Buying cheap UK shares after the stock market crash could be a sound strategy to improve your retirement prospects. Not only do they offer wide margins of safety, they also have the potential to enjoy recoveries as the prospects for the economy improve.
With that in mind, here are two FTSE 100 shares that appear to offer good value for money. Although they may face uncertain short-term prospects, their long-term performance could improve your financial position.
A dividend opportunity among UK shares
Income investing prospects among UK shares have deteriorated this year, with many FTSE 100 businesses cutting or reducing their shareholder payouts. As such, National Grid’s (LSE: NG) appeal could increase, with the utility company currently offering a dividend yield of around 5.7%. This suggests that it could provide an attractive income outlook, as well as good value for money.
Furthermore, the company’s annual results showed that it is investing heavily in its asset base. This led to strong asset growth of 9%, while it continues to make progress in improving its sustainability. This is being achieved alongside cost reductions that may improve the overall efficiency of the business.
Clearly, regulatory risks could negatively impact National Grid’s share price and income performance. However, its current valuation suggests that this may be at least partly factored in by investors, thereby making it an attractive stock relative to other UK shares for the long term.
Further FTSE 100 outperformance could be ahead
Rio Tinto’s (LSE: RIO) share price has risen by 3% this year. This is ahead of many other UK shares, as well as the FTSE 100’s 22% fall in 2020.
The mining company could deliver further capital growth. Its shares do not yet appear to be overvalued, since they offer a dividend yield of around 6% at the present time. Furthermore, the company’s recent half-year results showed that it has delivered a resilient performance despite an uncertain operating environment. Its solid balance sheet suggests that it can overcome a difficult economic outlook.
Therefore, now could be the right time to buy a slice of Rio Tinto. Although its financial performance may be relatively unpredictable over the medium term, its solid asset base and sound strategy may lead to further outperformance of other UK shares in the long run.
Buying stocks to retire early
Clearly, UK shares such as National Grid and Rio Tinto may not produce impressive returns in the coming months. Risks such as Brexit and coronavirus may hold back investor sentiment to some degree, and may even negatively impact on their operating outlooks.
However, over the long run, indexes such as the FTSE 100 have recovery potential. This could mean that shares outperform other mainstream assets such as cash and bonds. And they could offer the best opportunity to bring your retirement date a step closer.
Peter Stephens owns shares of Rio Tinto. 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.