Worried about the State Pension? You could boost your retirement income with these FTSE 100 dividend stocks

The State Pension pays next-to-nothing and things are unlikely to change. Here are two FTSE 100 (INDEXFTSE: UKX) income giants that could help you avoid 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.

If you’re concerned about the State Pension in the UK, and whether it’ll afford you a comfortable retirement once you’ve hung up the theoretical work apron for the last time, I’ve one thing to say. Good!

I’m not trying to be flippant or combative. So many British citizens are just waltzing carefree into the trap of pensioner poverty, without any inclination of how difficult it will be to live just on state benefits when they’re old and grey. Being worried about being plunged onto the breadline is the first step to doing something about it.

I’m certainly worried about the paltry £164.35 a week that the State Pension provides. I’m not expecting the Department for Work and Pensions to significantly loosen the pursestrings in the coming decades, either. Because of this I’ve loaded up on some of the FTSE 100’s big dividend hitters, from giant yielders like Taylor Wimpey to proven payout growers like Bunzl. There’s plenty of other blue-chip income plays on my radar, too, including the two I discuss here.

Chubby yields

If you’re looking to grab big yields straight away then you could do a lot worse than to plough your cash into AstraZeneca (LSE: AZN).

With City brokers expecting the pharmaceuticals developer to pay dividends of 280 US cents through to the end of next year, mirroring the payouts of the last half a decade, investors can lap up a juicy yield of 3.6%. That sits at twice the current rate of consumer price inflation in the UK.

Some may be turned off by suggestions that AstraZeneca still isn’t expected to begin growing dividends again for some time yet.  

I would urge patience, however. With sales of new medicines jumping through the roof (up 81% in 2018, according to full-year financials released last week), and sales to emerging markets also soaring (up 12%), I think a return to a progressive dividend policy can be expected as its ever-improving pipeline helps profit growth to accelerate over the next few years.

Great dividend growth

Near-term yields over at Ashtead Group (LSE: AHT) may not be as big as those at AstraZeneca. But the rate at which it has raised dividends in recent years — up 200% over the last five fiscal years, to be exact — still makes it a great income share to buy for the years ahead.

A combination of stunning earnings growth and exceptional cash generation over the period underpinned these bright dividend advances. Half-year trading details released in December showed that the rental equipment play continues to make great progress here. Indeed, another strong trading period prompted Ashtead to hike the interim dividend 18% to 6.5p per share.

The strength of its end markets mean City analysts predict full-year payouts of 37.8p per share this year, and 41.1p next year, up from 33p last year and projections that yield 1.9% and 2%, respectively. And with its aggressive attitude towards organic investment and acquisitions enhancing its long-term growth prospects, I’m confident that Ashtead will have what it takes to keep growing profits and thus dividends at a stratospheric rate many years into the future.

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 owns shares of Bunzl and Taylor Wimpey. The Motley Fool UK has recommended AstraZeneca. 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

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

If I’d invested £5,000 in a Nasdaq index fund 5 years ago, here’s how much I’d have now

The Nasdaq index keeps hitting new all-time records in 2024, as US tech stocks fly. How much could I have…

Read more »

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

£500 to invest a month? Consider aiming to turn that into a £20,000 passive income like this!

With a regular monthly investment, it's possible to build a large and steady passive income for retirement. Royston Wild explains.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Investing Articles

As retirement needs soar 60%, here’s how I’m building wealth with UK shares

A regular investment in UK shares and funds could help Brits create a large and lasting pension. Our writer Royston…

Read more »

Investing Articles

I’d buy Games Workshop shares before they reach the FTSE 100!

Games Workshop shares look likely to join the FTSE 100 soon. Here’s why I think investors should consider buying the…

Read more »

Businesswoman calculating finances in an office
Investing Articles

Could me buying this stock with a $2.5bn market-cap be like investing in Tesla in 2010?

Archer Aviation (NASDAQ:ACHR) stock's nearly doubled so far in November. Could this start-up be another Tesla in the making?

Read more »

Investing Articles

5,000 shares of this UK dividend stock could net me £1,700 a month in passive income

Our writer calculates the passive income he could earn from holding a significant number of shares in this powerful dividend-paying…

Read more »

Investing Articles

9.3%+ yields! 3 FTSE 100 dividend giants to consider buying

Our writer examines a trio of high-yield FTSE 100 shares and explains some of the opportunities and risks he sees…

Read more »

Investing Articles

As the Kingfisher share price drops on Budget fallout, should I buy?

The Kingfisher share price was on a strong 2024 run until the DIY group warned us of the possible effects…

Read more »