In November, he dropped consumer goods giant Reckitt (LSE: RKT), formerly Reckitt Benckiser Group, from his flagship investment fund Fundsmith Equity. In February, he ejected quality assurance provider Intertek Group (LSE: ITRK), which I wrote about recently and said looked pricey but still a long-term buy for me.

Last month, it was the turn of Sage Group (LSE: SGE) to feel Mr Smith’s boot. He’s a supremely successful stock picker and it makes me wonder whether I should rule out buying these top British stocks for my own portfolio.

Would I sell these FTSE 100 stocks?

I have a personal interest, because Reckitt has long been one of my favourite FTSE 100 stocks. It promotes a broad portfolio of popular everyday brands such as Air Wick, Harpic, Dettol and Nurofen, that shoppers buy in bad times as well as good. I considered it a top British stock, even though it is relatively expensive. Today, it trades at 21 times earnings.

The Reckitt share price shot up in the early days of the pandemic, as people spent more on cleaning products, but then doubts set in. After November’s vaccine breakthroughs, investors decided other British stocks would reap greater rewards.

Reckitt is down 9% over the last year, and 7% over five years. It looks like Terry Smith has had enough. The forecast yield of 2.7%, covered 1.7 times by earnings, was not enough to tempt him to stay. Yet I would still consider Reckitt for my own portfolio, as a defensive stock delivering long-term growth and income. It recently posted a 4% rise in Q1 sales, while digital revenues jumped an impressive 24%. As it invests £2bn in developing new products, it remains a top British stock and would merit a place in my own portfolio, whatever Terry Smith thinks of it. If I’d already bought, I wouldn’t sell today.

Sage offers integrated accounting, payroll and payments solutions to businesses around the world. Four years ago, Goldman Sachs rated it a top British stock, as it migrated to a subscription-based model, which offered more cross-selling opportunities, and enjoyed high customer renewal rates.

Subsequent performance has been disappointing. The Sage share price is up just 5% over five years. It hasn’t even benefited from the recent stock market rally. Again, it looks like Mr Smith has had enough, but what about me?

I still rate these top British stocks

Last month’s first-half results showed underlying operating profit falling 11% to £191m, as profit margins shrank from 23.2% to 20.2%. This was primarily down to increased spending on marketing and product development, to promote its new cloud operation. Management said margins should improve, as this investment drives growth.

Personally, I like to see a company investing in its future, even if it takes a short-term hit. I also like the fact that Sage has been paying down debt, from £238m to £96m in the last year. It still looks like a top British stock to me. I would consider buying it for my portfolio, even if Mr Smith doesn’t have space in his.

The post Terry Smith has sold these 2 top British stocks. Here’s what I’d do now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage Group. 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.

I rate Reckitt Benckiser Group (LSE: RB) as one of the top British stocks of all. This household goods company boasts a vast range of brands that people pop into their shopping trolleys without a second thought, such as Air Wick, Harpic, Dettol and Nurofen.

This gives investors defensive solidity, as most people can stretch to these everyday purchases in a recession. It also offers exposure to the emerging markets growth story, as middle-class consumers around the world buy them in greater quantity too. The Reckitt Benckiser share price never looks cheap, and that is the case today. Right now, it trades at 20.3 times forward earnings. That looks like a buying opportunity to me, especially since it is down 18% in the last six months.

I’d buy these top British stocks

While the stock initially benefited from the pandemic, as people bought more cleaning goods, its health division lost sales as fewer people caught coughs and colds during lockdown. I would expect other top British stocks to benefit more when lockdown is over. Shops selling essentials have remained open throughout, helping Reckitt Benckiser maintain sales. People will be looking to splurge on something more exciting than deodorant when they are let loose.

But I would buy Reckitt Benckiser for the long term. To retirement and beyond, in my case. The forecast yield of 2.8% is nicely covered 1.8 times and was paid throughout the pandemic. Management’s attitude is progressive and dividend payments should increase over time. 

I would supplement this with National Grid (LSE: NG), another top British stock that would give me more generous income today. This is as solid as a utility can get, as it manages the wires and pipes that businesses and homes rely on for power, both in the UK and north-east US.

