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If you’re retired, I’d consider buying this stock

Kirsteen Mackay
Happy retired couple on a beach

Even the most seasoned investor will strive to keep a tighter hold on their purse strings after retiring.

Coping financially and ensuring you’ve got everything necessary for the duration of your retirement can be a constant worry for retirees.

We all want to live long and prosper, but increased longevity can heighten financial worries and make us reluctant to take unnecessary risk.

That’s why income investing through reliable dividend-paying stocks and index funds is a popular method for financially savvy pensioners.

High yield UK stock

Royal Dutch Shell (LSE:RDSB) is an oil stock, which will not sit well with ESG investors looking to avoid sin stocks and edge towards companies benefiting the planet.

There’s an increased burden in portfolio decision-making for all investors with a conscience. This is even more pronounced for a retiree looking to leave the planet in a better place for the generations to come. But while Shell is not without its faults, it’s increasingly getting involved in renewables.

With its 7% dividend yield, it offers one of the highest payouts in the FTSE 100 and along with BP, I think it has the staying power to survive when other oil stocks will fail.

Shell’s price-to-earnings ratio (P/E) is around 12, which means it’s bordering on undervalued. Earnings per share are £1.95 and it has a market cap of £146bn.

The coronavirus outbreak and wider global issues are having a negative effect on many equities, but particularly oil stocks. This is something to be aware of, but equally, remember that very few people take advantage of market falls when they’re happening. This can be the best time to pick up bargains, particularly dividend-payers, which provide income for the long term.

The growth of oil demand is slowing down, but it’s far from disappearing. Emerging markets want the trappings of the West, which includes high energy consumption. Big Oil will continue to provide what the consumer wants, while making as much money as it can. This includes a progressive shift towards natural gas and renewable forms of energy.

Stay strong, move on

I understand that managing the risks associated with balancing your portfolio growth and gaining potential income throughout retirement is no mean feat. The important point to remember for all investors is to have the discipline to stay strong and not succumb to selling when the market is having a wobble.

The world’s full of misery and scaremongering just now, which is enough to topple even the savviest investor. Successful investors focus on enjoying the dividend payments they receive from their investments, while not thinking too hard about what’s happening to the underlying portfolio on a day to day basis.

Losses and gains are virtual until they’re realised, therefore if you can ride out the storm, I think you’ll reap the rewards in the long-term.

While many high-yielding companies look like their dividend yields could be at risk of a cut, I think Shell has a high yield that looks sustainable.

The post If you’re retired, I’d consider buying this stock appeared first on The Motley Fool UK.

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Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Motley Fool UK 2020