Is Now The Time for Annuities?

Annuities have promised much and delivered little.............................July 2019 has promise

Challenger Ltd (ASX: CGF)

A business that looks to provide a stable and guaranteed source of income for retirees could also be a good one to consider for our own stress-free portfolio.

The annuity sector is a growing industry with the number of people in retirement age expected to grow by 40% over the next decade and 70% over the next two decades. More customers should mean higher profits over the long-term.

The falling Australian housing market, the volatile share market and prospective Labor tax changes could make annuities and fixed income even more attractive.

If the US Fed doesn’t increase interest rates as much as expected then Challenger could have even brighter shorter-term prospects.

It’s currently trading at 13x FY19’s estimated earnings with a grossed-up dividend yield of 5.5%.

Motley