FTSE 100 income hero

National Grid has been a terrific source of dividends for years, with the payout funded from strictly regulated earnings. The stock is now forecast to yield 6%, making it one of the top British income stocks of all. I find that hard to resist at a time when the average instant access account pays just 0.18%.

I don’t expect massive share price growth and the National Grid share price is trading at similar levels to five years ago. Management also has to invest a hefty £10bn in its transmission networks over five years and pursue net zero carbon targets. Regulator Ofgem also proposed cutting its maximum return on equity by 40% from today’s level. I still think today’s entry price looks attractive, with the stock trading at 14.2 times earnings

National Grid remains one of the top British stocks for income seekers, and I would add it to my ISA portfolio today.

The post I’d buy these top British stocks in an ISA today appeared first on The Twelfth Magpie.

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Harvey Jones 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.

This is a great defensive stock because it sells everyday items that people still need in a recession, such as cleaning products, stain removers, headache pills, throat sweets and dishwasher tablets. 

This FTSE 100 giant has done particularly well in the pandemic, as consumers prioritised hygiene, snapping up products such as Dettol and Lysol. This morning it reported 13.3% growth in like-for-like third-quarter sales, a figure most companies could only dream of right now. This was driven by “underlying operational improvements augmented by continued growth in our leading global disinfection brands”, the group said.

Mean, clean FTSE 100 machine

The Reckitt Benckiser share price is cleaning up as sales rise 19.5% in its Hygiene division: driven by Lysol, Finish and Air Wick. This operation now accounts for 42% of sales. Like-for-like growth in its Health division stood at 12.6%, amid ongoing strong demand for Dettol.

Sales in its Nutrition unit grew at a slower pace of 4.1%, as it struggled with the birth pains associated with $18bn acquisition of baby formula specialist Mead Johnson.

Reckitt Benckiser is also expanding online sales, which rose 45% in the third quarter and more than 5o% year-t0-date. They now make up around 12% of group net revenue.

The group is investing £2bn into its hygiene, health and nutrition brands over three years, which should drive future share price growth. Management is also keeping a close eye on costs. Its expanded productivity programme has delivered savings of £300m so far this year.

I like the Reckitt Benckiser share price today

I am pleased to see Reckitt Benckiser’s share price success because I have regularly tipped it as a core portfolio holding. 

Covid-19 may also trigger a long-term shift in attitudes towards towards cleanliness. If we all take hygiene theory seriously in future, the Reckitt Benckiser share price could continue to clean up. This is a global company, this has moved into 19 new markets so far this year. Today it upgraded revenue growth projections to low-double-digits for the year. Previously, it anticipated high-single-digits.

The share price may look expensive, with the stock trading at 20.7 times earnings. However, that is reasonable by its standards. Along with two other FTSE 100 favourites of mine, Diageo and Unilever, it typically trades closer to 24 times earnings.

Reckitt Benckiser has also stood by its dividends throughout the crisis. Right now it yields 2.4%, covered exactly twice by earnings. Management also has a good track record of steadily increasing payouts.

I would have bought Reckitt Benckiser shares five years ago, three years ago and one year ago. I’d buy it today too. Then I would aim to hold it for years for long-term income and growth. 

The post The Reckitt Benckiser share price is cleaning up! Here’s what I’d do right now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. 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.

I have picked out three FTSE 100 dividend stocks whose payouts are covered at least twice by earnings. That is a sign they may be sustainable.

Consumer goods group Reckitt Benckiser Group (LSE: RB) has lived up to its reputation for being a defensive stock. After falling in the initial sell off, its share price bounced back strongly. It now trades an impressive 20% higher than a year ago when we’d never heard of Covid-19.

Three dividend income stocks I’d buy

It’s actually benefited, as this has increased demand for cleaning and pain relief products, boosting its health and hygiene operations. Dettol was a particularly big seller. First-half pre-tax profit rose £100m to £1.4bn, up 7.7%, with net revenue up 10.8% to £6.9bn. Other areas floundered, as the recently-acquired baby formula business stubbornly refuses to grow. 

