National Grid plc and Unilever plc look like ideal stocks for your golden years

Here’s why National Grid plc (LON:NG) and Unilever plc (LON:ULVR) are my top picks for a retirement portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve got a fair way to go to retirement, but when the time comes I’ll be looking to have a stocks portfolio that provides a growing stream of dividend income to increase (or at least maintain) my real spending power in my golden years.

I reckon a portfolio of 20 to 25 stocks wouldn’t take too much time to monitor and would provide enough of a spread to enable me to sleep easy. I’d be aiming for a somewhat higher blended yield than a FTSE 100 tracker. And a bias towards defensive sectors, as I wouldn’t want to hold too many cyclical companies that are liable to cut their dividends during times of economic stress.

Whether I arrive at my grave in an attractive well-preserved body or skid in broadside, whisky in one hand  and cigar in the other, hopefully such a portfolio would have served me well. Were I buying stocks for it today, National Grid (LSE: NG) and Unilever (LSE: ULVR) would be high on my list of priorities.

A unique business

Owning shares in National Grid gives you a stake in a unique and highly attractive business. The company is the sole owner and operator of gas transmission infrastructure in Great Britain. It also owns and operates the electricity transmission network in England and Wales (it operates but doesn’t own the Scottish networks).

Its near-monopoly of ownership and actual monopoly as operator of Britain’s principal gas and electricity arteries makes it a company of vital strategic importance. In its compact with the nation (via the regulator) National Grid is expected to maintain and improve the network. Provided it operates reliably and efficiently, it will receive a fair return, enabling it to both invest for the future and pay dividends to its shareholders.

The group also has other regulated businesses in the UK — for example, it owns four of the eight regional gas distribution networks — as well as a number of regulated businesses in the northeast US. Aside from the risk of regulators failing to live up to their end of the bargain, National Grid’s unique position of national dominance in UK gas and electricity transmission and the reliability of its cash flows bode well for steadily rising dividends well into the future. At a share price of 935p as I’m writing, the prospective starting yield for investors today is 4.8%.

Valuable brands

Consumer goods giant Unilever has neither the monopoly qualities nor the level of regulatory restraint of National Grid. However, its stable of hundreds of trusted brands (some global and some local) are historically embedded in many countries around the world and represent rare and valuable assets. Only a few consumer goods companies are in the same league.

These companies are likely to continue dominating their markets and to benefit from rising incomes across the developing world. As Unilever’s food, household and personal products are bought over and over again (so-called fast-moving consumer goods), the business is relatively non-cyclical, reliable and highly cash-generative. And that’s good news for steadily increasing dividends. The shares are trading at 4,520p as I’m writing, giving a current-year forecast yield of 2.8%. In this case, I might just be tempted to wait for a dip in the shares, as they can on occasion be picked up with a yield in the 3% to 4% region.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »