Anybody who loves top dividend stocks will struggle to resist going on a buying spree at the moment. The FTSE 100 is packed full of them.

Some of the yields on offer are astonishing. Housebuilder Persimmon currently yields 17.9%. That’s the best on the FTSE 100 but mining giant Rio Tinto isn’t that far behind, with a yield of 12.87%.

Fund manager Abrdn yields 9.37%, insurer Phoenix Group Holdings yields 9.07%, and builder Taylor Wimpey yields 9.05%. Wow.

I’m buying dividend stocks today

There are plenty more where those came from. In fact, I can hardly remember a time when yields were so high. But can I trust them?

A yield is calculated by dividing a company’s dividend by its share price. So if the dividend is 5p and the share trades at £1, the yield is 5%. This means that if the share price halves, say, to 50p, the yield doubles to 10%. 

As this basic example shows, a high yield is often the sign of a company in trouble. It signals both an opportunity, and a threat.

If stock markets are down generally and my chosen dividend stock has got caught up in the wider malaise, then I’ll see that as an opportunity. Loads of stocks fits the bill right now, thanks to this year’s global political and economic turmoil. 

But I would also work through its reports, statements, and updates, to see whether there are problems specific to that company. In particular, I would look to see whether management can afford to continue paying its dividend. The easiest way of doing this is to check dividend cover. This is calculated by dividing shareholder payouts by company earnings, but it can also be found easily online. 

Ideally, it will be covered twice or more. This figure is often lower with utilities, where earnings are typically more reliable, allowing companies to hand more of them to shareholders. A healthy level of cover is no guarantee, but it’s a promising sign that the company will be able to continue paying me passive income in future.

I would also look at other company numbers, such as the size of its net debt and of course the reliability of its free cash flows, which fund shareholder payouts. Similarly, I would prioritise firms with a lengthy track record of making dividend payments. Especially those who maintained them through thick and thin (and the pandemic, too). 

FTSE 100 offers amazing yields

Any company that increases its dividends year after year would be high on my list, as this gives me a rising passive income. While past performance is no guide to the future, it does offer reassurance.

As a general rule, I would prefer a company with a lower dividend that looks more reliable, than a higher dividend that is likely to be cut. When a dividend is cut for being unaffordable, the company’s share price tends to bleed, too.

Naturally, a host of other factors will determine whether the dividend is sustainable. A strong balance sheet, loyal customer base, unique brand, or popular products can all help secure those all-important cash flows. 

While I’m thrilled by all the top FTSE 100 dividend stocks out there right now, I’m doing some careful sums before buying them.

The post Can we really trust today’s high-yielding dividend stocks? appeared first on The Motley Fool UK.

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Harvey Jones holds shares in Persimmon. 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.

FTSE 100 dividend stocks pay some of the most attractive yields in the world. I believe their passive income stream offers investors one of the best ways of protecting their portfolio from skyrocketing inflation.

Inflation has just hit a 30-year high of 6.2%, and the Bank of England has warned it could top 8% this year. This is hitting our spending power and our savings. Today’s best-buy, easy-access account from Cynergy Bank only pays 0.84%. That’s why FTSE 100 dividend stocks are my go-to investment today.

Right now, the index as a whole yields 3.52%, which is pretty good. However, I’d like a higher return as inflation lets rip, and I’d start by investing in what I think is a top FTSE 100 dividend stock, Phoenix Group Holdings (LSE: PHNX).

I’d buy top FTSE 100 dividend stocks today

Phoenix buys up legacy life insurance and pension funds that are closed to new business, and manages them on behalf of members. It now services 14m policyholders and has been acquiring businesses too. It now owns Standard Life, ReAssure and SwissRe.

It is not a whizzy growth vehicle. The Phoenix share price trades 10% lower than five years ago. But the stock is a FTSE 100 dividend machine. Earlier this month, it increased its dividend by 3%, after cash generation exceeded expectations. It offers a forecast yield of 7.8%, covered 1.5 times by earnings. That should help me combat the inflation threat.

While I see Phoenix as a solid long-term buy-and-hold, no stock is without risks. Management has to rely on buying up more legacy funds or making acquisitions to keep this stock (and its dividends) rolling along. If it runs out of targets, shareholder payouts could take a hit. However, a low forecast valuation of just 7.7 times earnings makes this a risk I’m willing to accept.