Reckitt Benckiser doesn’t offer a massive yield, just 1.9%. However, management has been progressive, so you can expect growth in future. Cover currently stands at exactly 2.0, which is comforting. It’s one of my favourite income stocks, and not just for the dividends.

Data and credit-checking specialist Experian (LSE: EXPN) is another FTSE 100 income stock with a solid dividend, covered 2.1 times by earnings. It’s also one of the most spectacularly successful growth stocks on the index, up 176% over five years. The pandemic has done little to slow its progress. Experian is also up 20% measured over the last year.

Experian saw trading grow strongly in July and August. As a result, it has hiked its second-quarter revenue expectations to between 3% and 5%. Its US mortgage arm has done particularly well, as the business shows its “naturally resilient” qualities.

As FTSE 100 dividend stocks go, the yield is relatively low at 1.21%. But that’s partly down to its runaway share price success. Experian is now valued at almost 40 times earnings as a result. This is expensive, but also shows how highly investors rate it. You might prefer to buy if we get another stock market crash, when it may be cheaper for a while.

Aim to hold for the long term

My last well-covered FTSE 100 dividend stock is a long-term favourite of mine, distribution and outsourcing group Bunzl (LSE: BNZL). Again, the yield is relatively low at 2.04%, but cover is super strong at 2.6 times earnings.

After the usual March dip, Bunzl’s comeback has been staggering, with the stock soaring more than 50% over six months. It did scrap its dividend in April, but quickly brought it back as demand for personal protective equipment boosted profits. This should offer some ballast if slowing economic growth hits demand elsewhere in the business.

I reckon these three well-covered FTSE 100 dividend stocks merit a closer look. The businesses have solid long-term prospects and I’d aim to buy and hold them for years after the pandemic has passed.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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.

Reckitt Benckiser is up another 5% today after reporting a jump in first-quarter sales and lifting its full-year outlook. The household cleaning goods specialist is a rare beneficiary of this year’s meltdown, and I’d buy it.

The Reckitt Benckiser share price is not exactly a bargain, trading at 18.34 times earnings. Given that investors can typically expect to pay around 22 to 24 times earnings, that price looks tempting to me.

Who wants to be an ISA millionaire?

I’ve been hailing the stock as a buy for years. If anything, the crisis has strengthened my belief in its long-term income and growth prospects.

Despite that, the Reckitt Benckiser share price has disappointed over the last five years, trading just 10% higher over that time. It has easily beaten the FTSE 100, though, which dropped 12% over the same period.

This morning, it reported a 12.3% rise in total first-quarter sales to £3.5bn, or 13.3% on a like-for-like basis. Unsurprisingly, growth was driven by strong demand for its hygiene and health products, notably Dettol, Lysol, Mucinex, Nurofen, and VMS.

Reckitt Benckiser does face coronavirus challenges elsewhere. Consumer demand was strong, particularly in March and April, but CEO Laxman Narasimhan cannot say if this was due to stockpiling. Even if that slows, I still think it is a long-term buy and hold for wannabe ISA millionaires.

I’d buy the Reckitt Benckiser share price today

Like every other company, Reckitt Benckiser faces operational challenges and costs associated with living under lockdown conditions, and these look set to continue for some time.

The trend towards better hygiene may endure, especially since a vaccine is so far away. On the other hand, people might relax and return to sloppier habits.

The Reckitt Benckiser share price tempts because the company sells everyday products that people need in their kitchens and bathrooms. That makes it fairly recession-proof as well. You can say the same about Unilever, which is also coming out well from the crisis. It could also aid your bid to become an ISA millionaire.

Unlike many FTSE 100 companies, Reckitt Benckiser is standing by its dividend. The yield on this stock is never spectacularly high – currently it is 2.7% – but cover is strong at 1.7, and management is typically progressive.

Right now, some investors will be keen to fill up their portfolios with bargain stocks whose share prices have crashed. However, you might want to find a corner for this good old-fashioned defensive play as well. It could underpin your ISA millionaire portfolio.

The post I’d buy this rock-solid FTSE 100 stock to become an ISA millionaire appeared first on The Twelfth Magpie.

