The Motley Fool

Worried about the State Pension? These FTSE 100 stocks could be good additions to your portfolio

Relying solely on the State Pension is not a realistic retirement plan. To compound your wealth and avoid retirement poverty you should consider investing your hard-earned cash, and letting it work for you. By putting your savings into a Cash ISA, and gradually increasing the size of your portfolio, you can increase the probability of an easy retirement. Let’s look at two FTSE 100 stocks that could be good additions to your Stocks and Shares ISA.


Shares of FTSE 100 heating and plumbing equipment distributor Ferguson (LSE: FERG) are currently priced at around 6,100p a share. The company recently reported promising results in its latest trading update, which give shareholders a reason to cheer, given the wider uncertainty around the housing market. 

Total annual revenue was up 7.9% year-on-year, and up 4.4% on a like-for-like basis. More specifically, Ferguson showed great growth in its US segment, which accounts for over 80% of its total revenue. US revenues were up by 10.1% year-on-year, outstripping overall market growth. Ferguson’s significant US exposure makes it a comparatively safer UK-listed housing pick for investors who are concerned about a potential no-deal Brexit, and all the disruption that that would imply for the real estate industry domestically. 

CEO John Martin, who will be leaving Ferguson later this year, said that although US market growth is “broadly flat”, he expects that the company will “continue to outperform”, based on incoming orders. Additionally, Ferguson has been extremely active in pursuing mergers and acquisitions, inking 15 deals over the last year to the tune of £537m. Much of this activity was financed by endogenously-generated cash, which has allowed the heating specialist to keep its debt levels low. 

Shares of Ferguson currently trade at a P/E multiple of 11.5, making it a bargain compared to the FTSE 100 average of 17.8. 

Admiral Group

With a P/E ratio of 15.5, shares of Admiral Group (LSE: ADM) are not as cheaply-valued as those of Ferguson. However, there are other reasons for shareholders of this auto insurer to be hopeful about its prospects. For one thing, it has made big strides in attracting customers from outside the UK, which gives it a similar Brexit buffer to Ferguson. For another, it has an excellent history of rewarding shareholders with dividend payouts — in its latest trading update back in July, it announced that it would be distributing 100% of earnings back to owners.

Shares of Admiral currently trade at a dividend yield of 4.3%, and have demonstrated impressive dividend growth over the last few years. As reported by my colleague Rupert Hargreaves, Admiral’s total annual distribution has grown at a compound rate of 14% from 47p a share in 2013 to 90p in 2018. This has been one of the reasons for the stock’s steady upward march over the last five years — since 2014, it is up almost 60%. As such, I think that Admiral is an excellent pick-up for income investors looking for some shelter from Brexit-related downturns. 

High-Yield Hidden Star?

Discover the name of a Top Income Share with a juicy 7% forecast dividend yield that has got our Motley Fool UK analyst champing at the bit!

Find out why he thinks “the stock’s current weakness may offer us the chance to buy a proven dividend performer at what could be a bargain price”.

Click here to claim your copy of this special report now — free of charge!

Stepan Lavrouk owns no shares mentioned. The Motley Fool UK has recommended Admiral Group. 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.