I would match this by investing in another top FTSE 100 dividend stock, fund manager M&G (LSE: MNG). It was spun off from Prudential in 2019 and, in contrast to Phoenix, the M&G share price has shot up 95% in just two years. It was never going to maintain that breakneck growth, but it has held steady during this turbulent year.

I’d buy this inflation-busting stock too

Again, I wouldn’t buy M&G for growth. I’d buy it because I think it can establish itself as a top dividend stock for the long term. Today, it yields an incredible 8.5%, one of the highest dividends on the index.

M&G has challenges. Pre-tax profits dipped by £67m to £721m in the year to December, partly due to changing longevity assumptions. Management has been scrambling to cut costs, to maintain the bottom line and keep investors happy. Yet there is good news too. Dividends are not the only reward from investing in this FTSE 100 stock.

Earlier this month, management announced a £500m share buyback after generating £2.8bn of capital over two years. That comfortably surpassed its £2.2bn target. It hopes to generate another £2.5bn capital generation by the end of 2024. That could trigger another buyback. Fingers crossed.

M&G has a strong capital position too. I’m hoping this FTSE 100 stock can give me inflation-busting dividends for years to come.

The post I’ll fight inflation by investing in these 2 FTSE 100 dividend stocks yielding 8% appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares 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.

As inflation skyrockets, the State Pension is looking even more inadequate. Especially since Chancellor Rishi Sunak has suspended the annual triple lock uplift.

The triple lock increases the State Pension either by earnings, inflation or 2.5%, whichever is higher. Pensioners were on course for an 8% increase this year, as wages rocketed in the wake of the pandemic, until Sunak intervened.

I’d rather rely on UK shares

Sunak scrapped the earnings element of the triple lock, so that pensioners will get a rise of just 3.1% from April 6. With inflation set to hit 7.25% that month, according to the Bank of England, the State Pension will actually fall by £387 a year in real terms. UK shares can be risky too, but at least politicians don’t decide how much I get each year.

The State Pension is hugely important because it offers a steady, rising income in retirement. From April, it will pay up to £9,627.80 a year. I would need a portfolio of almost £200,000 to generate a similar-sized income. So it plays an important role, but it’s not enough to fund a comfortable retirement.

That’s why I’m investing in a balanced portfolio of global funds, to spread my risk and give me international exposure. I will complement this with a blend of UK shares.

I make regular monthly contributions into a personal pension and Stocks and Shares ISA, plus lump sums when I have spare cash. I particularly like to load up on UK shares in the wake of a stock market crash, when valuations are cheaper.

It’s never easy buying shares when stock markets are falling and everybody is panicking. I get round this by reminding myself that I am investing for the long term, at least 15 or 20 years. That allows plenty of time for stock markets to bounce back.

I will reinvest all the dividends from my UK shares for capital growth, while I’m still working. When I retire, I will draw them as income, to supplement my State Pension.

I’d buy these FTSE 100 stocks for passive income

There are loads of top FTSE 100 dividend stocks paying an incredible passive income to pensioners. Fund manager M&G currently yields staggering 8.60%, while insurer Phoenix Group Holdings yields 7.65%.

Admiral Group, Antofagasta, British American Tobacco and Abrdn all yield more than 6%. That’s around 10 times the return on the average savings account, even after last Thursday’s Bank of England base rate increase.

Incredibly, housebuilder Persimmon and global minor Rio Tinto yield more than 10% right now. Although I’m always wary when UK shares offer such dizzying yields, and would investigate them carefully before buying.

Naturally, UK shares can be risky. If markets crash, so will my portfolio. Some individual stock picks will inevitably underperform. Dividends can be slashed, as well as increased. There are absolutely no guarantees. But in contrast to the State Pension, that’s down to me, rather than the whims of the Chancellor of the day.

The post The State Pension will rise by less than inflation — that’s why I’m investing in UK shares appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended Admiral Group and British American Tobacco. 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.

It’s a tough call to make as there are so many top income stocks out there. Right now, fund manager M&G and housebuilder Persimmon both yield more than 10%. Imperial Brands and Rio Tinto yield more than 9%. Abrdn and Phoenix Group Holdings pay more than 8% a year. These are incredible returns, at a time when a best-buy easy-access savings account pays just 0.65%.

