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It’s hard to recommend a single retirement stock that would suit an investor’s golden years in their entirety. We all hope to enjoy a retirement that lasts for decades. As such, the companies we need to choose to fund that retirement need to be watertight when it comes to profitability and dividend-paying ability.
If an investor were bent on just investing in individual companies, we at the Motley Fool would recommend a highly diversified portfolio of retirement stocks that covers most corners of the ASX.
But that is not the only path that would-be retirees can take with their ASX dividend shares. There’s a rather unique stock out there right now that arguably fulfils every need a retiree might have. It is inherently diversified, offers a strong, fully-franked dividend yield, and pays out that dividend every single month. What’s more, it is specifically tailored to cater to a retired investor.
This retirement stock is Plato Income Maximiser Ltd (ASX: PL8).
What makes Plato a top ASX retirement stock?
Plato Income Maximiser is a listed investment company (LIC). LICs are companies that, instead of making goods or marketing a service, are investors themselves. A LIC typically owns an underlying portfolio of investments that it manages on behalf of its shareholders. As such, buying shares of a LIC is akin to buying a share of that underlying portfolio.
In Plato’s case, that underlying portfolio is made up of a variety of ASX dividend stocks, all selected based on their dividend yield, as well as the perceived sustainability of that yield going forward.
These shares hail from across the ASX. Recently, they included Beach Energy Ltd (ASX: BPT), BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Metcash Ltd (ASX: MTS), and Suncorp Group Ltd (ASX: SUN), amongst others.
So what makes Plato a strong candidate for the ideal retirement stock? Well, its yield is a good start. Over the past 12 months, Plato shares have paid out 12 dividends, each worth 0.55 cents per share, fully franked. That 6.6 cents in annual dividends per share gives Plato a trailing yield of 4.56% at the current stock price (at the time of writing).
That’s a fair bit of upfront cash flow every month. But Plato doesn’t just deliver dividend returns. Its overall performance (share price growth plus dividends) has come in at 10.2% per annum since its inception in 2017. That’s as of 30 November. Unlike many other would-be retirement stocks, that shows a track record of providing real capital growth alongside meaningful dividend income.
As such, I think this makes Plato a fantastic retirement stock to consider today.