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Summary
- Retirement planning is a crucial step in everyone’s life and should be done sooner than later.
- Investing in dividend paying stocks that also have the potential to generate capital gains can be a good starting point.
A successful retirement plan is a key milestone in everyone’s life. It is a journey that commences post work life or might be taken early provided the individual is financially independent and stable.
Retirement and financial freedom are correlated. Attaining financial freedom is on the to-do list of all, but there are only a few who can achieve it. One must begin planning for his/her retirement early in life. The right choice of investments compounded over a long period could lead you to a huge corpus that might suffice your needs for retirement life. Notably, once Albert Einstein said the power of compounding is considered the eighth wonder in the financial world.
Copyright © 2021 Kalkine Media Pty Ltd.
Investing in stocks that can supplement your income through consistent earnings distribution along with generating returns that could help you beat inflation could be an ideal starting point. In this article, we would put our lens through stocks that have the potential to pay consistent dividends along with a lot of headroom for capital appreciation.
Also read: 3 Defensive Stocks to Consider for Your All-Weather Portfolio
(Data Source: LSE) Copyright © 2021 Kalkine Media Pty Ltd.
- Gore Street Energy Storage Fund Plc (LON:GSF)
UK-based closed-ended investment company Gore Street Energy Storage Fund Plc invests in a diversified portfolio of utility scale energy storage projects to generate sustainable and attractive returns for investors in the long term. London's first energy storage fund, Gore Street, encourages the shift towards carbon neutrality.
During the quarter ended December 2020, the company recorded an increase in the Net Asset Value (NAV), driven by company’s involvement in the UK's new Dynamic Containment service introduced by the National Grid in September 2020, along with strong performance of the company's GB assets.
The company is slated to get a solid revenue boost as it participates in dynamic containment service, which will use the company’s assets in multiple contracts, thereby reinforcing the revenue model of the company. Also, the company expects to have over 90MW portfolio of operational assets from April. The company expects strong uplift in revenue this year.
The estimated unaudited NAV increased by 2.36 per cent quarter on quarter to 99.6 pence per share as of 31 December 2020. The board of the company declared an interim dividend per share of 2 pence for the quarter ended December 2020. Despite the wider equity market downturn, the company has announced 7 pence per share in dividends during the last twelve-month period.
Notably, the company aims to deliver a minimum of 7 pence per share or 7 per cent of NAV in the form of annual dividends to shareholders. In addition, the total NAV return of the company stood at 10.9 per cent. Gore Street had a fruitful quarter. The company is well-poised to take on the global transition to clean and renewable energy generation and generate significant value for its shareholders.
Also read: 6 UK Gaming Stocks That Have Seen Highest Gains In 2020
- British American Tobacco Plc (LON: BATS)
FTSE 100-listed global leader of tobacco and nicotine products British American Tobacco recorded an increase of 10.5 per cent year-on-year in reported profit from operations along with an increase in an operating margin of 380 bps during the fiscal year 2020. The company has declared a full-year dividend per share of 215.6 pence in 2020, an increase of 2.5 per cent year-on-year.
The company expects a dividend pay-out ratio of 65 per cent of adjusted diluted EPS, bolstered by a strong liquidity position. With high cash conversion rates, the company has a strong liquidity profile and has managed to achieve operating cash flow conversion of more than 95 per cent and has successfully raised £8.9 billion in new debt.
- SSE Plc (LON: SSE)
UK-based energy group SSE Plc is engaged in the business of generation, transmission, and distribution of electricity along with generating clean energy from renewable sources of energy such as onshore and offshore windfarms. SSE recently joined forces with Spanish energy company Acciona to generate wind energy by developing wind farms off the coasts of Spain and Portugal.
For FY2021, the company expects adjusted earnings per share to be ahead of expectations in the range of 85-90 pence. Further, the total operating profit for FY2021 is expected to be in the range of £150-£250 million.
The company has earmarked £7.5 billion for making low-carbon capex investments. The company intends to propose a full-year dividend per share of 80 pence for FY21. SSE is well poised to be an important cog in the wheel in helping the UK to make a transition towards reduced carbon emissions.
- Aviva Plc (LON: AV.)
FTSE 100-listed insurer Aviva has a robust capital framework, sustainable and resilient dividend policy, which underpins long-term opportunities for capital return to shareholders. The insurer announced a final dividend of 14 pence per share that translated into a total dividend of 21 pence per share for FY2020. Also, the company expects a reduction of £1.7 billion in net debt by the end of the first half of 2021.
In addition, the recent disposal of Aviva’s Vietnam business shall enhance the NAV and solvency surplus of the insurer by nearly £0.1 billion. The company is among the market leaders in the UK’s insurance sector with a strong moat.
- Greencoat UK Wind PLC (LON:UKW)
FTSE-250 listed renewable infrastructure fund Greencoat UK Wind Plc invests in renewable energy projects to provide investors with inflation Retail Price Index (RPI) adjusted dividends along with a capital appreciation of the portfolio in the long term.
The group has a progressive dividend policy in place for delivering consistent returns for its shareholders due to the high cash generative nature of operational wind farms and lower leverage. The company had declared a dividend of 7.10 pence per share for the year 2020. Moreover, Greencoat UK is expected to declare a dividend of 7.18 pence per share for 2021.
Given the strength of the existing portfolio, along with an impressive pipeline of lucrative investment opportunities, the company has a positive outlook along with resilient financial and operational performance. The company currently operates 25 GW of wind farms in the UK.
The company had managed to generate robust cash flow during 2020 despite several operational headwinds caused by the Covid-19 pandemic and extremely volatile power prices. Greencoat UK is well poised to generate consistent returns for its shareholders and achieve the growth trajectory in the medium term.
(Data Source: LSE)
