Tritax.
Tritax shares currently trade on a forward-looking P/E ratio of 22.5 and offer a prospective dividend yield of 4.5%. Given the long-term growth story here, I see those metrics as very reasonable. Overall, I think BBOX is a top retirement portfolio pick.
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Edward Sheldon owns shares in Prudential, M&G, and Tritax Big Box. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Prudential and Tritax Big Box REIT. 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.