I think some of the best stocks to buy today can be found in the FTSE 100. With that in mind, here are three blue-chip equities I’d acquire for my portfolio right now.
FTSE 100 income champion
The first on my list is BAE Systems (LSE: BA). The global weapons and technology contractor operates a relatively defensive business model. Its contracts are usually significant and awarded on a multi-year basis. This gives the company a level of income protection and predictability.
Further, the company’s products and services are usually protected under national security rules and patents.
I think these qualities make the company the perfect income investment. Its net profits are predictable and forecastable. It’s also unlikely competitors will be able to steal market share without the valuable intellectual property. This should support the stock’s dividend, which currently stands at 4.4%.
However, while I’m happy to buy the company today, I realise it may not suit all investors. BAE’s exposure to the defence sector means it fails many Environmental, Social, and Corporate Governance (ESG) criteria. That may make this unsuitable as an investment for some.
Growth stocks to buy
I think both of these businesses offer something different. Hargreaves is one of the country’s largest online stockbrokers, and it has a strong reputation among consumers. According to its latest trading statement, which covered the four months to the end of April, 126,000 new clients joined the group during the period.
Including these additions, 1,622,000 consumers now use its platform with a combined £132.9bn of assets. I think these numbers show that consumers not only like the group’s offer, but there’s also plenty of room for growth.
Estimates suggest UK households own a combined £1.6trn of investable wealth. That implies Hargreaves has only just scratched the surface and could continue to grow for many years.
Meanwhile, Rentokil seems to be benefiting from higher rodent numbers. According to its first-quarter trading statement, organic revenue grew 9.4%, with an additional 6% coming from acquisitions. This produced overall revenue growth of 15.4% for the period. It’s this kind of growth that’s put the business firmly on my list of the best stocks to buy.
Acquisitions have always played an essential part in the company’s growth strategy. These numbers suggest Rentokil will continue to pursue deals, which could support growth rates. Management is planning to spend £400m on acquisitions in 2021.
This strategy has yielded results in the past, but many related businesses have struggled. Issues associated with integrating acquisitions and high levels of borrowing have all undermined acquisitive companies. These are probably the most significant risks and challenges the FTSE 100 firm will have to deal with.
At the same time, the UK wealth management sector is incredibly competitive. Hargreaves has disrupted the market, but it now has to compete with a new generation of smaller, more agile peers. There’s no guarantee the company will win this battle.
Still, considering their growth prospects, I believe these are two of the best stocks to buy right now.