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2 FTSE 100 growth dividend shares I’d buy to retire on

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While I have a few decades to go before retiring, Fools will know it’s never too early to begin planning for your golden years. With that in mind, I have my eye on two companies with great long-term potential.  

As defensive as they come

First up is credit bureau Experian (LSE: EXPN). It’s by far the largest of three giants in an industry that is an inescapable fact of modern life. Whether its applying for a car loan, mortgage, or credit card, you can be sure your credit details will be checked via Experian or a competitor. And with records on hundreds of millions of consumers, there are incredibly high barriers to entry for new competitors.

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Experian leverages these assets into pricing power that manifests itself in operating margins that hit an enviably high of 24.7% last year. On top of high margins, the company also offers growth throughout the business cycle as consumers generally continue to apply for credit even in extreme downturns. This is clear in the company’s results for the years 2009-2011, in which it posted sales growth of 2.9%, 1.7% and 10.8%, respectively. While growth figures in 2009 and 2010 weren’t fantastic, there were few other companies posting positive sales momentum during the depths of the financial crisis.  

With high margins and few expensive capital investment needs, Experian is in a fantastic position to return loads of cash to shareholders. Last year, the company’s operations kicked off $1,525m in cash, of which management returned $383m via a dividend that currently yields 2.09%. In addition to cash dividends, the company also bought back $364m worth of its own shares.

The downside is that all these positives mean Experian is not cheap at 24 times trailing earnings. However, with strong positions in developed markets such as the US and UK, and exposure to long-term growth prospects in Brazil, I reckon this price isn’t too lofty for long-term investors.

Just a temporary setback? 

The second stock in the same vein I’m looking at is consumer goods juggernaut Reckitt Benckiser (LSE: RB). The company’s share price has dropped nearly 15% over the past three months as its sales growth has slowed and analysts have increasingly scrutinised the logic of its $17.9bn acquisition of baby formula seller Mead Johnson.

However, while sales growth has stuttered, with Q3 revenue down 1% year-on-year, I believe RB is still well-placed to support long-term sales and profit growth. One reason I’m bullish is that 2% of Q3’s sales reversal can be attributed to the recent cyber attack that crippled supply chains in North America, while another chunk came from – hopefully –  one-off problems in South Korea. Furthermore, the recent sales growth slump mirrors troubles competitors, such as Unilever and Nestle, have had.

Looking forward, it also appears RB may be gearing up to slim itself down, with management announcing a reorganisation into two businesses; consumer health brands such as Nurofen and Durex; and hygiene brands including Finish and Lysol. RB has successfully jettisoned bits of the business before, such as the Indivior spin off in 2014, and selling off the hygiene division would free up tonnes of cash and allow it to make further consumer health acquisitions. Either way, with high margins, a history of non-cyclical sales growth and a steady dividend – matched by high share buybacks, I like Reckitt Benckiser as a long-term holding.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Experian and Reckitt Benckiser. 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.

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