Should You Buy Challenger Ltd’s Shares at this Price?

What does Challenger do?

Challenger Ltd [ASX:CGF] is the market leader in providing annuities. They work like a regular pay cheque in retirement, providing a stable secure income.

What’s driving Challenger’s share price up?

The company is growing sales. Challenger released their full-year results on 16 August.

They posted record sales for annuities, up 22%, to $3.4 billion. Sales actually accelerated in the second half, with annuity sales up 45% on the prior corresponding period.

The company rewarded shareholders with a record full-year dividend of 32.5 cents, up 8%.

What now for Challenger Ltd?

There are multiple forces getting behind Challenger now.

In the past, the appeal of annuities was hampered by tax impediments. That’s changed, though, with the recent budget improving the attractiveness of annuities.

From July 2017, tax exemptions on superannuation will be extended to annuities.

The government is getting fully behind annuities now.

The other force getting behind Challenger is Australia’s greying population. Data released last month by the Australian Bureau of Statistics reveals Australia’s fastest growing age group is the 65 and over bracket. It has grown at a rate of 20% since 2010.

The company is increasing accessibility to its annuity products via partnerships and digital platforms — and the use of annuities is increasing.

The chart of the company share price is suggesting Challenger is tracking along nicely. Challenger is one to keep on the watchlist.

Terence Duffy,
Cycles, Trends and Forecasts


Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends & Forecasts.


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