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No savings at 40? I think these 2 FTSE 100 shares could boost your retirement prospects

Peter Stephens
Retirement saving and pension planning

With the FTSE 100 having experienced a turbulent period in recent months, now may not seem to be a good time to kickstart your retirement plans. After all, risks such as a global trade war and Brexit may continue to cause uncertainty across the index.

However, now could be the right time to invest for the long term. A number of large-cap shares appear to offer wide margins of safety, as well as encouraging growth outlooks.

With that in mind, these two FTSE 100 stocks could be worth buying today. They could boost your retirement prospects through generating improving returns over a sustained period of time.

Whitbread

Premier Inn owner Whitbread (LSE: WTB) appears to have a sound growth strategy that could produce improving financial performance. For example, it’s seeking to become more efficient through cutting costs and investing in new technology. It’s also expanding internationally, while seeking to occupy multiple price points in order to appeal to a wider range of consumers.

Clearly, key markets such as the UK and Germany are experiencing slowing GDP growth rates at present. This could limit the company’s growth potential in the near term. However, both markets appear to be ripe for growth in the budget hotel segment, with Whitbread’s financial performance providing the capital required to generate improving levels of profitability and cash flow.

The company is forecast to generate double-digit earnings growth in the next two years. This is expected to lead to dividend growth of 9.5% next year. While it currently yields just 2.4%, Whitbread could become an increasingly appealing income share. This may enhance its overall appeal and lead to a rising share price.

HSBC

Despite a slowing growth rate in Asia, HSBC (LSE: HSBA) was able to report a rise in income of 4% in the region in its third quarter results. It experienced a resilient performance in Hong Kong despite political risks, while revised plans in Europe and the US could lead to improving financial performance in the coming years.

The bank’s price-to-earnings (P/E) ratio of 10.5 suggests investors are pricing in an uncertain period. With a global trade war still ongoing, a margin of safety may remain in place over the short term. However, with strong growth forecast for major economies across Asia over the longer run, HSBC could experience rising demand for its services that boosts its profitability.

The stock’s dividend yield of 6.7% is covered 1.4 times by net profit. This suggests it may not need to deliver high capital returns in the short run to outperform many of its sector and index peers. Therefore, investors looking to capitalise on Asia’s long-term growth rate, while obtaining a high yield, may wish to consider buying a slice of the company while it trades on a low valuation.

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Peter Stephens owns shares of HSBC Holdings and Whitbread. The Motley Fool UK has recommended HSBC Holdings. 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 2019