I’d buy this FTSE 100 Legal eagle

If I could only pluck one dividend stock from the index, I would go for Legal & General Group (LSE: LGEN). The £14.55bn insurance giant isn’t the whizziest stock, but it’s a solid name, with a solid business, and pays a solid level of passive income.

Today, L&G yields 7.2% a year, with dividend cover of 1.3 times. The forecast dividend yield is even more promising at 7.9%, with cover of 1.8.

It’s a pretty reliable dividend too. Unlike FTSE 100-listed insurers Aviva and RSA, L&G maintained its dividends through the pandemic. Management also kept staff on and shunned furlough support.

It didn’t emerge completely unscathed. The group’s final 2020 dividend payment was held flat due to Covid, and management also cut its dividend growth target for the next five years. Yet today’s passive income level still looks enticing to me.

What isn’t so enticing is its growth potential. The Legal & General share price trades at similar levels to five years ago. There have been up and downs along the way, but few signs of a breakout. Yet I’m looking for passive income here, rather than active growth.

The L&G share price crashed on Friday, by 5.62%, compared to a drop of 3.48% across the FTSE 100 as a whole. Yet I reckon current fears could be a buying opportunity, and L&G’s valuation looks tempting to me. It currently trades at a relatively low forward valuation of 8.3 times earnings, well below the FTSE 100 average P/E of 14.3. Its price-to-sales ratio is 1.1. That’s hardly demanding.

This is a top passive income stock

Legal & General is widely diversified across a broad range of personal finance areas, selling everything from general insurance and protection to investment funds, pensions, equity release and bulk annuities. It’s also a direct investor in housing and commercial real estate.

Interestingly, it’s one of just a handful of companies that continue to sell annuities, which could now swing back into fashion as interest rates finally pick up. The group is also well capitalised, and has forecast operating margins of 18.5%, and return on capital of 10.6%. This should help keep that passive income sustainable.

I’m not getting carried away. Legal & General is one of those stodgy, boring stocks that investors overlook when markets are flying. That may be an advantage right now. One year ago, it reported a 2% dip in full-year operating profits to £2.4bn. We will find out how well the last year has gone when it reports on Wednesday.

Another risk is that lack of share price growth — and the worse-than-average fall last week that I mentioned above. If it fails to grow in price, its dividends may not be enough.

Either way, I’d buy it for passive income ahead of any other FTSE 100 stock today. Then hold it for years and years.

The post If I could only buy one FTSE 100 dividend stock for passive income, I’d choose this appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended Imperial Brands. 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.

To generate around £800 a month in tax-free passive income, I need ISA savings of £240,000. How do I know that? Thanks to an often overlooked investment benchmark called the 4% rule. Put simply, this states that if I withdraw 4% of my retirement portfolio as income each year, my pot will never run dry.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

How I’m building a passive income for retirement

The 4% rule assumes average investment growth of 7% a year, including dividends. If I withdraw 4% a year and inflation averages 3%, my portfolio will stay roughly the same size. Of course, none of those figures are guaranteed, but a target of £240,000 in ISAs looks just about doable, at a stretch. And 4% of that is £9,600 a year, or £800 of monthly passive income. It’s not riches, but it’s better than relying purely on the State Pension.

So much for rules. I will also have to knuckle down and build enough ISA savings to generate my target income. There’s still a way to go, but I’m taking advantage of current stock market volatility to top up my portfolio. I need to act fast, because the annual ISA deadline is just one month away, at midnight on 5 April.

The FTSE 100 is one of the best stock markets in the world for dividends, and I’m underpinning my portfolio with a couple of top equity income funds. I’m a long-standing fan of the City of London Investment Trust, and it’s about time I bought it. Its current yield is a rather splendid 4.48%. The ongoing charge is just 0.38%, so I’d get to keep most of that juicy passive income for myself.

I’m also investing in FTSE 100 stocks

City of London has even started to generate some growth, as the FTSE 100 swings back into favour, rising 15.4% in a year. I’ve been investing in the Rathbone Income fund for years. Its yield is lower at 4.06% and charges are higher at 0.75%, so I may rethink this choice, but it has grown steadily for the 15 years I’ve held it, and I’m reluctant to let it go.

To generate the rest of my passive income, I would look to build a portfolio of individual FTSE 100 stocks. I like the look of Lloyds Banking Group right now, as rising interest rates should boost its net lending margins. Yet it still trades at a dirt-cheap P/E of just 6.1 times earnings. The dividend yield is now 4.34%, and I expect that to continue climbing.

