My plan to make returns of over 25% each and every year from investing in income and growth shares

Table of Contents

All investors want to make as big a return as they can from the stock market. Alongside time in the market and costs incurred, the percentage return achieved is one of the biggest contributors to growing your money. If you want to generate wealth through the stock market, you need to improve your performance and your returns. I’m aiming to make returns of 25% a year from income and growth shares.

a person holding a cup of coffee on a table: Image of person checking their shares portfolio on mobile phone and computer

© Provided by The Motley Fool
Image of person checking their shares portfolio on mobile phone and computer

Pick quality income and growth shares 

To have any chance of reaching the ambitious target of 25% annual growth, I’ll need to pick quality shares. I think one way to do this is to look at shares that currently combine both income and growth. I’ll want to see that a company has a history of being able to consistently increase dividend payouts to investors while growing the share price.


Load Error

One way to assess a company’s performance is by looking at its earnings per share growth. That alone won’t be enough though. To get a more full picture of a company, I’ll want to see high and consistent levels of return on capital employed, high if not growing profit margins, and some sort of competitive advantage or unique selling proposition.

Past performance is also an indicator, although, of course, I want to be optimistic and confident about the future prospects for any investment. Company management that has made consistently smart decisions in the past could well be able to keep doing so. That gives them a better chance of delivering value for shareholders. Simon Wolfson at Next seems to be a great example of this kind of director.

Think long term

To make returns of 25% a year, I want to be entirely focused on pursuing my income and growth strategy. This means thinking long term while ignoring most short-term opportunities and volatile shares. I want to avoid being drawn into overtrading and racking up big costs. Instead, I want to focus on building a portfolio of quality income and growth shares that I’m confident holding.

Mostly concentrate on active investing and ignore ETFs

To outperform the market I’ll mostly ignore trackers, unless they give me access to a market, commodity, or theme that I particularly want to have exposure to. To reach my goal, though, I will require very active investment. I will need to make sure my portfolio is consistently performing and that I’m generating new ideas and opportunities. I can’t expect – and no investor can expect – to achieve 25% returns by sitting back and letting a tracker do that work. It’s just not possible.

Even if I end up not making returns of 25% a year – which is ambitious – if I can get close by setting myself the goa,l then I’ll be able to retire early. That for me is the biggest goal and beating the market is the way to do it. 

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

More reading

Andy Ross owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The post My plan to make returns of over 25% each and every year from investing in income and growth shares appeared first on The Motley Fool UK.

Continue Reading

Source Article