Thanks to attractive tax relief and flexibility over the types of investments that can be held, I reckon a SIPP (Self-Invested Personal Pension) is a great way to save for later life. And for those who adopt a successful stock-picking strategy, I believe it’s possible to retire early on a pension equal to (or more than) the UK average.
Let me explain.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
How do the numbers look?
Investing £200 a month at an annual rate of return of 10.2% would build a SIPP worth £243,249 after 25 years.
Why 10.2%? Well, I deliberately chose this figure as it’s the same as the return that Coca-Cola HBC (LSE:CCH) has delivered since June 2021. This ignores the dividends that were received during the period.
With a £243,249 SIPP, it would require a collection of dividend shares paying just over 6% — 6.03% to be precise — to produce an income of £282 a week, or £14,664 a year.
Is this realistic?
I think it is because the top 10 on the FTSE 100 are currently (14 June) yielding 6.6%.
Of course, it wouldn’t be a good idea to hold just one stock. And dividends can fluctuate. During particularly difficult times when earnings are squeezed, they can also be suspended.
But with patience and discipline — as well as picking the right shares — I think it’s possible to provide for a more comfortable retirement by investing in the stock market.
Cheers!
Due to its impressive record of share price and dividend growth, I have Coca-Cola HBC in my own portfolio.
It holds the Coca-Cola group’s bottling and distribution rights in 29 countries stretching from Ireland, across Central and Eastern Europe, into Africa.
Admittedly, there are other shares that yield more – currently it’s returning 2.5% — but its dividend was three times higher in 2026 than it was in 2016:
- 2026 – €1.20
- 2025 – €1.03
- 2024 – €0.93
- 2023 – €0.78
- 2022 – €0.71
- 2021 – €0.64
- 2020 – €0.62
- 2019 – €0.57
- 2018 – €0.54
- 2017 – €0.44
- 2016 – €0.40
Impressively, its payout was raised during the pandemic, which points to the stock’s defensive qualities.
But it’s the growth potential that excites me most.
What next?
It’s shortly due to complete the acquisition of Coca-Cola Beverages Africa. This will bring another 14 markets into its stable. And should take the group’s performance to another level.
Based on its current emerging markets, the group claims that if it was able to bring the average per capita consumption up to European Union levels, it would double its sales volumes. Just imagine the impact if it could do this in another 14 territories as well.
However, there are challenges. Competition is intense and a move towards healthier drinks could see consumers switch from its more sugary brands. Supply chain inflation could also be an issue.
But for now, its sales volumes and revenue are growing thanks, in part, to its 24/7 portfolio (a drink for every occasion round-the-clock). Importantly, the group’s about more than the world’s most popular beverage, Coke. It has lots of other famous names in its stable, including Fanta, Sprite, and Schweppes.
For both its growth and income potential, I think Coca-Cola HBC is a stock to consider.
Should you invest £5,000 in Coca-Cola Hbc Ag right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Coca-Cola Hbc Ag made the list?
James Beard owns shares in Coca-Cola HBC.
