This year, investors are navigating a massive health worry that has also created considerable economic uncertainty. Many of us still remember the economic and financial difficulties during the 2008/09 crisis. It affected our economy, plus so many people’s jobs and retirement pots.
Needless to say, investors are now wondering if their retirement savings will be enough to ensure comfort in their golden years. The good news is that both the FTSE 100 and FTSE 250 indices are home to several top dividend stocks that have generated great returns over the years and can be considered for a diversified retirement portfolio. Therefore today, I’d like to bring to your attention two robust companies that have stable dividends. They are spirits giant Diageo (LSE: DGE) and sweetener and ingredients producer Tate & Lyle (LSE: TATE).
FTSE investors love dividends
Investing in dividend stocks for passive income, especially in retirement years, is one of the most tested investment styles. Such companies not only pay dividends but can also help to build a retirement nest egg via capital appreciation.
Retirement is expensive. Retirees need to comfortably cover their expenses and supplement their lifestyle when they’re no longer earning income from employment. Seasoned investors realise that by generating passive retirement income, investors can make sure that their investments really work for them.
In the UK, we’ve an important investment structure that’s legally designed with tax advantages — the ISA. Investments held inside an ISA can grow tax-free. This means the full dividend payout can be used to buy more stocks, leading to a powerful compounding process over time. This sets off a snowball effect. Each new dividend buys additional shares that generate more dividends.
Cheers to retirement years
FTSE 100 member Diageo, the global spirits maker and brewer, is my first pick for today. The group has a diverse global exposure and brand portfolio. Such geographic diversification – especially into emerging economies, where consumers are increasingly showing brand loyalty – is likely to provide a relatively defensive investment opportunity for a retirement portfolio.
DGE has over 200 strong brands, including Baileys, Don Julio, Guinness, Johnnie Walker and Smirnoff. These well-known names contribute to increased volume growth and gives DGE pricing and competitive power.
Year-to-date, it’s down about 9.5%. The current price of 2,900p means a dividend yield of 2.4%. The shares are expected to go ex-dividend next in early August, with a payment date of early October. In addition to reliable dividends, Diageo shares offer investors long-term growth potential. I’d buy the dips.
Sweet golden years
In 2018, FTSE 250 member Tate & Lyle celebrated the company’s 140th birthday at the Thames Refinery in Silvertown, London. The company’s primary focus is on producing sweeteners and other bulk ingredients for food manufacturers. The group is the exclusive UK producers of the Splenda artificial sweetener.
On 21 May, it released full-year results for the year ended 31 March. Revenue comes in three segments:
- Food & Beverage Solutions ‒ delivered strong revenue and double-digit profit growth
- Sucralose ‒ profits slightly ahead
- Primary Products ‒ profits higher despite challenging market conditions
So far in 2020, TATE shares are down about 10%. The stock price of 685p supports a dividend yield of 4.3%. The shares are expected to go ex-dividend next on 18 June. I’d be an investor, especially if there is any weakness in price in the near future.
The post FTSE investors: I believe we can all retire early and rich appeared first on The Motley Fool UK.
- Stock market crash round 2 may be coming. Here's what I'm doing now!
- FTSE 100 crash: I’d start buying cheap stocks in an ISA today to get rich and retire early
- Lloyds’ share price has fallen below 30p. Here’s what I’m going to do now
- Stock market rebound: Could dirt-cheap Aston Martin shares help you get rich and retire early?
- I’d buy cheap FTSE 100 shares today despite the potential for another stock market crash
- Top shares for 2020
tezcang has no position in any of the shares mentioned. 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.
Motley Fool UK 2020