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Retirement savings: I’d buy these 2 FTSE 100 dividend shares to beat the State Pension

With the State Pension unlikely to be adequate to provide most retirees with financial freedom, buying FTSE 100 dividend shares could be a sound move.

Not only do they offer a higher income return than many mainstream assets today, their dividend growth potential over the coming years could mean that they produce an inflation-beating outlook

With that in mind, here are two FTSE 100 dividend shares that could be worth buying right now. They could improve your prospects of beating the State Pension through obtaining a growing passive income.


The recent half-year results from Aviva (LSE: AV) showed that the insurer’s performance has been mixed. While it has struggled in areas such as life insurance due to weak trading conditions, it was able to produce a rise in operating profit of 2% when compared to the same period of the previous year. This was partly due to its strong performance in general insurance.

Looking ahead, Aviva has a strong financial position that could help to improve its overall performance. In fact, it is aiming to further improve its balance sheet through debt reduction, while a restructuring may boost its efficiency and provide a stronger proposition for its customers.

The company’s dividend yield for the current year is around 7.4%. Its progressive dividend policy means that there is scope for an improvement in its dividend growth rate over the coming years.

Since the stock trades on a price-to-earnings (P/E) ratio of just 7, it seems to offer a wide margin of safety. This could lead to the prospect of capital growth over the long run as it delivers on its growth strategy. As such, now could be the right time to buy a slice of the business from a value and income investing standpoint.

DS Smith

Packaging company DS Smith (LSE: SMDS) released an upbeat trading update recently. It stated that trading conditions have been in line with those experienced in prior updates, with the company posting improving margin progression. Furthermore, it has been able to maintain a disciplined stance on costs that may lead to improving financial performance in the coming years.

Of course, the business faces an uncertain macroeconomic outlook. Risks such as a global trade war and Brexit could contribute to weaker levels of demand. However, the company’s dividend yield of 4.4% suggests that investors may be factoring in an uncertain future.

With DS Smith’s dividend expected to be covered twice by net profit in the current year, it seems to have ample headroom when making payments to its shareholders. As such, from an income investing perspective the stock could offer long-term appeal. Its forecast bottom-line growth over the next couple of years could lead to an improving dividend that makes it a worthwhile income investing purchase at the present time.

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Peter Stephens owns shares of Aviva. The Motley Fool UK has recommended DS Smith. 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.