Have £1,000 to invest? These 2 FTSE 100 dividend stocks could help you to retire early

Royston Wild identifies two FTSE 100 (INDEXFTSE: UKX) income shares that could make you a fortune.

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A negative verdict on its blockbuster merger from one of Britain’s biggest banks has caused Standard Life Aberdeen’s (LSE: SLA) share price to plummet since the turn of the year.

Its market value has shrunk 30% since then, Lloyds Banking Group’s decision to cancel a £109bn asset management contract in February setting the tone. The move forced investors to seriously reconsider the implications of last summer’s Standard Life-Aberdeen Asset Management tie-up, and Lloyds’ further decision to sell its 3.3% stake in the group in June has hardly improved sentiment either.

It is quite possible that the share price rout could be extended when interim results are released on Tuesday. Most commentators are anticipating a scary update, with UBS for one expecting the asset manager to report outflows of £20bn between January and June.

However, it could also be argued that Standard Life Aberdeen’s ultra-low valuation — a forward P/E ratio of 12.2 times — compared with those of its peers more than prices in the possibility of bad trading news.

In actual fact, I reckon this represents an attractive jumping-in point for long-term investors. I am convinced that once the scale benefits of last summer’s mega-merger become apparent, the asset manager should rise again.

Indeed, City analysts are expecting the Footsie business to snap back into profits expansion on the back of the tie-up next year. And this bright outlook supports predictions that Standard Life Aberdeen will keep its progressive dividend policy ticking along. Last year’s 21.3p per share reward is expected to advance to 22.3p this year and again to 23.5p in 2019, figures that create monster yields of 7.3% and 7.7% respectively.

Flying high

The yields over at International Consolidated Airlines Group (LSE: IAG) may lack the bludgeoning power of those of Standard Life Aberdeen, but I believe the business still has what it takes to create stunning shareholder returns in the years ahead.

Last time I covered the stock in June I paid tribute to the efforts IAG is making to expand its presence in the low-cost airline segment both organically and through game-changing M&A. And the benefits of these twin drives were borne out in latest traffic statistics, the British Airways owner announcing that passenger numbers (as measured in revenue passenger kilometres) rose 9.1% year-on-year in June.

Also since I last wrote about IAG, the business launched its shorthaul Austrian subsidiary under the banner of its budget brand LEVEL, which will operate flights to 14 European destinations from its base in Vienna.

It’s not surprising that City analysts are expecting the FTSE 100 flyer to remain in earnings growth for the next couple of years at least, and this lays the bedrock for predictions of additional dividend expansion too — 2017’s reward of 27 euro cents per share is expected to move to 29 cents this year and to 32 cents in 2019.

These estimates create tasty yields of 3.8% and 4.2% respectively. When combined with IAG’s rock-bottom  forward P/E ratio of 6.8 times, I reckon the aviation colossus is a terrific buy right now.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group and Standard Life Aberdeen. 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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