2 dividend growth stocks I think could help you get rich, retire early and beat the State Pension

Worried about your bank balance post-retirement? I’d take some of the stress out of it with these two dividend heroes.

| 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.

Sit down and think for a second. Are you doing as much as you can to build a big nest egg for retirement? And do you think you could really survive on the meagre £8,546.20 per year which the basic State Pension provides?

I’m not sure about you, but I dream of living the life of riley in my later years, or possibly even throwing my season rail pass in the bin and enjoying an early retirement. It’s abundantly clear that simply relying on the State Pension won’t allow me to achieve these goals.

As recent data shows, leaving it to the last minute to take charge of your post-retirement finances is extremely risky business. There’s no reason to delay things, either. Taking steps to secure your financial future doesn’t have to be like pulling teeth. Let me start you off with a couple of dividend heroes that could help you make a pretty little nest egg.

Fortify your finances

Forterra (LSE: FORT) is a share that’s been a dream for dividend chasers in recent times. Some significant, double-digit earnings increases, allied with some serious cash generation, have allowed it to hike the annual dividend by 81% during the past three years. It’d take a brave man to predict either profits or payouts at the brickbuilder to stop growing at a spectacular rate too, given its strong long-term demand outlook.

Indeed, sales rates of its products to homebuilders are so high, and so low is total production capacity in the UK, that brick imports are soaring right now. As I noted in a recent piece about Ibstock — a share I myself own — Britain needs to build as many as 340,000 new homes per year to solve the country’s chronic homes shortage, making it quite likely this supply/demand imbalance will persist.

Clearly, then, the earnings picture for Forterra et al looks pretty secure for many years ahead. In the meantime the firm is expected to lift last year’s 10.5p per share dividend to 12.1p in 2019, a figure which yields a mighty 4.7%.

Another dividend magician

I also reckon Bloomsbury Group (LSE: BMY) has the tools to make shareholders a fortune for retirement. It’s not all about Harry Potter, although shareholders will be pleased to hear Bloomsbury’s cash cow remained one of the company’s best-selling consumer titles in the four months to June.

The small-cap’s really gone to town on developing its position in the academic and professional publishing arena, thus laying the base for terrific earnings growth in the years ahead. To illustrate the point, like-for-like sales of these titles soared 42% in the fiscal year ending February 2019. This performance makes me particularly excited for the years ahead.

Now Bloomsbury doesn’t offer the biggest dividend yields out there, a predicted 8.4p per share payout for this year yields a decent-if-unspectacular 3.7%. However, the firm’s commitment to raising dividends each and every year still makes it a true income hero in my eyes — it’s raised annual dividends for 24 years on the bounce — and a stock that anyone looking to build a big retirement pot needs to take a close look at.

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.

Royston Wild owns shares of Ibstock. The Motley Fool UK has recommended Ibstock. 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

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »

Investing Articles

Billionaire Warren Buffett just bought shares of Domino’s Pizza. Should I grab a slice?

Our writer takes a look at a few reasons why Domino's Pizza stock might have appealed to Warren Buffett's Berkshire…

Read more »