Stock market

2 FTSE 100 retirement shares to consider now

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A good retirement portfolio should include some high-quality companies that pay consistent and growing dividends over time. Accordingly, I am searching FTSE 100 For the best stocks to buy for my Self Invested Personal Pension (SIPP).

But which blue-chip stocks might fit the bill right now? These are two retirement shares that Citi brokers are feeling very positive about. Here’s what they’re saying.

The Ashted Group

Rental equipment provider The Ashted Group Is (LSE:AHT) has recently suffered from weak demand in the media and emergency response markets. Yet sales are growing strongly, and the business expects rental income to grow by 11-13% this year, albeit at the lower end of that range.

Markets are not used to Astide beating their forecasts. If U.S. interest rates don’t fall, March’s decline may not be the last chance to lower expectations.

But that won’t discourage me from buying the company. From a long-term perspective, the outlook remains extremely bright, driven by its ongoing (and highly successful) acquisition-based growth strategy and significant structural opportunities.

Quilter Cheviot analyst Jarek Pominkiewicz notes that “We continue to see positive momentum in manufacturing and infrastructure megaproject activity, where Ashtead’s win rate is double its overall market share.

He adds: “This, along with the ongoing structural shift from owning equipment to renting, should pave the way for strong growth in rental income over the medium term.

Ashted is a true dividend aristocrat. It has been increasing shareholder payouts every year for nearly two decades, driven by impressive cash flows. And city analysts expect this proud record to continue until at least 2026.

On the downside, its 1.5% forward dividend yield isn’t the greatest. But some FTSE stocks fare better when it comes to dividend growth.

HSBC Holdings

Profits — and, in turn, profits — are more sensitive to conditions in the broader economy than banking stocks. In the case of HSBC Holdings (LSE:HSBA), ongoing turmoil in its key Chinese market is clouding its near-term prospects.

Nevertheless, this did not dampen my enthusiasm for the bank. This is due to the extraordinary value of money. It trades at a forward price-to-earnings (P/E) multiple of 6.6 times and on top of that, the firm’s relative dividend yield sits at a whopping 9.5%.

Profits are never guaranteed, but HSBC’s strong financial position puts it in a good position to meet current dividend forecasts. Its CET1 ratio of 14.8% means it has one of the best balance sheets in the business.

I also like HSBC because of its focus on the fast growing markets of Asia. Market penetration of financial services is increasing from current levels as wealth levels continue to improve.

And the bank is shrinking its global footprint to improve its focus on these regions. This week, it announced its exit from Argentina as part of its ongoing slimming down program.

City analysts say HSBC’s shares could be set to jump. The 18 analysts rating the firm have an average 12-month price target of 771p, up from 644p today. At current prices, I think it is worth serious consideration by UK investors.


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