MNG, IMB, DEC: Stocks you may invest in for retirement amid recession fears

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 MNG, IMB, DEC: Stocks you may invest in for retirement amid recession fears
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Highlights

  • The UK government announced that it is not going to bring back a temporary increase to state benefits, amid inflation rose to a 40-year high of 9% in April from 7% in March.
  • Experts are warning that retirees could run out of money in their pensions due to the sharply rising cost-of-living crisis.

The UK government has announced that it is not going to bring back a temporary increase to state benefits as inflation rose to a 40-year high of 9% in April from 7% in March. 

Retirees could run out of money in their pensions due to the sharply rising cost-of-living crisis, experts have said. 

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Since the start of this year, over £150 billion has been wiped off the value of Gilts, which is a type of bond issued by the UK’s central government to finance public spending. It is the biggest dip in the last 30 years.

The food and energy prices are escalating, putting a squeeze on the budget of households. Experts are warning that retirees could run out of money in their pensions due to the sharply rising cost-of-living crisis. Pensioners tempted to use their pension pots to cover rising costs may see significantly less income during their retirement. Withdrawing pension funds too early will reduce the income a pensioner will receive during retirement as it will lose out on the growth potential.  

According to financial services company Legal & General, around 18% of pension customers made an ad hoc withdrawal in the first four months of this year as compared to 5% during the same period last year. Since the reforms made in 2015, savers can easily withdraw their retirement money after the age of 55, which was before limited to one-fourth of the lump sum. However, any money accessed over 25% will be taxed as income for that year.

Pensions ensure that during retirement people are financially secure, but data from HM Revenue and Customs show that in the last quarter of 2021 around 428,000 people made £2.69 billion from personal pension savings. Under the current government rule, a person can contribute £40,000 towards their pension and get tax relief.

Let us look at 3 FTSE-listed stocks that you may consider for your retirement.

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  • M&G Plc (LON: MNG)
  • Mcap: £5,340.17 mn
  • One-year dividend yield: 8%
  • 5-year dividend yield: 9%

With a market cap of £5,340.17 million, M&G Plc is a global investment manager for both individual and institutional investors. It operates through two segments that include saving and assets management and heritage. The share of the FTSE 100-listed company was trading at GBX 210.20, up by 1.64%, on 23 May 2022, at 10:50 AM (GMT).

The company has recently announced that it has reached an agreement to fully acquire Swiss-based responsibility Investments AG to enhance its capabilities in impact investing.

The company is offering a dividend yield of 8.8% a year and its five-year average dividend yield stands at 9%, as of 23 May 2022. The company hasn’t performed well as its share value has depreciated by -11.57% in the last one year. However, its YTD return stood at 5.36%, as of 23 May 2022.

Dividend income often keeps up with inflation.

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  • Imperial Brands Plc (LON: IMB)
  • Mcap:  £16,945.44 mn
  • One-year dividend yield: 9%
  • 5-year dividend yield: 9% 

The market cap of the world’s fourth-largest international tobacco company stood at £16,945.44 million, as of 23 May 2022. The company operates under various brand names across 120 markets. The share of the FTSE 100-listed company was trading at GBX 1,779.50, down by 0.61%, on 23 May 2022, at 10:50 AM (GMT).

The company has reported a 1.3% decrease in its revenue to £15,362 million in FY2022, from £15,568 million in FY2021. Its operating profit for the FY2022 stood at £1,201 million, which is down by 26.6% from £1,637 million in FY2021.

Imperial Brands Plc is offering a dividend yield of 9% a year and its five-year average dividend yield stands at 8.9% as of 23 May 2022. The company has performed well as its share value has appreciated by 6.93% in the last one year. However, its YTD return stood at 9.91%, as of 23 May 2022.

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  • Diversified Energy Company Plc (LON: DEC)
  • Mcap: £1,039.37 mn
  • One-year dividend yield: 1%
  • 5-year dividend yield: 8% 

The market cap of the UK-based independent energy company stood at £1,039.37 million as of 23 May 2022. The company is engaged in the production and marketing of primarily natural gas related to its synergistic midstream assets and US onshore upstream assets.

The share of the FTSE 250-listed company was trading at GBX 125.70, up by 2.86%, on 23 May 2022, at 10:50 AM (GMT). It has declared a Q1 2022 interim dividend of 4.25 cents per share.

Diversified Energy Company Plc is offering a dividend yield of 11.1% a year and its five-year average dividend yield stood at 8% as of 23 May 2022. The company has performed well as its share value has appreciated by 12.77%, in the last one year. However, its YTD return stood at 20.48% as of 23 May 2022.

 Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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