I’d buy these 2 FTSE 100 stocks to help me retire early in comfort

I want to give myself the option to retire early if I possibly can, and buying these FTSE dividend income stocks will help me achieve that goal.

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More people are working beyond 65 than ever before, but I would like to have the opportunity to retire early if I can. The only way I can do that is to save enough money for a sustainable retirement income, and I reckon FTSE 100 shares are a great way to do that.

In recent years, US tech stocks have grabbed the limelight. That is now going into reverse as investors wake up to the charms of the FTSE 100, as UK blue-chips offer a solid, steady income stream from dividends. That’s what I need to retire early.

Despite this year’s volatility, the index has escaped the stock market crash. It trades at a similar level to the start of the year. By contrast, the S&P 500 has fallen more than 20% year-to-date, and is in a bear market.

I’d retire early on these stocks

Yet a whole heap of FTSE 100 stocks are trading at cut-price valuations, while also paying hugely generous dividends. Better still, many of these dividends are comfortably covered by earnings, which makes them relatively secure.

One stock that jumps right out at me is insurer Aviva. It generates solid cash flows, year after year, from selling pensions, protection and general insurance. Yet it habitually trades at a low valuation. Right now, I can buy it at just 7.8 times earnings. Better still, this will give me a staggering income of 8.7% a year, covered 1.5 times by earnings.

Dividend income is never guaranteed. Aviva suspended its payout during the pandemic, although quickly restored it. Management knows how important the dividend is to shareholders, and will be reluctant to cut again except in extreme circumstances. The £13bn group recently reported “continuing momentum” in the six months to 30 June. Interim operating profits rose 14% to £829m. It looks steady enough for me.

The Aviva share price has not moved much over the years, although it has jumped 13% over the last 12 months. Over five years, it’s down 9%. I’m not buying Aviva shares for growth though. I’m sure that will come over time, but income is my main goal and this stock offers that in spades.

Oil giant BP is my second income pick. It is slightly more expensive than Aviva, trading at 13.7 times earnings. That is hardly surprising given that its share price has rocketed 47.75% over the last year. Five-year performance is less impressive at just 1% though.

I’m buying FTSE 100 dividend income shares

BP now faces the huge challenge of transitioning from fossil fuels to renewables. Like Shell, it has only made tentative steps so far. The energy crisis has shown that the world still needs plentiful oil and gas during this year’s energy crisis, but management cannot rely on that continuing forever.

While acknowledging the risks, I’m backing BP to make the leap. Frankly, management has no choice. But this doesn’t have to happen overnight. The income looks rock solid at the moment. BP’s forecast yield of 4.4% is covered a stunning six times by earnings. Usually, two times is seen as comfortable.

I’m now scraping together some cash to go shopping for shares, and when I have it, these two will be at the top of my list. My plans to retire early depend on them.

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.

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has no position in any of the shares mentioned. 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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