2 FTSE 100 dividend stocks I think could boost your retirement income as the State Pension age rises

These FTSE 100 (INDEXFTSE: UKX) income heroes could help protect you from poverty in retirement.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

I don’t know about you, but I wouldn’t bet on the State Pension helping me to survive once I retire, let alone enjoy the comfortable retirement that I’ve always dreamed of.

The situation is becoming more and more perilous as well. The age at which Britons can look forward to retiring is edging further and further away and many of us will be knocking on the door of our eighth decade before we can think about throwing out the work uniform.

I don’t fancy working until I’m a septuagenarian, or having to scrimp and save once I finally retire. I’ve taken the bull by the horns and recently bought into some more brilliant FTSE 100 dividend stocks I’m confident could make me a fortune by the time I come to retire.

Should you invest £1,000 in Royal Mail Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Royal Mail Group made the list?

See the 6 stocks

A quality selection

There’s a number of other income heroes that I’m very tempted to snap up too, like product testing giant Intertek Group (LSE: ITRK).

Financials this week disappointed brokers a little as the firm declared a 4.5% uptick in organic revenues during the three months to October. This didn’t bother me, though — there is a galaxy of structural growth opportunities that should allow Intertek to continue expanding the top line long into the future.

As it noted this week, “an increased focus of corporations on risk management, global trade flows, global demand for energy, expanding regulations, more complex sourcing and distribution operations, technological innovations, government investments in large infrastructure projects, and increased consumer demand for higher quality and more sustainable products.”

The indispensable quality assurance industry is already big business and is only going to get bigger and bigger as the global economy grows. City analysts expect an anticipated 1% earnings improvement for 2018 to increase to 8% next year, and this also means the company’s über-progressive dividend policy is predicted to remain in business as well.

Last year’s 71.3p per share reward, which itself was up more than 14% year-on-year, is likely to rise to 92.7p in the current period, or so say the number crunchers. And it’s expected to rise to 103.2p in 2019, meaning that 2018’s 1.9% yield jumps to 2.1% for next year.

The 7% yielder

If you’re looking for bigger yields though, and aren’t frightened of going against the grain, then Royal Mail (LSE: RMG) could be worth your attention.

The Footsie courier’s share price has almost halved in a little over six months as investors have feared the impact of a slowing UK economy on Royal Mail’s top line and have reacted to the firm’s missed cost-saving targets.  

There’s no doubt that these issues could carry over to 2019, but I still believe that the company’s long-term outlook remains robust as the growing internet shopping arena blows parcel volumes higher (these rose 6% in both the UK and at its GLS European division during the first fiscal half).

The bad news is that City analysts expect group earnings to fall in both of the years to March 2019 and 2020. But a bright outlook thereafter means that dividends are expected to keep heading higher — last year’s 24p per share reward is predicted to move to 24.6p this year and to 25.3p in fiscal 2020, meaning juicy yields of 7.5% and 7.7% respectively. Despite its current problems Royal Mail, like Intertek, is a share I’d be happy to buy now and hold until I retire.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. 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

Investing Articles

Here’s what £20,000 invested in IAG shares at the start of 2024 would be worth today

IAG shares smashed the FTSE 100 in 2024, and Harvey Jones is kicking himself for squandering this buying opportunity. But…

Read more »

Investing Articles

BP shares are forecast to return 30% in 2025 – and they’re filthy cheap with a P/E of 5.8!

Harvey Jones bought BP shares twice in the autumn and after a bumpy start he expects great things in the…

Read more »

Investing Articles

At a P/E ratio of 8, are shares in this FTSE 100 winner unbelievable value?

3i is a top-performing UK stock that trades at a P/E multiple of 8. Should value investors be snapping up…

Read more »

Investing Articles

Best British growth stocks to consider buying in 2025

We asked our freelance writers to reveal the top growth stocks they’d buy in 2025, which included two 'Fire' recommendations!

Read more »

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

2 shares to consider for turning an empty ISA into a £31,301 a year passive income machine

Earning passive income doesn’t take huge amounts of cash to start with. Investing in great companies consistently over time can…

Read more »

Investing Articles

What £20,000 invested in BT shares at the start of 2024 is worth now…

BT shares enjoyed a solid 2024, Harvey Jones discovers, especially once the bumper dividend is taken into account. So should…

Read more »

Investing Articles

The Lloyds share price could hit 80p in 2025!

The Lloyds share price could push as high as 80p in 2025, according to one highly respected analyst. Dr James…

Read more »

many happy international football fans watching tv
Investing Articles

This FTSE 250 stock offers no passive income but looks 42% undervalued to me!

Our writer has found one stock that he thinks could take off in 2025, even though it doesn’t offer the…

Read more »