If you’re investing for retirement, you want shares that can provide a nice mix of capital growth and dividends over the long term. You also want shares that aren’t too risky. The FTSE 100 index is home to a number of shares that fit the bill. Here’s a look at one stock I believe is well suited to those investing for retirement.
A leading FTSE 100 company in a growth industry
St. James’s Place (LSE: STJ) is a FTSE 100 wealth management company. Through a network of nearly 4,300 advisors across the UK, it offers face-to-face financial advice to thousands of people and businesses. Its services include investment planning, pension planning, risk protection, inheritance planning, mortgages, and business advice.
STJ was recently described as the “leading company in a growth industry,” by analysts at Deutsche Bank.
Long-term growth story
St. James’s Place appears to be well-positioned for growth in the years ahead. Right now, there are literally millions of ‘Baby Boomers’ across the UK heading into retirement. Many of them are accessing their pensions.
The issue is, though, managing your pension savings these days isn’t so straightforward. Interest rates on savings accounts are terrible. Stock market volatility is elevated. Tax changes are frequent. Overall, the financial environment is very complex. Meanwhile, people are living longer. So retirement savings needs to be managed very carefully.
This means demand for trusted financial advice should continue to rise in the years ahead. This should benefit St. James’s Place. Just recently, the FTSE 100 company said: “Looking ahead, the fundamental financial planning requirements of individuals remain considerable with the need for trusted financial advice continuing to increase.”
As St. James’s Place continues to attract new clients, and rising stock markets push the company’s earnings up, its share price should rise.
A reliable dividend payer
On top of share price growth, St. James’s Place has the potential to provide investors with an attractive level of dividends. Since 1998. STJ has paid a dividend every single year. And, in that time, the dividend payout has grown significantly.
Now, the FTSE 100 company did recently advise it will hold back around one third of its proposed 2019 final dividend, due to Covid-19. That’s a little bit disappointing for investors. However, it’s a sensible move. Conserving this cash will enable the group to emerge from this crisis in a stronger position.
Even after the dividend reduction, the yield’s still attractive. At the current share price, the trailing yield is about 4%.
An attractive long-term FTSE 100 buy
St. James’s Place shares currently trade on a forward-looking price-to-earnings (PE) ratio of about 20, using next year’s earnings forecast. That’s not bargain territory. Yet it isn’t overly expensive for a FTSE 100 company with a good track record and an attractive growth story.
Overall, I see St. James’s Place as an attractive long-term buy. If you’re investing for retirement, I think it’s a solid pick.
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Edward Sheldon owns shares in St. James's Place. 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.