The Motley Fool

I think buying these top UK FTSE 100 dividend stocks could help you retire early!

Diversifying a stock portfolio doesn’t have to be overly complicated, and needn’t involve buying complex investment funds that inevitably come with high fees. In fact, I think it’s perfectly possible to achieve a good degree of diversification by investing in just a handful of FTSE 100 mega-cap stocks.

For best results, I’d pick the best stock from each sector of the FTSE 100, or rather from the sectors that are poised to do well. Picking the best stocks from the best sectors is effectively a form of selective diversification.

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...

Despite the Brexit gloom, we investors shouldn’t forget that the UK is home to some of the world’s biggest and best companies.

Mega caps

These mega caps tend to have a few things in common. They are hugely profitable billion-pound companies with a track record of producing predictable and reliable financial results. Their sales are split across the world, with the majority originating from outside of the UK.

Crucially, they are big dividend payers and have demonstrated an ability and willingness to grow dividends over time. Importantly, they all have brand strength that protects revenues from competitors and economic downturns.

From the insurance sector, I’d pick Prudential for its exposure to emerging markets. It’s the largest pan-Asian insurer and has a strong presence in the huge US market. Over in the consumer goods sector, Diageo is similarly well diversified from a geographical viewpoint, and has some serious brand strength too.

I’d choose International Airlines Group from the travel sector. As well as being attractively priced, the group also offers diversification, and looks set to benefit from the expected continued growth in air travel.

While AstraZeneca shares are by no means cheap, they would be my top pick from the pharmaceutical sector. The pharma giant has a strong drugs pipeline, with a growing oncology business.

Experian would be my top stock from the technology and information services sector. The information and analytics provider operates in a growing market, and is well exposed to the huge US market.

Despite being more UK-focussed than my other picks, Lloyds is my favourite of the large banks, with a net interest margin and cost to income ratio that compares favourably to any of its competitors. Now the August PPI deadline has passed, I think financial performance can only improve.

In the energy sector, I’d go with Shell, for its impressive cost control and focus on cash generation. JD Sports – from the retail sector – would be my final pick. As well its track record of growing profits, a recent US acquisition now gives it both scale and geographic diversification.

Market outperformance

Since the start of the year, this portfolio would have risen in value by 22%, comfortably beating the FTSE 100’s gain of 9%.

What’s more, this portfolio contains some huge dividend payers and has an average yield of nearly 4%. I think this is just another reason why this could be a good all-weather stock portfolio to survive Brexit and beat the market in the long run.

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...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Thomas owns shares in Royal Dutch Shell. The Motley Fool UK has recommended AstraZeneca, Diageo, Experian, Lloyds Banking Group, and Prudential. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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.