If you’ve reached 40 years of age without any pension savings, there’s no need to worry. You still have plenty of time to save for retirement. Indeed, many FTSE 100 stocks could help you build a sizeable nest egg in the time you have left.
These companies offer long-term growth potential that could deliver substantial capital gains and a passive income in older age.
FTSE 100 income and growth
A FTSE 100 company that stands out right now is Bunzl (LSE: BNZL). This distribution and outsourcing group has an excellent record of producing attractive returns for investors.
Over the past decade, the stock has achieved an annual total investor return of nearly 14%. At this rate, you could double your money every five years. And it looks as if there’s a good chance Bunzl can repeat this performance.
Distribution is a tedious but essential business. However, it’s virtually impossible to start up a new distribution business overnight.
Because profit margins tend to be razor-thin, only the most significant players in the market can make the economics of the business work. This is especially true in the markets Bunzl dominates.
The company supplies consumable products such as food packaging, disposable tableware and catering equipment. The group also distributes cleaning products.
Individually, these goods don’t command a high price, but when sold in bulk, profit margins can be attractive. That’s Bunzl’s competitive advantage.
The company’s global distribution network allows it to sell at the best prices to customers, and negotiate discounts from suppliers.
The company’s advantage is the fact its clients trust it to deliver what they need on time at the right cost. So, it’s unlikely they’ll move their accounts to a competitor just because it’s cheaper. As such, customers are usually quite sticky. That’s another significant advantage of the Bunzl business model.
That said, the market for distributing small widgets isn’t growing particularly quickly. However, Bunzl has found a way around this problem. Over the past two decades, it’s acquired 157 businesses around the world with an average purchase price of £20m.
This deal strategy has helped improve revenues and profit margins as the company has been able to extract better economies of scale across the ever-growing group.
More acquisitions planned
Many more acquisitions are planned. According to management, Bunzl has identified at least 1,000 possible targets. Based on its past rate of deals, that gives the company enough potential acquisitions to last it for a few decades.
All of the above has helped the company achieve one of the most impressive dividend records in the FTSE 100. Its dividend has risen every year for several decades, and the stock currently supports a yield of 2.6%, its highest level in several years.
As such, now could be an excellent time for long-term income investors to snap up shares in this growth and income champion.
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Rupert Hargreaves owns no 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.