Oil giants BP and Shell are rising along with the oil price, and I’d buy them both, along with passive income heroes including mining giant Rio Tinto, financial firms M&G and Phoenix Group Holdings, housebuilder Persimmon and mobile phone operator Vodafone.

Of course, I have to remember that each of these stocks comes with risks, both sector- and company-specific. But I feel that owning a basket of them mitigates some of the risk for me.

I hope that the 4% rule will serve me well when the time comes to retire.

The post I’m targeting £800 a month passive income from dividends thanks to this forgotten rule appeared first on The Motley Fool UK.

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Harvey Jones holds Rathbone Income but has no position in any of the shares 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.

Insurer and asset manager Legal & General Group (LSE: LGEN) is possibly my number one British dividend income stock. To its credit, L&G continued to reward loyal shareholders throughout the pandemic, even when rival Aviva bowed to pressure and cut its dividend. 

Today, L&G offers a thumping forward yield of 6.5%. With the average savings account paying 0.06%, that is a mighty return. Naturally, as with all dividends, there are no guarantees. However, the payout is covered 1.7 times by forecast earnings, which boosts my confidence.

I’d buy these two FTSE 100 stocks

Legal & General didn’t survive the pandemic completely unscathed. In March, it reported a 3% drop in annual operating profits to £2.21bn, while it has set aside an extra £110m to cover claims caused by mutant Covid strains. Yet its fund management arm has done well, with assets under management increasing 6.9% to £1.3bn. Better still, the underlying business remains solid, with capital levels climbing to a meaty 192%. This could free up funds to invest in faster growth opportunities.

As well as being a top British dividend income stock, the Legal & General share price has delivered growth as well. It is up 36% over the last year, although five-year growth is actually lower at 20%. For me, L&G is mostly about income, and on that front, it delivers.

I am sticking with the insurance industry for my next pick, Phoenix Group Holdings (LSE: PHNX). This also merits the title of top British dividend income stock for maintaining payouts through last year’s woes. Today it yields 6.6%, although cover is slightly thinner at 1.3 times earnings.

I’d buy this top British dividend income stock, too

Phoenix is a different creature to L&G. Its strategy is to buy up old life insurance and pension funds that are closed to new business, and run them on behalf of members. The more it buys, the greater the economies of scale. It now services 14m policyholders.

The Phoenix share price is never going to shoot the lights out. The income is the attraction here, as the share price has climbed just 15% measured over both one and five years. Management knows that, and kept investors onside by taking advantage of record £1.7bn cash flows to hike its annual payout by 3%.

The challenge is that Phoenix must keep buying up legacy life pension and life funds in order to keep growing and funding those dividends. So I am pleased to see that it also has an ‘open’ business offering pension and investment products to new customers, under the Standard Life brand. In 2016, it acquired SunLife from Axa. This diversification should help it remain a top British dividend income stock over the longer term.

The post 2 top British dividend income stocks I’d buy today appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares 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.

I was delighted, given that it’s now one of my favourite FTSE 100 stocks. However, I wouldn’t buy it for share price growth, because it hasn’t delivered much of that. I’d buy Phoenix for its yield. Currently, it pays income of 6.53% a year, at a time when the average instant access account pays 0.18%.

That makes it an attractive way to build my retirement wealth. I’ll reinvest those dividends to buy more stock while I’m working, then draw them as passive income after I retire.

Phoenix dividend rises

Phoenix is an insurer, but one with a different take to other FTSE 100 stocks in this sector. It buys up old life insurance and pension funds that are closed to new business, and manages them on behalf of members. This should be good news for policyholders, as managers who also run funds that are open to business treat legacy products as second best.

As Phoenix doesn’t rely on investor inflows, it should (in theory) have protection against a downturn. On the other hand, it needs to keep making acquisitions in order to grow. The more funds it can snap up, the greater the synergies and economies of scale.

Earlier this month, Phoenix posted record annual cash generation of £1.7bn. Better still, it’s now expecting cash generation of £4.4bn by 2023, up from its original £4.2bn target. This is good news for shareholders, because it’s the cash that keeps the dividends flowing. Dividends rose 3% last year and a cover of 1.5 adds to the impression of a really solid FTSE 100 dividend stock.

