If you’ve hit 50 and don’t have any retirement savings, what should you do?
First of all, it’s not too late to start saving. You’ve still got 15 years until State Pension age. This gives you some time to build a retirement portfolio.
For this article, I’ve decided to focus on three themes I think will be important growth areas over the next decade: renewable energy, sustainability, and public transport. For each theme, I’ve selected a representative stock that offers an attractive dividend yield and the potential for steady growth.
Renewable growth
My first selection is renewable energy investor The Renewables Infrastructure Group (LSE: TRIG). This FTSE 250 investment trust is mainly invested in wind farms in the UK and northern Europe, but it also has exposure to the growing solar and energy storage sectors.
The wind sector is maturing and costs are falling fast. TRIG says that it’s seeing new wind farm projects being developed without subsidies in mainland Europe. This suggests that this form of energy is becoming commercially viable. It’s my hope this will reduce the investment risks that can come from relying on subsidies.
Since floating in 2013, TRIG has provided steady returns for shareholders. Dividend growth has broadly matched inflation each year. The shares aren’t as cheap as they were, but still offer an attractive forecast yield of 5.1% for 2020. That’s well ahead of the FTSE 100 average of 4.3%. I see this as a buy-and-forget dividend stock.
The sustainable option
Packaging group DS Smith (LSE: SMDS) makes around 80% of its cardboard packaging using recycled material. The company also provides a full lifecycle service – it will collect and recycle used packaging from clients.
Demand for packaging could fall in a recession. But DS Smith operates throughout northern Europe and in the US, so it benefits from a good level of geographic diversity.
The company reported record profits in December, with half-year sales up by 4% to £3.2bn and adjusted operating profit up by 15% to £351m. City analysts expect DS Smith to sustain this performance over the coming year.
In my view the stock looks good value at current levels, trading on 10 times forecast profits with a dividend yield of 4.7%. I see this stock as a good long-term buy.
Beat the jams
My final choice is public transport operator Stagecoach Group (LSE: SGC). We don’t all like public transport and it doesn’t always provide the choices we’d wish for. But congestion and pollution is continuing to worsen in our towns and cities, many of which also have rising populations. I believe that greater use of (better) public transport is an essential part of the solution to these problems.
Stagecoach has been in business for more than 30 years and carries more than 3m passengers each day. The firm is the biggest bus and coach operator in the UK, with a 26% share of the regional bus market and a 14% share of the London bus market.
The group recently exited the West Coast rail franchise, which it ran jointly with Virgin Rail. This will result in a fall in profits in 2020–21, but I think this is already reflected in the share price. With the stock trading on about 12 times forecast earnings and offering a 5.1% dividend yield, I believe now could be a good time to buy.