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2 FTSE 100 dividend stocks I’d buy in a Stocks and Shares ISA today to beat the State Pension

Buying FTSE 100 shares to build a retirement nest egg could be a sound move. After all, the State Pension amounts to just a third of the average income in the UK, while the age at which it starts being paid is set to rise to 67 over the coming years.

With that in mind, here are two FTSE 100 shares that appear to offer good value for money. They also have relatively high dividend yields that could boost their total returns in the long run and enable you to enjoy a greater amount of financial freedom in older age.

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The recent trading update from SSE (LSE: SSE) showed that the company is on track to meet its financial guidance for the full year. In addition, it expects to pay a dividend of 80p per share, which equates to a yield of around 5% at its current price. It also committed to its dividend payment plan over the next three years, which could see its dividend payments increase by at least as much as inflation over the medium term.

Looking ahead, SSE could deliver improving financial performance. Its pivot towards renewables is continuing, and it expects to cease production at its last coal-fired power station in March. Following the sale of its domestic energy supply business to Ovo Energy, SSE now has no exposure to the highly competitive sector. This could reduce its risk, since it may be less impacted by regulatory change.

Moreover, renewables are likely to become an increasingly prominent part of the UK’s energy mix. Therefore, SSE may enjoy an improving financial performance over the long run that is reflected in a rising dividend and a higher share price.


Another FTSE 100 share that could deliver high returns in the long run is BHP (LSE: BHP). The mining company recently released an encouraging production update for the first half of its current financial year. It delivered solid operational performance across its portfolio, and expects its overall production to be slightly ahead of the previous year.

Additionally, BHP’s cost guidance has remained unchanged from its previous update. This is expected to contribute to a rise in its bottom line of 12% versus the previous year. Since the stock trades on a price-to-earnings (P/E) ratio of 11.4 and has a dividend yield of 6.1%, it seems to offer good value for money at the present time.

Looking ahead, risks from the spread of coronavirus could hold back the growth prospects for the world economy. This may cause a decline in investor sentiment towards the wider mining sector. However, BHP’s solid financial position and its diverse portfolio of assets could enable it to overcome the near-term challenges it faces. As such, now could be the right time to buy it while it appears to offer a wide margin of safety.

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

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

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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 SSE. 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.