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Harvey Jones 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.

Reckitt Benckiser

Household goods giant Reckitt Benckiser Group (LSE: RB) has long been one of my favourite FTSE 100 stocks, thanks to its impressive long-term track record of share price and dividend growth. It sells basic, everyday items that billions of global consumers keep in their kitchens and bathrooms all over the world, and boasts a raft of strong brands.

Such is its popularity that the Reckitt Benckiser share price usually trades at a premium level of around 24 times earnings, while offering a relatively low yield of just over 2%. Things are different today. Global stock markets have hammered stocks across the board, but Reckitt Benckiser has got into a mess of its own making, too.

On Thursday, it reported a £1.9bn operating loss, as margins weakened due to increased investment in its brands, while management recognised a £5bn impairment charge against its recent Mead Johnson child nutrition acquisition.

This shows that no matter how steady the company is, it can always slip. The coronavirus is adding to the uncertainty, as we wait to see what impact it has on the company’s sales in China and beyond. On the plus side, you can now buy Reckitt Benckiser stock at around 20 times forward earnings, which counts as a bargain by its elevated standards. The forecast yield is 2.8%, but dividend cover is strong at 1.9 and management remains progressive, having just hiked the final payment 2.3%. I would place this high on my watchlist, as global markets tremble.

British American Tobacco

The British American Tobacco (LSE: BATS) share price has underperformed lately, dropping by a third over the last three years. The group has been hit by the continuing crackdown on smoking, particularly since the US regulatory authorities are extending this to new products such as e-cigarettes and vapes, which were supposed to open up a fresh source of revenue.

The £70bn FTSE 100 group still sells a lot of cigarettes, though. Yesterday it reported a 5.7% rise in revenue to £25.9bn, although profit from operations fell 3.2% to around £9bn. Management expects adjusted revenue growth in the 3% to 5% guidance range, despite a 4% drop in overall industry volumes.

British American Tobacco stock is primarily attractive for its dividend, as it currently yields 6.7%, covered 1.5 times by earnings. Today’s entry price of 9.9 times forward earnings is attractive, as recent share price underperformance has pushed it into bargain territory, offering a cushion against further falls in the weeks ahead.

Raising prices and cutting costs should support British American Tobacco despite the long-term decline in smoking. It may even offer some protection against coronavirus concerns, as stocks in more vulnerable sectors such as travel come crashing down. It looks tempting at today’s relative bargain price.

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Harvey Jones 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.

Long-term view

Following recent dips, the index of top UK blue-chip stocks is packed with top companies trading at bargain valuations.

Stock markets are always volatile, and this year investors have been worrying about the US-China trade war, stand-off with Iran, and now the coronavirus. However, if you are investing for the long-term, by which I mean anything up to 50 years, you can afford to ignore these short-term ups and downs.

Personally, I’m attracted to solid companies selling products that ordinary people will need far into future, and by that yardstick, I think you will struggle to do better than buy household goods giant Reckitt Benckiser Group (LSE: RB) inside a tax-free Stocks and Shares ISA.

It offers a stream of everyday brands, many of which you are likely to find in your own kitchen and bathroom. We’re talking about Dettol, Strepsils, Airborne, Air Wick, Calgon, Clearasil, Cillit Bang, Durex, Vanish and more.

Global hero

It doesn’t only sell these to UK customers but sells its products in more than 120 countries around the world. As well as its global products, Reckitt Benckiser also offers ‘local hero’ brands that may offer faster growth and higher margins.

The Reckitt Benckiser share price usually trades at a premium valuation, typically around 22-24 times earnings, because investors are willing to pay extra for a quality long-term keeper like this one. Currently, it is relatively cheap by its own standards, trading at just 18.3 times earnings. That is due to a recent patchy performance, with the stock trading 8% lower than three years ago.

Its most recent trading update, in October, show steady third-quarter growth of 1.6%, but weakness in its Health division (Hygiene Home is still growing nicely). CEO Laxman Narasimhan pinned Health’s “disappointing” performance on more cautious retailer seasonal purchasing patterns in the US, and challenging market conditions in China.

