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I build a balanced portfolio of FTSE dividend shares to generate the income I need to enjoy a comfortable retirement. But what if I can only buy one? If so, I will have to take a very different approach.
A single stock portfolio may offer some benefits. I would go to someone who is more productive, like a wealth manager IM&Gand get more income of almost 9% per year. While M&G's shareholder payouts seem secure for now, that's still a risky strategy. And its share price is difficult to grow.
Alternatively, I could play it safe and buy a referral monopoly National Gridit currently yields 5.47%.
However the utility's share price fell in May after it announced plans to raise £7bn to accelerate the transition to renewable energy. It's over £40bn in debt, and I'm not comfortable with that. So I won't buy National Grid alone either.
I would buy Lloyds Banking Group
Unilever it is a strong one FTSE 100 A blue-chip I would consider for my one-stop portfolio, but it doesn't pay enough, currently yielding less than 3%.
The oil giant BP it yields 5.39%, which is good. Its shares are cheap too, trading at six times earnings. However the energy sector is moving, oil exploration is risky and we still don't know how BP will negotiate the switch to zero.
I would happily hold all four of these in a portfolio of dividend income and growth stocks, but I wouldn't make them my only picks. If I had to pick just one stock for life, this would be it Lloyds Banking Group (LSE: LLOY).
I know, I know, that's a little dark. But somehow, it should be dull. My feelings will be sour if I buy one stock and the store is full.
But this does not mean that Lloyds will avoid the volatility and volatility that comes with investing in equities.
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As we saw in the financial crisis, things could still get much worse. Although I like to think we have learned from that. We have certainly learned that the big banks are too big to fail, and should be bailed out if needed.
I chose Lloyds over the other banks in the FTSE 100 because it sticks to the fundamentals of small business banking, which reduces its risk profile. Still showing the ups and downs of the UK economy, which has been very difficult recently with Covid, the cost of living crisis and everything else. But if you invest in stocks, it is impossible to avoid risk all together.
Lloyds' share price appears to be trading at a healthy 7.4 times earnings, roughly half the FTSE 100 average of around 15 times. That's despite the stock being up 36.3% for the year. The trailing yield fell as a result, to 4.8%.
However, management intends to raise the dividend every year, and the forecasted yield is quite impressive at 5.6%. Even better, that doubles as income, which is great.
Like I said, it would be crazy to invest in just one stock. But if someone put a gun to my head, my first choice for nothing would be Lloyds.
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