If you are building a portfolio of FTSE 100 stocks to get rich and retire early, the following two companies are worth a look.
Both are recovering from the Covid-19 crash in March, and could help you generate the capital growth and dividend income you need to build your long-term wealth.
FTSE 100 recovery stock
The Glencore (LSE: GLEN) share price has climbed a steady 20% in the last three months and today’s positive half-year production report suggests there could be more to come from this FTSE 100 stock.
The commodity sector has bounced back from the crash in March, amid hopes that China can lead the world out of the pandemic. Today, Glencore’s chief executive Ivan Glasenberg highlighted “an overall strong first-half operating performance amid the unprecedented challenges presented by Covid-19″.
The pandemic led to the temporary suspension of some of its operations, triggering a 15% decline in first-half coal production to 58.1m tonnes. Glencore’s marketing business has risen to the challenge by helping to deliver “robust counter-cyclical earnings”. Isn’t diversification lovely? As a result, Glencore has raised its full-year 2020 earnings expectations to the top end of its $2.2bn–$3.2bn guidance range. I wish more FTSE 100 stocks had such bullish prospects.
Glasenberg expects operating cash flow to remain solid, as it adapts to today’s unprecedented times, although net debt is up. Curtailed operations are now getting back to work. What Glencore needs now is a full-blooded global economic recovery, just like every other FTSE 100 stock. The decision on this year’s dividend has been suspended for now. We should know more in the third quarter. Fingers crossed!
The dividends will return
I’d also like to see insurer Aviva (LSE: AV) restore its dividend sooner rather than later. The FTSE 100 stock cut shareholder payouts at the peak of the crisis, when the banks were under direct pressure to do the same. Yet rival Legal & General Group felt able to stand by its payout.
While the Aviva share price has recovered slightly from the lows of March, progress has been tentative. It is up 10% in the last three months.
The pandemic has been hard on the group, which has had to pay a hefty number of claims during the lockdown, including for business interruption and travel insurance.
It still benefits from strong growth in bulk annuity sales, where it takes over the responsibility of running company pensions. Across the business, sales volumes looked set to be lower in the rest of the year, and it will struggle as people lose their jobs and businesses go under.
This FTSE 100 stock is incredibly cheap right now, trading at just six times forecast earnings. New CEO Amanda Blanc might just give this business the shake up it needs. Better still, the dividend will come back at some point, and can be generous after recent share price dips.
The Aviva share price still trades a third lower than this time last year. The recovery may take a little longer, so now could be a time to hop on board if you plan to hold for the long term.
By the time you retire, dividends from these two FTSE 100 stocks could be rolling in again.