50 years is a long, long time

I’m not too worried about this, remember, we are looking to buy and hold this stock for anything up to 50 years. In fact, I see this as a good opportunity to buy a relative bargain price, then bed in and wait for the recovery.

Reckitt Benckiser continues to invest in its market-leader brands to build the business for the long term, and is working hard to boost its operational performance. Turning around its Health division could take time — Barclays’ analysts reckon three years, but they also said that success could lift its share price “significantly”.

While you wait, you benefit from the 2.7% yield, nicely covered twice by earnings, which gives management plenty of scope to increase the payout over the longer run. This passive income stream should continue to climb over the years and decades. I would buy and hold Reckitt Benckiser with the aim of holding it until retirement and beyond.

The post Have £2k to invest? This FTSE 100 leader could pay you for the next 50 years appeared first on The Twelfth Magpie.

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Harvey Jones 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.

On top of this income, I think the stock also has the potential to double from current levels.

Under pressure

Shares in consumer goods group Reckitt have come under pressure over the past three years as management has struggled with rising costs and stagnating sales.

The maker of Mucinex flu medicine and Dettol cleaning products has faced a perfect storm of disasters during this period. These including buying a business that had sold deadly humidifier systems in South Korea, and a $1.4bn settlement related to alleged mis-selling of an opioid addiction treatment. That’s not to mention the impact of a significant cyber attack on the group and disruption at a baby milk factory.

These events have weighed on growth since 2017. Between 2014 and 2017, the company’s earnings grew at an average annualised rate of more than 10%. However last year, growth ground to a halt and this year, City analysts are forecasting a decline in earnings per share of around 3.5%.

According to Reckitt’s new CEO Laxman Narasimhan, who recently replaced Rakesh Kapoor, the company’s big problem is execution. He wants to change that. The CEO is planning to unveil a turnaround plan when the group reports its full-year results in February.

Reckitt does have huge potential, but it needs to get its house in order before shareholders can reap the benefits. Sales have increased at a compound annual rate of 6.5% since 2013, and City analysts expect this trend to continue for the next few years.

On top of this, the company’s operating profit margin has remained relatively stable at around 24%. However, higher taxes, interest costs and exceptional charges have chipped away at the bottom line.

The bottom line

If Reckitt’s new management can stop the rot, and return the group to growth, then I think this could be an excellent investment.

Historically, the shares have changed hands for as much as 25 times forward earnings. Today they’re dealing at just 17.7 times. If confidence returns, based on current City growth projections, a multiple of 25 times projected earnings suggests a possible share price of £84, approximately 42% above current levels.

That’s excluding any further earnings growth. If management can get Reckitt back to the position it was in three years ago, when earnings were growing at a double-digit rate every year, the stock could be worth as much as £135 in five years, according to my calculations. That’s a return of nearly 130% on the current share price.

These are only back-of-the-envelope calculations and depend entirely upon management’s ability to engineer a return to growth successfully. Nevertheless, I think they clearly illustrate Reckitt’s potential and show why this stock could be a much better investment than a Cash ISA over the long term.

The post Forget the Cash ISA! I think this FTSE 100 dividend stock could double your money appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Star pupils

Over the years I have showered them with praise, and they have justified my faith, as their share prices and dividends have continued to grow. However, in recent months I have largely forgotten about them. Instead of regularly checking up on their progress, my attention has drifted elsewhere.

As global growth appears to be slowing, defensive stalwarts like these two could prove their worth all over again, to support your portfolio in turbulent times to come. Unlike gold, they pay dividends. Unlike buy-to-let properties, you don’t have to deal with tenants. And unlike a Cash ISA, you get a decent yield.

So what have they been up to lately?

Wreck it Benckiser

I’m sad to report that Reckitt Benckiser is on the naughty step, as its share price is down almost 6% in the last year, and 18% over three years. Unilever is still my star turn, up 12% over one year, and 36% over three years, easily beating the FTSE 100, which grew a sluggish 2% and 5% over the same period.

So how did Reckitt wreck it? Last month it cut full-year sales growth forecasts from 2%–3% to flat or worse, blaming slowing demand from the US and China, although the rest of its figures weren’t too bad. Slippage like this can be a buying opportunity, especially if it encourages the company to sharpen up its act, as chief executive Laxman Narasimhan is now pledging to do.

