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No retirement savings? I’d buy these 2 FTSE 100 stocks to retire on a passive income

Having no retirement savings can cause a significant amount of stress and worry. After all, the State Pension age is set to rise and the amount it pays per year of £8,767 is unlikely to sustain most retirees in the long run.

As such, buying a range of dividend stocks from the FTSE 100 could be a sound move. In many cases, they offer rising income payments and trade on low valuations.

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Here are two prime examples of such stocks that could be worth buying in a tax-efficient account such as a Stocks and Shares ISA today.

Barratt Developments

Despite improving investor sentiment since the general election, housebuilder Barratt Developments (LSE: BDEV) trades on a price-to-earnings (P/E) ratio of just 11.2. This suggests that it offers a wide margin of safety – especially while its recent trading updates have suggested that demand for its new-build properties has been robust, despite political and economic risks being high.

Looking ahead, the stock could deliver a rising dividend for its investors. It has a solid balance sheet, and may be able to afford to pay a large proportion of its profit as a dividend. And with low interest rates set to stay over the coming years, new-build properties may retain the high level of demand they have experienced over the past decade.

With a dividend yield of 5.8%, Barratt offers an impressive income return today alongside its growth prospects. Although the housebuilding sector may be negatively impacted by the planned end of the Help to Buy scheme in the current parliament, the stock’s wide margin of safety suggests that investors have factored this in to the company’s valuation. Therefore, now could be the right time to buy a slice of the stock for the long term.


Another FTSE 100 share that could deliver an impressive long-term income outlook is IAG (LSE:IAG). The British Airways owner has reported strong underlying results in recent quarters, despite suffering from industrial action and weak demand in some of its key markets.

Looking ahead, it is expected to raise dividends per share by 10% next year so that it has a forward yield of almost 6%. Certainly, there are many FTSE 100 companies that offer greater financial resilience and are far less cyclical. But with IAG having a strong track record of producing growing profitability and a rising dividend, it may deliver relatively high returns in the long run for investors who are able to look beyond its short-term volatility.

IAG is set to change its CEO in March. While this could mean there is a refreshed strategy ahead, its diverse operations and the prospect of rising demand for air travel over the long term mean that its financial prospects appear to be bright. Its price-to-earnings growth (PEG) ratio of 0.6, meanwhile, suggests that there could be capital growth ahead for the company’s shares, alongside a rising dividend.

A top income share with a juicy 5% forecast dividend yield

Income-seeking investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that’s throwing off gobs of cash!

But here’s the really exciting part…

Our analyst is predicting there’s potential for this company’s market value to soar by at least 50% over the next few years...

He even anticipates that the dividend could grow nicely too — as this much-loved household brand continues to rapidly expand its online business — and reinvent itself for the digital age.

With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.

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Peter Stephens owns shares of Barratt Developments. 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.