Having no savings at 40 does not necessarily mean that an early retirement is impossible. After all, the FTSE 100 appears to offer a wide range of stocks that trade on low valuations and that could offer long-term growth potential.
As such, buying a variety of companies and holding them over the long run could lead to surprisingly high returns that bring your retirement date a step closer.
With that in mind, here are two FTSE 100 dividend shares that offer wide margins of safety, and which could be worth buying and holding for the long run.
The prospects for commercial property companies such as British Land (LSE: BLND) may be uncertain in the short run. The upcoming general election and Brexit may lead to increasing caution among investors, as well as potential tenants.
However, a period of uncertainty can be an opportune moment to buy stocks while they offer wide margins of safety. In British Land’s case, it has a price-to-book (P/B) ratio of just 0.6. This suggests that it offers good value for money.
The company is seeking to pivot towards faster-growing areas such as flexible office space and build to rent properties. They could help to offset weaker growth in its retail portfolio, and may provide growth stimulus for its dividend over the coming years.
With a dividend yield of 5.6%, British Land offers a relatively high income return. Alongside its low valuation and what appears to be a sound strategy, it may offer impressive long-term total return prospects.
Another UK-focused business that may experience a period of weakness in the short run is ITV (LSE: ITV). The company’s performance has been negatively impacted by weak sentiment in the UK, which has contributed to a lack of top and bottom-line growth over recent years.
The business is seeking to become more efficient through a cost-cutting strategy. This may offset the impact of lower revenue growth, while investment in areas such as digital and streaming services may open up new avenues for growth as ITV continues to adapt to changing consumer tastes.
Ultimately, the stock lacks the strong growth forecasts of its FTSE 100 index peers over the next couple of years. However, its price-to-earnings (P/E) ratio of 10.5 shows that investors may have factored in the risks that it faces in the short run.
Although dividend growth may also be lacking in the short run, ITV’s yield of 6% highlights the value and income opportunities that it offers.
As a cyclical business that is impacted significantly by the performance of the wider economy, buying it at a time of economic uncertainty could prove to be a sound move for long-term investors. Its strategy and market position may mean that it can produce strong total returns in the coming years that help you to retire early.
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Peter Stephens owns shares of British Land Co. The Motley Fool UK has recommended British Land Co and ITV. 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