Just as they say "all ships rise with the tide" when referring to a bull market lifting most stocks, there are also currents, or trends, that can take companies and whole industries up or down.
These investing trends can sometimes last for years, like a sea-change movement in real estate, for example. Currently, there are two investing trends that investors can possibly ride to get richer returns. I have also identified two stocks connected with these trends that stand to benefit from them as well.
1) Annuities for retirement
Some people may have heard of annuities, but they're not something that come up in everyday conversation. Separate from your superannuation fund that you dutifully pay into every month, you can also buy an annuity that promises to pay a particular amount regularly like an income.
These are popular recently because people are concerned their superannuation may not be enough or last long enough during retirement. Wealth management company Colonial First State plans to include the annuity products of Challenger Limited (ASX: CGF) in its wealth management platforms. This will give Challenger much more exposure to superannuation and SMSF holders and should boost revenues and ongoing service fees.
Challenger has been growing its earnings steadily over the past ten years on its own, but this opportunity with Colonial could set it a number of notches up in growth from here. Retirement investment trends can run for a long time, so Challenger is one stock I would be watching now.
2) Overseas investing
Most Australian investors buy only home-grown ASX-listed stocks for no better reason than they haven't explored the possibilities of buying international equities.
Now, it seems more Australian investors are ready to venture outside to take advantage of stronger markets abroad. Many of the growth stocks we already know, like Apple, Facebook and Google aren't on the ASX. So why miss out? This trend could keep growing as the ASX trades sideways.
For people who want to tap into the overseas financial markets, but still feel uncertain about what to buy and when, the fund management company Perpetual Limited (ASX: PPT) can help. In August, it launched its Perpetual Global Share Fund that will hold about 30 high quality global companies. Interested investors can have Perpetual manage their investments.
Perpetual's earnings are forecast to rise about 13% annually over the next two years, so investors buying the company's stock directly can benefit from this overseas investing trend just as well. The stock also pays a very attractive 4.7% yield fully franked to go along with that solid forecast growth. You could do well with this stock in your long-term portfolio.
For any investment, a combination of share price gain and generous dividend income is important for superior returns. If you wanted one more example of a stock that could give you both, then you will want to read about a company our top Motley Fool investment advisor Scott Phillips has just named his #1 dividend-paying stock for 2014-2015.
