No savings at 40? I’d buy these 2 FTSE 100 dividend stocks to beat the State Pension

These two FTSE 100 (INDEXFTSE:UKX) shares could offer high total returns, in my opinion.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Having no savings at age 40 doesn’t necessarily mean you’ll be reliant on the State Pension in older age. There’s still time to build a surprisingly large nest egg from which to draw a passive income in retirement.

With the FTSE 100 currently appearing to offer a number of stocks that trade on attractive valuations and which have improving financial prospects, now could be the right time to start building a retirement portfolio.

Here are two prime examples of large-cap shares which could produce impressive total returns in the coming years.

Landsec

The recent performance of commercial property business Landsec (LSE: LAND) has been relatively encouraging. Its share price has risen by over 20% in the past six months, while its half-year results highlighted the progress it is making in delivering on its strategy.

For example, around a third of its £3bn development pipeline is now on site, while its pivot towards flexible office opportunities has certainly resonated with customers. This could provide it with improving financial performance at a time when demand for retail units has continued to be weak.

Looking ahead, a difficult outlook for bricks-and-mortar retailers could weigh on the company’s financial performance. Evidence of this can be seen in its financial forecasts, with Landsec expected to produce a slight fall in its net profit over the next couple of years.

However, even after its recent share price rise, the company still appears to offer good value for money. It trades on a price-to-book (P/B) ratio of 0.7, which suggests that it offers a wide margin of safety. In addition, it has a dividend yield of 5%, which could mean that it has the capacity to deliver an impressive total return in the long run.

easyJet

Another FTSE 100 share that could offer high returns in the long run is easyJet (LSE: EZJ). Its recent quarterly update showed that its costs were aided by its self-help initiatives, while robust customer demand enabled it to report resilient revenues.

Looking ahead, the company could continue to deliver improving financial performance. Its investment in sustainability and in achieving cross-selling opportunities from the launch of its holidays business could strengthen its competitive position still further.

With the company expected to post a rise in its bottom line of 19% in the current year, and 13% next year, its price-to-earnings (P/E) ratio of 13.9 suggests it offers a wide margin of safety. Although it may lack the financial consistency of some of its FTSE 100 peers, it nevertheless could have income investing potential as a result of its 3.5% dividend yield.

As such, now could be the right time to buy a slice of the stock while it appears to offer a mix of income, growth and value appeal for the long term.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of easyJet and Landsec. The Motley Fool UK has recommended Landsec. 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.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »