With more and more people wanting to take control of their own pensions and enjoy a fulfilling retirement let’s take a look at an investment trust and a share I think would be strong additions to a SIPP.
I think one of the best things about the investment trust Murray International Trust (LSE: MYI) is its global reach. The trust invests in companies ranging from Taiwan Semiconductor Manufacturing to Verizon and Roche. Although the US makes up the biggest proportion of investment, it only accounts for around about 15% to 20% of the total, with significant investment in countries as diverse as Brazil, Mexico, the UK, Singapore and India.
At a time when many investors are worried about Brexit, the global nature of the trust may well be appealing. It also gives the trust managers the flexibility to scour the globe looking for profitable, higher-yielding companies.
The dividend and a discount
Income is paid out to investors quarterly, ideal for a retirement fund where income is a primary objective for investing in shares. The yield is not too shabby either at around 4.4%.
The dividend has been steadily increasing for many years and with trusts having the flexibility to sustain their dividend payments during harder times, they’re often more resilient, I believe, in more difficult economic periods. With a recent survey finding that 70% of economists think a US recession will strike by the end of 2021, the reliability trusts provide may well be important for any retirement fund.
As a last point on the trust, it’s now trading at a bigger discount to its historical norm, meaning the net asset value (NAV) is 1,180p but the shares can be picked up for 3% under that. So there could be potential upside for investors if the discount gap narrows or the shares start to trade at a premium to the NAV.
Making life sweeter
Supplying ingredients to the global food and beverage industry is sweet business for FTSE 250 company Tate & Lyle (LSE: TATE). The company has a dividend yield of around 4.2% which is towards the higher end of the spectrum for the FTSE 250 and the shares are trading on a P/E below 15, which indicates good value. The company’s P/E is currently 13.
The last set of full-year results, which was for the year ended 31 March 2018, showed profit before tax was up 23% and debt was reduced from £452m to £392m. At the time of the results, it pointed out a desire to grow organically as well as to acquire companies to grow, as well as to have a progressive dividend policy and return excess cash to shareholders. I think these aims bode well for the future, as a rising dividend should make the company more attractive to income-focused investors.
When looking at the long term – as we at Motley Fool believe shareholders should – Tate & Lyle seems well-placed to capitalise on the trends towards healthy eating, as my Foolish colleague Kirsteen Mackay has explained in more detail. There’s clearly a huge market opportunity and I think investors may be undervaluing the potential for the company to grow in the future. For that reason I think it’s a great share for a retirement fund.
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Andy Ross 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 2019