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I’d buy these FTSE 100 stocks for a retirement portfolio today

Legal & General (LSE: LGEN) might not be the most exciting business in the FTSE 100. However, if you are looking for stocks to include in your retirement portfolio, then this boring business should undoubtedly be on your watchlist.

What I like about this pension and savings provider is the fact that it is a business with long-term investing at its heart. The company has been around for more than 100 years and during this time, it has become a stalwart of the UK financial sector. It manages more than £1trn of assets for clients around the world and was the first UK asset manager to meet this lofty target. 

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Focused business

Life insurance and pension management is a tricky business because there is so much that can go wrong.

Legal promises clients an income in retirement, and the company cannot afford to renege on this promise. So, management has to invest clients’ money sensibly with a three or four-decade time horizon to make sure that when the time comes, it can meet its obligations.

Sensible, long-term investing is the name of the game for the company, and that’s why I think it could make a perfect addition to your pension portfolio. At the time of writing, shares in the group trade at a forward P/E of just 6.9 and support a dividend yield of 8.3%. I think that’s a steal for such a high quality, FTSE 100 business with more than 100 years of history behind it.

Undervalued  

Another FTSE 100 company that I’m eyeing up for my pension portfolio today is Reckitt Benckiser (LSE: RB). The market has recently fallen out of love with this consumer goods business after outgoing chief executive Rakesh Kapoor cut his full-year revenue growth target on a slow start to the year.

The company is now targeting full-year like-for-like net revenue growth of 2% to 3%, down from 3% to 4% previously. That’s not a big decline, but it is enough to concern City analysts. 

Still, while Reckitt’s near-term outlook may not be as rosy as analysts had wanted it to be, I think the company has excellent long-term potential, and this is why I’m recommending it for your retirement portfolio today.

Looking past the headwinds, Reckitt owns some of the most recognisable consumer brands in the world, including Mucinex, Nurofen and Dettol, and it is a tremendously profitable business. The firm’s profit margin has averaged 24% per annum for the past six years, compared to 8% for the London market average. 

However, despite the company’s advantages, it is currently dealing at a forward P/E of just 17.2. This might seem expensive, but compared to its close peers, such as Unilever, Reckitt now looks cheap. Indeed, shares in Unilever are currently dealing at a forward P/E of 20.7. I see no reason why shares in Reckitt cannot command the same valuation when it overcomes the current issues facing the business. On top of the attractive valuation, the stock also supports a dividend yield of 2.9%. 

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Rupert Hargreaves owns shares in Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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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