Please forgive me if I’m overthinking this process. But if you’re looking for long-term pension investments, then the firms working hard on your behalf to increase pension and investment returns have to be worth buying into.
Therefore, I am recommending buying two pension firms’ shares: Standard Life Aberdeen (LSE: SLA) and XPS Pensions Group (LSE: XPS). One firm is an industry behemoth with legacy and agency. The other is a relative upstart with a growing reputation, which made its market debut in February 2017.
If you take this two-pronged investment approach, you’re covering your bases. Firstly, you’re buying into a company that is part of the tapestry of the pension industry. Secondly, you’re buying shares in an incredibly ambitious firm whose small market capitalisation will ensure competitors might look at it closely with a view to a takeover at some stage.
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An in-depth look at Standard Life Aberdeen
Standard Life Aberdeen has offices in 54 locations employing 6,000 people, managing and administer over £550bn of assets worldwide. The Standard Life brand is trusted by over 4.5 million customers. The firm is clearly recognised and trusted when UK savers and investors are looking for advice and financial products to buy.
Analysis of the firm’s latest key performance indicators for the accounting period ending December 2018 generates confidence in its ability to grow. Gross inflows rose by £75.2bn in 2018, while adjusted profits before tax came in at £650m. The company provided a healthy, yearly dividend of 21.6p.
The share price has risen from December’s 52-week low of 224p to trade at 290p at the time of writing. This is still some distance short of the 52-week high of 385p. The target price issued by a cohort of market analysts and brokers is currently 390p. Based on the current financials and recent bullish sentiment, there’s every possibility that the share price could revisit its 52-week high. Indeed, other Foolish colleagues share my view on Standard Life Aberdeen as a buy, most notably Roland and Rupert.
Despite being viewed by many as staid, safe and lacking ambition, the firm has recently taken steps to become involved with Age Partnership in the equity release market. This is a service for those aged over 55, which is predicted to experience significant growth over the coming years.
An impressive small-cap firm with a big future
XPS Pensions Group describes itself as “the largest pure pensions consultancy in the UK”. It advises over 1000 pension schemes and administer pensions for over 870,000 members. and employs 1,200 staff across 15 UK locations.
XPS Pensions Group’s latest set of figures have revealed a significant improvement. According to the 2019 interim report, revenue growth is up 113% to £52.2m and the dividend is up 10%. Adjusted operating profit is up 63% to £11.4m and business growth is up 3.3%.
The share price has enjoyed a rally over recent months, from printing a low of 132p in mid April, to trade at 159p at the time of writing. The 52-week high is 195p and brokers have set a target price of 245p. The share price is currently trading close to the 50-day moving average of 158p, just above the 200-day moving average sited at 150p. This could be technical evidence that price is ready to bounce back.
