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Is The Sage Group the Ultimate Retirement Share? – The Sage Group plc (SGE)

The Sage Group plc (LON:SGE) has been in the FTSE 100 since 1999 and has gradually expanded the scope of its software beyond its initial accounting remit. Areas covered today include payroll, customer relationship management and a wide range of financial planning, forecasting and costing — all of which is likely to become more critical and more automated in years to come.

My verdict
Although The Sage Group plc (LON:SGE)’s current dividend yield of 3% is slightly below the FTSE 100 average of 3.1%, I think that its well-covered, progressive dividends could make it very attractive for an income-based retirement portfolio.

Dividend growth is almost as important as outright yield when buying shares for a retirement portfolio, as it enables your income to keep pace with inflation. Income growth also means that in the years before you retire, the dividend yield on cost you receive from your shares will rise, often to levels far higher than the index average. If you had purchased Sage shares at the start of 2010, for example, your dividend yield on cost in 2012 would have been 4.3%, considerably higher than the FTSE 100 average.

Overall, I think that The Sage Group plc (LON:SGE) provides an attractive way of gaining exposure to the IT and business services market, and could fit well into a diversified retirement portfolio.

The article Is The Sage Group the Ultimate Retirement Share? originally appeared on Fool.com.

Roland does not own shares in The Sage Group or Microsoft Corporation.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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