The Motley Fool

Have £2,000 to invest? This FTSE 100 growth and dividend stock could help you to retire early

Image source: Getty Images.

There’s no shortage of brilliant FTSE 100 big yielders that could make you a pretty penny in the near term but ultimately fail you in your attempts to build a juicy retirement nestegg.

Take Lloyds Banking Group, for example. It may have the financial strength to make good current dividend estimates through to the close of next year that yield more than 5% . However, the rocky outlook for the UK economy casts a cloud over the bank’s ability to keep paying above-average dividends.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

If I were seeking blue-chip stocks with a great dividend profile stretching long into the future, one of the stocks I would rather splash the cash on today is Halma (LSE: HLMA).

A safe pair of hands

Now the Footsie firm may not carry the same sort of formidable yields as Lloyds, but I remain convinced it is in much better shape to keep growing shareholder rewards year after year.

The company — whose mission statement is to provide products and services dedicated to “protecting life and improving the quality of life for people worldwide” — has grown dividends each and every year by more than 5% for the past 39 years.

And supported by predictions of further decent earnings growth (of 6% and 8% in the years to March 2019 and 2020 respectively), City analysts are not expecting this run to end any time soon. Last year’s 14.68p per share payout is anticipated to rise to 15.7p this time and again to 16.8p in fiscal 2020.

Record breaker

As I say, subsequent yields may not be enough to bowl you over, coming in at 1.1% and 1.2% for this year and next. But you can put the house on Halma making good on these near-term projections, unlike many of its Footsie compatriots and their own corresponding projections. That is particularly so as the yield would be covered 3 times by earnings through to the close of next year, sailing above the widely-considered security benchmark of 2 times.

Halma has posted record revenues and profits for 15 years on the bounce. Its broad range of products, supplied to a wide array of industries across the globe provides it with the sort of diversification essential for reliable earnings and thus dividend expansion year after year.

And the company’s commitment to mergers and acquisitions bolsters its chances of keeping the run going, Halma having spent £116m on five purchases last year and currently boasting a “healthy acquisition pipeline” with which to continue expanding the group. It certainly has the financial firepower to keep its M&A strategy rolling, adjusted operating cash flow improving 9% in the 12 months to March, to £190.4m.

At current share prices Hamla carries a forward P/E ratio of 28.9 times. While that is toppy on paper, I actually think that this is a snip given its proven pedigree as both a top growth and income stock.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.