2 FTSE 100 shares to buy now

These two FTSE 100 shares have performed well through the pandemic. Both look set to deliver steady progress and shareholder dividends ahead.

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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.

Around two years ago, I wrote an article saying I’d invest £2k in FTSE 100 companies Kingfisher (LSE: KGF) and DS Smith (LSE: SMDS).  I still think they’re decent stocks for me to buy now. Let’s see how they’ve performed so far.

Stress-tested by the pandemic

Both businesses have been stress-tested by the pandemic and they’ve served me well. Kingfisher owns the B&Q and Screwfix home improvement brands as well as a big business in France and some smaller international enterprises.

In July 2019, the share price was near 222p. Today, the stock changes hands around 352p. Of course, there was a Covid-induced dip in the spring of 2020. But a strong recovery followed. And Kingfisher found its businesses to be in a good place when cash-flush customers filled their time with DIY during the lockdowns.

The directors expect a small short-term decline in revenue because of strong comparable figures and the easing of lockdowns. However, the medium-to-long-term outlook is positive.

Meanwhile, the forward-looking earnings multiple for the trading year to January 2023 is just below 13 and the anticipated dividend yield is close to 3.1%. I’d watch the stock closely. Even now, I’d aim to buy on dips and down-days with a view to holding the shares for at least five years.

But Kingfisher has a history of somewhat volatile earnings. Two years ago, trading had been lacklustre and that situation could repeat in the years ahead. It’s possible for me to lose money on Kingfisher shares if the positive momentum in the underlying business stalls. Nevertheless, I’m inclined to take the risk.

An attractive sector

Packaging company DS Smith was trading near 383p two years ago. Today, the stock’s close to 424p. Like Kingfisher, the investment proved to be a good hold through the coronavirus crisis.

Profits took a dent because of the pandemic and that reflects in today’s full-year figures. However, City analysts expect a strong rebound in earnings of around 28% for the current trading year to April 2022.

The directors issued a positive outlook statement in today’s report. The current year has started well, they said. However, inflationary cost pressures have “also continued.” Input costs, such as old corrugated cases (OCC), energy, transport and labour, have all been rising. Nevertheless, the directors expect to fully recover the increasing costs by raising selling prices.

Despite the challenges of inflation, demand has been “strong” for the company’s products and the directors expect to make good progress this year.” Meanwhile, the forward-looking earnings multiple is just below 14 for the current trading year. And the anticipated dividend yield is around 3.4%.

I reckon DS Smith trades in an attractive sector. However, there’s a fair amount of competition and earnings may not prove to be as steady as I’m expecting in the years ahead. It’s possible for me to lose money on the shares.

However, I’m inclined to embrace the risks and add the stock to my long-term diversified portfolio.

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 considered so you should consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

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