Have £2k to spend? A FTSE 100 dividend stock I think is perfect for retirement

Looking to get rich by retirement? Royston Wild looks at a FTSE 100 (INDEXFTSE: UKX) stock he thinks has all the tools to make investors a fortune.

| 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.

Ask me to give you a list of brilliant income shares to help you create a comfortable retirement and I’ll happily provide a list as long as my right arm.

Here though, I’m concentrating on Reckitt Benckiser Group (LSE: RB), a top income share from the FTSE 100 I think has what it takes to make you a tidy nest egg to enjoy once you’ve hung up those proverbial workgloves.

The brand bruiser

The brilliant strength of its branded products, and the ability to grow revenues in even the toughest of economic conditions, is what’s made the household goods manufacturer such a dependable profits and dividend raiser for many, many years.

Latest research from Kantar Worldpanel shows just how successful Reckitt has been in developing its brands, making them consistent profit creators whatever the weather.

According to its annual Brand Footprint report released this month, the manufacturer’s Dettol disinfectant product line recorded one of the biggest global penetration gains in 2018, rising 0.9% year-on-year. It was only beaten by Kinder confectionery, Vim cleansing goods, and Brooke Bond tea.

Dettol is only one of four brands in its annual list of the 50 best-loved global brands to have grown every year since Kantar started the survey back in 2014.

Reckitt also has its finger firmly on the pulse of the consumer and changing retail trends and, through product innovation and clever marketing, it knows exactly how to keep maintaining eye-popping volumes.

Investing for global growth

And there’s another couple of reasons why investors can look forward to the business continuing to deliver strong and sustained profits growth long until I’ve retired, at least.

Firstly, the vast amounts it’s investing in e-commerce give plenty of reasons to be optimistic. Recent trading in China, where Reckitt is developing its multichannel strategy, shows just why. Some 58% of Health product sales (excluding baby milk) in the territory were attributable to online in 2018.

Secondly, the rate at which population levels, disposable incomes, and appetite for leading consumer brands in emerging markets, is another reason to expect shareholder returns to keep ballooning well into the future.

In 2010, Reckitt generated around a quarter of all its business in these developing territories. But through a combination of product development, operational improvements, and those aforementioned demographic factors, this figure has risen to more than 40%.

And there’s plenty of evidence to expect sales to keep on detonating. The World Bank, for one, expects GDP growth in the company’s largest emerging markets to keep swelling for some time yet.

In Brazil, economic growth is anticipated to lift more than 2% through to 2021. But in Reckitt’s other mighty market, India, growth is expected to stampede 7.5% higher each year over the period. In China, meanwhile, economic growth is expected to remain above 6%.

Many more stocks on the FTSE 100 carry forward yields bigger than Reckitt Benckiser (which currently sits at around 3%). But there aren’t many others I’d tip to provide such sustained dividend payouts decades into the future.

This makes the household products maker such an income star and, in my opinion, a brilliant blue-chip to buy today.

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 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Is the Rolls-Royce share price too high? Here’s what the experts say

The Rolls-Royce share price has surged over two years, representing one of the FTSE 100’s greatest success stories. But is…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

A top S&P 500 growth share and an ETF I’d buy this November!

I think this S&P 500 share and exchange-traded fund (ETF) could be brilliant additions to my ISA or SIPP right…

Read more »

US Stock

Here are the best-performing S&P 500 stocks after the US election result

Jon Smith notes some of the largest gainers from the S&P 500 yesterday and explains how the election result has…

Read more »

Growth Shares

2 UK stocks knocking on the door of promotion to the FTSE 100

Jon Smith points out a couple of UK stocks that he feels could be ready for the big league based…

Read more »

Investing Articles

Rolls-Royce shares just fell 7%. Is it time to buy?

This investor in Rolls-Royce shares takes a look at the FTSE 100 engine maker's trading update to see what caused…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

What’s going on with the Auto Trader share price?

Paul Summers takes a closer look at why the Auto Trader share price has tumbled despite the company posting higher…

Read more »

Investing Articles

Legal & General shares look set to give me a mind-blowing 10.22% yield in 2026!

Harvey Jones is getting a brilliant second income from his Legal & General shares and expects even more to come.…

Read more »

Investing Articles

I’d consider this beaten-down FTSE 100 dividend stock to target a second income of £19,000

Our writer sees an opportunity to earn a substantial second income by investing in this UK insurance giant. Here’s his…

Read more »