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2 top FTSE 100 shares I’m buying before 2022

Screen of price moves in the FTSE 100
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The FTSE 100 has rallied well after the Omicron scare. The index showed an incredible 1.5% recovery yesterday, largely dispelling investor concerns. Businesses are now much better prepared to cope with Covid scares. And I think the UK market is a great place to invest my savings right now given the quality dividend stocks on offer. 

Today, I will be looking at two FTSE 100 shares that look like great long-term picks for my portfolio, one for steady passive income and one with growth potential.    

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Market leader with 6%+ yield

The British insurance industry is a tough nut to crack. There are several established insurers and asset managers vying for a larger chunk of the market. But Legal & General (LSE:LGEN) has been a name synonymous with the industry for nearly two centuries now.

Recent share price returns have been underwhelming. One-year returns stand at 12.6% and LGEN ranks 50th out of the 100 stocks listed in the footsie for returns over the period. But I see an impressive recovery from pandemic lows when analysts expected inflation and interest hikes to have a more profound impact on the insurance sector this year. 

These returns coupled with the 6.2% dividend yield mean investors collected a tidy profit this year. And unlike previous market crashes, LGEN kept its yield steady across a turbulent 2021, upholding its investor-first strategy. The company is currently trading at a forward price-to-earnings (P/E) ratio of 7.5 times, driven by strong profits from its asset management and life insurance divisions. 

But, the British stalwart has to fend off strong competition from the likes of Aviva and M&G. Also, if Omicron fears strengthen, we could face another large market crash. And insurance shares could suffer as a result. But I’m watching LGEN closely, and will consider a £1,000 investment if the FTSE 100 recovery continues.

Top FTSE 100 performer

Ashtead (LSE:AHT) shares have been on an incredible run lately. One-year returns stand at an impressive 92%, making it the best performing FTSE 100 stock in this period, as of today. But. with Omicron fears plaguing the construction industry, the shares are down nearly 3% in the last month which I see as a rare buying opportunity. 

The company has also been bolstered by its growing presence in the US and Canada. US President Biden’s $1.2trn infrastructure investment plan and is great news for a company that specialises in renting out pricey construction equipment. I think Ashtead has a great business model, allowing smaller projects to cut down on construction costs. Although it’s not a new idea, Ashtead has scaled up its venture well and has attracted investors with consistently strong results. Revenue doubled from £2,546m in 2016 to £5,031m in 2021. The company simply shrugged off the pandemic crash while many large construction businesses struggled.

But this also means that its shares are overvalued right now, trading at a P/E ratio of 32 times. And I expect operational costs to rise with its expanding presence in the US. The larger equipment cache means more repair and upkeep costs. And the company operates primarily in North America and the UK, overlooking developing regions in Asia and Africa that have mammoth expansion projects.

Yet I think its strong focus on stable, defensive growth makes it a good FTSE 100 option for my long-term portfolio today.

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Suraj Radhakrishnan 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.

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