Assets under administration increased 36% to £338bn, boosted by the acquisition of ReAssure in 2020. That also helps.

One of my favourite FTSE 100 stocks for dividends

As with every stock, there are risks. Phoenix is buying the Standard Life brand from Standard Life Aberdeen, while its SLAL UK investment products move the other way. Integrating new purchases is always challenging. Also, there’s the wider risk of rising inflation and interest rates, which could hit stock market returns and knock the company’s cash flow projections.

Phoenix also has to keep finding attractive acquisitions to grow revenues. Success is not always guaranteed.

The Phoenix share price may never shoot the lights out, although it’s up a solid 12% on a year ago. I still expect dividends to provide most of my returns over the long term, and that’s fine by me. I reckon this is one of the very best FTSE 100 stocks for income, and that offsets my other worries.

Even better, Phoenix has a healthy balance sheet and strong capital coverage, while leverage of 28% is comfortably within its target range.

I’d buy and hold this FTSE 100 dividend stock for the long term.

The post Why I’d buy top FTSE 100 stocks like this one to give me a passive income in retirement appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares 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.

New figures from Charles Stanley show how investors get a much better return from shares. If you had invested £10,000 in global markets in 2010 the money would now be worth £30,742. In a savings account, it would have grown to just £11,230. I’m hoping the following two FTSE 100 stocks will make my money work far harder than any savings account.

While many FTSE 100 stocks scrapped their dividends during the early stage of the pandemic, Edinburgh-based fund manager Standard Life Aberdeen (LSE: SLA) made a virtue of standing by its shareholder payouts. Chairman Sir Douglas Flint acknowledged that many of its small shareholders rely on a dividend cheque, and felt a duty to pay them if possible. Better still, the company was in a position to do so. It has £1.7bn of cash reserves, recently bolstered by the sale of its £237m stake in Indian financial services firm HDFC Life.

I’d buy this dividend hero today

That gives me the confidence to believe that Standard Life Aberdeen will remain a reliable income payer. The forward yield is currently 6.1%. However, payouts could be reduced in future, as the yield is only covered 0.8 times by projected earnings. Even if it is trimmed back, this top FTSE 100 income stock should still offer attractive income.

The Standard Life Aberdeen share price has recovered steadily since March, despite recently reporting a 30% drop in first-half profits. Assets under management fell due to market declines and customers exiting for safer assets, but this has been an exceptional year. If the vaccines do their work, 2021 should be better. Whenever the recovery comes, I believe Standard Life Aberdeen will still give me long-term income and growth.

Another FTSE 100 financial services stock, insurance consolidator Phoenix Group Holdings (LSE: PHNX) offers an even more generous forward yield of 6.6%. Better still, it is covered 1.8 times by earnings. It has also recovered strongly from this year’s stock market crash, climbing 50% from its March lows.

I’d check out this FTSE 100 stock too

Earlier this month, Phoenix reported beating its cash generation target for 2020, after generating £1.71bn compared to £707m in 2019. It already had a strong balance sheet, but has increased its Solvency II surplus by another £600m in the three months to 30 September. It may raise a further £578m amid reports that buyers are circling its Irish and German operations.

Phoenix isn’t even expensive, trading at just 8.4 times forward earnings. That gives me another reason to buy it rather than leaving my money idling in cash. Yes, this has been a tough year for FTSE 100 dividend stocks, but as these two financial services companies show, the income is still out there.

The post Forget cash! I’d buy these brilliant FTSE 100 stocks for their 6%+ yields appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares 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.

Insurance consolidator Phoenix Group Holdings (LSE: PHNX) is one of my favourite stocks on the FTSE 100 index. It is underpinned by a solid business proposition. Basically, it buys up old life insurance and pension funds that are closed to new business, and manages them on behalf of members. The more it buys, the greater the economies of scale.

The Phoenix share price was unfairly hammered during the March stock market crash but has mounted a solid recovery, climbing 20% in the last three months. The main attraction is its dividend. Right now, it yields 6.93%.

Phoenix rises from the stock market crash

That payout looks pretty secure, with management today announcing “strong” first-half cash generation of £433m, up from £287m last year. Cash generation was boosted by the recent acquisition of Swiss Re AG’s UK unit ReAssure. Phoenix is able boast a winning combination of “cash, resilience and growth”, something few other companies can say right now.

In a further sign of its resilience in the stock market crash, the group’s Solvency II surplus climbed from £3.1bn at the end of last year to £4bn on 30 June. Its shareholder capital coverage ratio climbed from 161% to 169% over the same period.

Group operating profit grew 11% to £361m. While the Phoenix share price is unlikely to shoot the lights out, its generous dividend should keep them burning nicely. A rare ray of hope amid today’s dividend darkness.

Another top FTSE 100 dividend stock

The M&G (LSE:MNG) share price has recovered at an even faster pace after being caught up in the stock market crash. It is up 33% over the last three months. Once again, it combines financial strength with a meaty dividend. Right now, M&G yields 7.22%. Who says you cannot generate income from FTSE 100 stocks these days?

The FTSE 100 newcomer has a solid shareholder Solvency II coverage ratio of 168%, and affirmed its commitment to continue paying dividends. As with Phoenix, the investment manager has not put any staff on furlough or tapped into government support.

While the pandemic has not completely passed these companies by, it has certainly left them relatively unscathed. Assets under management at both companies will fell in the stock market crash, again, the damage was minimal.

M&G also operates a closed fund, the Prudential UK life insurance and annuity book, which generates steady cash flows. It is aggressively seeking out new growth opportunities, buying a wealth management platform from Ascentric, which has £14bn of assets under management. Last month, it launched a £183m bid for home loans platform UK Mortgages.

It’s hard to believe that you can buy two solid FTSE 100 stocks yielding 7% right now, but you can. And I would.

The post Stock market crash winners: I’d buy these 2 solid FTSE 100 stocks for their 7% yields appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares 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.

Prudential

Insurance giant Prudential (LSE: PRU) is one of my most successful stock trades, doubling my money in just a few years. I took my profits four or five years ago, and got my timing right, because its stock has idled since then.

This leaves the Prudential share price trading at a bargain valuation of just 8.8 times earnings, less than half the average valuation across the FTSE 100, which is currently 18 times earnings.

Now is a tempting entry point but why has the Prudential dipped like that? A key (and innocent) reason is that it recently peeled off its fund management arm, M&G, into a new business, a split that led to an instant 10% drop in the Pru’s share price.

Slimmed down Prudential has massive growth potential, as it looks to build on its strong position in emerging markets and Asia, where the fast-growing middle class population does not have state benefits to fall back on, and needs to buy its own pension and protection products. This gives the £36bn group a huge market to go for, and it recently struck a new deal to sell life insurance to customers of Vietnam’s Southeast Asia Commercial Joint Stock Bank.

Prudential currently yields income of 3.6% a year but dividends should continue to increase steadily, with earnings expected to rise 7% this year, then another 7% in 2021. Asia looks set to grow at a faster pace than the West. The Pru could be a good way to play that opportunity.

Phoenix Group Holdings

Phoenix Group Holdings (LSE: PHNX) is one of the unsung dividend champions of the FTSE 100. The £5.55bn group is a closed life assurance fund consolidator, which means it buys up life and pension funds that other insurers have closed to new business, and continues to run them for policyholders.

This means it does not have to spend any money marketing its services to new customers, but can focus its efforts on quietly managing existing funds, while using its size to cut costs and boost efficiencies.

This is a steady, conservative business whose main attraction is the regular stream of dividend income you should receive, which you can reinvest back into the stock to build your pension wealth, then take as income after you retire. Phoenix offers an attractive current yield of 6.2%, comfortably above the FTSE 100 average of 4.3%. 

Investors have enjoyed share price growth as well, with the stock up 20% over the last year. Despite this, the Phoenix share price isn’t expensive, trading at 11.4 times earnings.

Combined or individually, stocks like these two could set you on the way to building the pension you need in retirement.

The post No savings at 50? I’d buy these FTSE 100 dividend stocks to retire on a passive income appeared first on The Motley Fool UK.

More reading

• How much is needed in a Stocks and Shares ISA to aim for an income of £9,874 a year?
• How these 2 dividend shares could help an ISA investor target a £1,639 income in 2026
• How big a Stocks and Shares ISA is needed to target a £2,932 monthly passive income?
• How many Standard Life shares must an investor buy to give up work and live off the income?
• Here are the secrets behind the FTSE 100’s success!

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.