Having no savings at age 40 doesn’t necessarily mean you’ll be reliant on the State Pension in older age. There’s still time to build a surprisingly large nest egg from which to draw a passive income in retirement.
With the FTSE 100 currently appearing to offer a number of stocks that trade on attractive valuations and which have improving financial prospects, now could be the right time to start building a retirement portfolio.
Here are two prime examples of large-cap shares which could produce impressive total returns in the coming years.
The recent performance of commercial property business Landsec (LSE: LAND) has been relatively encouraging. Its share price has risen by over 20% in the past six months, while its half-year results highlighted the progress it is making in delivering on its strategy.
For example, around a third of its £3bn development pipeline is now on site, while its pivot towards flexible office opportunities has certainly resonated with customers. This could provide it with improving financial performance at a time when demand for retail units has continued to be weak.
Looking ahead, a difficult outlook for bricks-and-mortar retailers could weigh on the company’s financial performance. Evidence of this can be seen in its financial forecasts, with Landsec expected to produce a slight fall in its net profit over the next couple of years.
However, even after its recent share price rise, the company still appears to offer good value for money. It trades on a price-to-book (P/B) ratio of 0.7, which suggests that it offers a wide margin of safety. In addition, it has a dividend yield of 5%, which could mean that it has the capacity to deliver an impressive total return in the long run.
Another FTSE 100 share that could offer high returns in the long run is easyJet (LSE: EZJ). Its recent quarterly update showed that its costs were aided by its self-help initiatives, while robust customer demand enabled it to report resilient revenues.
Looking ahead, the company could continue to deliver improving financial performance. Its investment in sustainability and in achieving cross-selling opportunities from the launch of its holidays business could strengthen its competitive position still further.
With the company expected to post a rise in its bottom line of 19% in the current year, and 13% next year, its price-to-earnings (P/E) ratio of 13.9 suggests it offers a wide margin of safety. Although it may lack the financial consistency of some of its FTSE 100 peers, it nevertheless could have income investing potential as a result of its 3.5% dividend yield.
As such, now could be the right time to buy a slice of the stock while it appears to offer a mix of income, growth and value appeal for the long term.
The post No savings at 40? I’d buy these 2 FTSE 100 dividend stocks to beat the State Pension appeared first on The Motley Fool UK.
Peter Stephens owns shares of easyJet and Landsec. The Motley Fool UK has recommended Landsec. 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.
Motley Fool UK 2020
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