Forget a Cash ISA! I’d fund my retirement with these attractive FTSE 100 yields

I’d aim to compound my retirement pot by investing in solid-looking, dividend-paying shares like these.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The interest rates available from Cash ISA accounts have been dire for years. So instead, I’d aim to compound my retirement pot by investing in solid-looking, dividend-paying shares.

Here are two that I like the look of right now, and I’d aim to buy a few of their shares and hold them for the long term while reinvesting the dividends back in along the way. Such compounding, along with the potential for the share prices to rise, could combine to deliver a decent investing outcome for me over time.

Energy

Gas and electricity supplier SSE (LSE: SSE) expects earnings to improve going forward after a couple of years of declines. We should find out more with the half-year results report due next week. But one positive move the firm made recently was to agree to sell its energy services business to Ovo Energy for £500m. The deal is scheduled for completion by early 2020 and possibly before then.

The unit had struggled to make a profit and SSE plans to use the sale proceeds to pay off some of its borrowings, which I reckon is a good move because there’s a lot of debt. But the company is in the process of shifting its focus and plans to concentrate on developing its renewable energy and network assets, along with businesses aligned with such core activities.

Meanwhile, with the share price near 1,259p, the anticipated dividend yield stands above 6% after being rebased down a bit. But from this level, I reckon there’s a fair chance that future dividends will grow as the company’s business become stronger. I think SSE shares are attractive right now.

Medical devices

The share price of medical device manufacturer Smith & Nephew (LSE: SN) has dropped back more than 15% over the past couple of months. The strengthening pound against the US dollar could be to blame because the company reports its financial figures in dollars. Nevertheless, at the end of October, the company released a positive trading update.

Chief financial officer Graham Baker said in the report that the company produced organic revenue growth of 4% in the third quarter of the year. Trading in the first nine months had good momentum and the directors tweaked up their guidance on revenue for 2019.

Despite the share price weakness, operationally there doesn’t appear to be much wrong at Smith & Nephew. Meanwhile, at the beginning of November, the new chief executive Roland Diggelmann took over, and I always see refreshed leadership as a potentially good thing in companies.

With the share price at 1671p, the earnings multiple for 2019 is just under 21 and the anticipated dividend yield is around 1.8%. That’s not a bargain valuation, but the company has a strong multi-year financial record, and I reckon growth looks set to continue.

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.

Kevin Godbold has no position in any share mentioned. 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.

More on Retirement Articles

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

2 UK shares that could help set up a SIPP for decades!

Our writer explains the long-term appeal he sees in one British share he already owns in his SIPP -- and…

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

Here’s how I’m aiming to become a Stocks and Shares ISA millionaire!

I'm confident that a regular investment in FTSE 100 and FTSE 250 shares could supercharge the size of my Stocks…

Read more »

Investing Articles

3 top tactics that ISA millionaires use to strike it rich!

Ever wondered how ISA millionaires manage to make such enormous wealth? Here, Royston Wild divulges some of their greatest strategies.

Read more »

Investing Articles

Can a Stocks and Shares ISA help me retire early?

This Fool is confident that using his Stocks and Shares ISA will allow him to give up work early. Here…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Cash vs Stocks and Shares ISAs: here’s where I’m investing in 2024!

Cash and Stocks and Shares ISAs are both excellent products for the modern saver and investor. But which is the…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how I try to find brilliant shares for my SIPP

Christopher Ruane shares the approach he takes when hunting for shares to buy and hold in his SIPP as he…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

3 FTSE 100 and FTSE 250 stocks I’d buy to target a £31,188 passive income!

Royston Wild explains how a regular monthly investment in FTSE 350 stocks could be the key to long-term wealth creation.

Read more »

Investing Articles

How I’d try to turn a small ISA into £1,000,000 with this savings trick!

Regular investment in a tax-efficient Stocks and Shares ISA could be an effective way to build long-term wealth. It could…

Read more »