No savings at 50? I’d buy cheap FTSE 100 shares to boost my retirement income

I reckon shares in the FTSE 100 (INDEXFTSE: UKX) could deliver decent returns in the years ahead following this stock market crash.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With all the uncertainty in the air, it may not seem like a good time to invest in shares right now. But the stock market crash has brought many FTSE 100 share prices down. And lower prices could lead to better value.

It’s true that some companies have been damaged by the coronavirus crisis. Just last week, for example, hotel and restaurant operator Whitbread announced a big rights issue aimed at raising around £1bn. And that dilution of existing shareholders should help the company emerge from the Covid-19 pandemic with a strong balance sheet.”  

The directors reckon the money will enable the company to “deliver on its strategy. And that includes plans to expand the hotel business in Germany. The share price is lower, and after research, you may decide the company is worth investing in now.

Cheaper FTSE 100 shares in strong sectors

But some sectors have not been as badly affected as the hotel and hospitality industry. Defensive operators have been trading well through the crisis. And it looks likely their businesses will remain strong after the crisis fades. So, if their share prices have weakened in the meantime, it could be worth analysing the opportunity to invest.

For example, some FTSE 100 stocks look interesting to me, such as British American Tobacco, Bunzl, Diageo, GlaxoSmithKline, National Grid, Unilever and SSE. Firms like these are not suffering as much as those in vulnerable sectors, such as International Consolidated Airlines and others.

If you are investing from the age of 50, one approach is to hunt for dependable dividend-paying companies. Then you can reinvest the dividends until you retire to compound your investment. And the current crisis has stress-tested companies. Many have slashed their dividends, but not all. If you can find a company that is still managing to pay a dividend, it could be a strong contender.

I’d also look for a multi-year record of strong cash flow, revenue and earnings. Ideally, those measures should have risen a little every year along with the dividend. And if you find some FTSE 100 companies like that trading with lower share prices than before the crisis, it could be worth investigating further.

Tax-efficient wrappers

If you decide to buy some shares after doing your own research, I’d recommend holding them in a tax-efficient wrapper such as a Stocks and Shares ISA or a Self-Invested Personal Pension (SIPP). Over time, you could see gains both from a rising shareholder dividend and from an elevating share price.

At 50 now, you’ll have the best part of two decades before being eligible to collect a pension from the government. And over that time, regular investment into selected FTSE 100 shares could help you compound your way to a decent-sized investment pot of money to help finance your retirement.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Diageo. 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.

More on Investing Articles

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »

Investing Articles

Dividend shares: 1 FTSE 100 stock to consider buying for chunky shareholder income

This company’s ‘clean’ dividend record looks attractive to me and I’d consider buying some of the shares to hold long…

Read more »

Investing Articles

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »