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No savings at 50? 3 FTSE 100 stocks I’d buy for 2020

Roland Head
Mature financial advisor showing report to young couple for their investment

Hitting 50 without any retirement savings is a scary prospect. But it’s not too late to put things right by building a portfolio of FTSE 100 stocks that should provide income and long-term gains.

In this article I’ll look at three FTSE 100 dividend stocks I’d buy to start building a retirement portfolio today.

I’ve bought this 6% yield

Mining, oil, and gas aren’t the most fashionable businesses to be in at the moment. Environmental concerns mean that companies operating in these sectors are under growing pressure to take more responsibility for the pollution they create.

Big commodity companies are starting to respond. Anglo-Australian firm BHP Group (LSE: BHP) recently announced plans to switch the energy supplies for its copper mines in Chile from coal to renewable energy. This is expected to cut energy costs by 20% and save 3m tonnes of CO2 per year from 2022.

Environmentalists may say that this is a drop in the ocean. But I think it’s worth pointing out that renewable energy and the electrification of transport are both expected to drive a big increase in demand for copper in coming years.

For investors, I think BHP is attractive. The group has very little debt and strong free cash flow. At current levels, the shares trade on just 10 times last year’s free cash flow, with a forecast dividend yield of 6.5%. I’ve been buying shares myself at this level.

Asian growth?

Owning BHP allows you to receive an income from almost all major commodities. I think that’s very attractive. Another area of long-term growth I believe investors should consider is the Asian consumer market.

One way to play this is through cruise ship giant Carnival (LSE: CCL). The world’s largest cruise ship operator owns brands including Holland America, P&O Cruises, and Costa. Of course it already has a large market share in the US and European markets. But Asia is a major source of growth, thanks to increasing middle class wealth in China and elsewhere.

Carnival stock has fallen by 35% over the last two years. I think this could be a good time to be buying. I’ve recently started building a position in Carnival stock in my own portfolio. The shares may get cheaper, but I’m not too concerned, as I plan to make several more purchases.

Trading on 9.7 times forecast earnings with a 4.8% dividend yield, I see Carnival as a good long-term consumer stock.

Brexit relief

Whatever your view on Brexit, I think it’s fair to say that most businesses and investors will welcome an end to the current period of uncertainty.

We’ve already got a taster of how this might affect UK-focused stocks. Shares in FTSE 100 landlord Landsec (LSE: LAND) have gained nearly 25% from the 750p lows seen in late August as a result of the deal agreed with the EU.

However, the shares are still trading about 30% below their last-reported net asset value of 1,339p. The Landsec share price is also well below the 1,100p+ level at which it was trading before the Brexit referendum.

I believe the group’s ownership of prime London commercial and retail property means that its assets will remain in demand over the long term, regardless of the political situation. At current levels the stock yields 5.1%. I see that as a good opportunity to lock in an attractive long-term income.

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Roland Head owns shares of BHP and Carnival. The Motley Fool UK has recommended Carnival and 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 2019