Vanishing act

The dip in the Reckitt Benckiser share price offers a cut-price entry point, with its shares now trading at just 17.3 times forward earnings. That counts as bargain territory for this company, which I would typically expect to trade closer to 24 times earnings. The forecast yield is modest at 2.9%, covered twice.

Disappointingly, City analysts currently forecast three years of flat earnings growth, so if you take a position today, you may have to be patient. You should be rewarded in the long run, though. Solid, everyday brands like Dettol, Strepsils, Airborne, Air Wick, Calgon, Clearasil, Cillit Bang and Durex aren’t simply going to Vanish. See what I did there?

Unilever fever

Unilever has also disappointed investors by recently posting a fall in underlying sales growth from 3.5% to 2.9%. However, this was offset by promising emerging markets growth, and predictions of healthy full-year profit margins and free cash flow. Investors were willing to cut Unilever some slack, and understandably so, given its past top grades.

City earnings projections are promising, with forecast growth of 8% this year and 10% next, by which time the yield should hit 3.4%, with solid cover of 1.55. The Unilever share price is more expensive than Reckitt Benckiser’s, trading at 21 times earnings, although again, it usually trades at an even more elevated valuation. Its top brands include Dove, Lux, Sunsilk, Lifebuoy, Knorr and Lipton – another recession proof line-up.

I’d still buy both today. Unilever is in a better place right now, but Reckitt Benckiser may have more recovery potential, for those who like buying on the dips.

The post Forget gold, buy to let, and Cash ISAs. I’d rather buy Unilever and Reckitt Benckiser appeared first on The Twelfth Magpie.

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• 3 beaten-down FTSE 100 shares to consider buying and holding for a decade

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.

What I like about this pension and savings provider is the fact that it is a business with long-term investing at its heart. The company has been around for more than 100 years and during this time, it has become a stalwart of the UK financial sector. It manages more than £1trn of assets for clients around the world and was the first UK asset manager to meet this lofty target. 

Focused business

Life insurance and pension management is a tricky business because there is so much that can go wrong.

Legal promises clients an income in retirement, and the company cannot afford to renege on this promise. So, management has to invest clients’ money sensibly with a three or four-decade time horizon to make sure that when the time comes, it can meet its obligations.

Sensible, long-term investing is the name of the game for the company, and that’s why I think it could make a perfect addition to your pension portfolio. At the time of writing, shares in the group trade at a forward P/E of just 6.9 and support a dividend yield of 8.3%. I think that’s a steal for such a high quality, FTSE 100 business with more than 100 years of history behind it.

Undervalued  

Another FTSE 100 company that I’m eyeing up for my pension portfolio today is Reckitt Benckiser (LSE: RB). The market has recently fallen out of love with this consumer goods business after outgoing chief executive Rakesh Kapoor cut his full-year revenue growth target on a slow start to the year.

The company is now targeting full-year like-for-like net revenue growth of 2% to 3%, down from 3% to 4% previously. That’s not a big decline, but it is enough to concern City analysts. 

Still, while Reckitt’s near-term outlook may not be as rosy as analysts had wanted it to be, I think the company has excellent long-term potential, and this is why I’m recommending it for your retirement portfolio today.

Looking past the headwinds, Reckitt owns some of the most recognisable consumer brands in the world, including Mucinex, Nurofen and Dettol, and it is a tremendously profitable business. The firm’s profit margin has averaged 24% per annum for the past six years, compared to 8% for the London market average. 

However, despite the company’s advantages, it is currently dealing at a forward P/E of just 17.2. This might seem expensive, but compared to its close peers, such as Unilever, Reckitt now looks cheap. Indeed, shares in Unilever are currently dealing at a forward P/E of 20.7. I see no reason why shares in Reckitt cannot command the same valuation when it overcomes the current issues facing the business. On top of the attractive valuation, the stock also supports a dividend yield of 2.9%. 

The post I’d buy these FTSE 100 stocks for a retirement portfolio today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares in Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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.