2 top FTSE 100 stocks to buy and hold in 2022

Dan Appleby analyses two FTSE 100 stocks to see if they’re buys for his portfolio. He views these two stocks as top prospects for the year ahead.

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I’m looking at top FTSE 100 stocks I can buy and hold through next year. Here are two I think will offer great returns for my portfolio.

A top FTSE 100 dividend stock

The first company I’m going to buy and hold is Legal & General (LSE: LGEN). It’s a financial services business, offering a wide array of investment and insurance solutions.

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The share price has performed well over one year and is up almost 20% at time of writing. This means the stock has outperformed the FTSE 100, which has risen 11% over the same time period. I think this could continue in 2022.

First, the dividend yield forecast for next year is a huge 6.3%. I have to keep in mind that dividends are never guaranteed. However, Legal & General was able to keep paying a dividend throughout the pandemic, so there’s a good chance that it’ll be paid in 2022.

Then, Legal & General is expanding its alternative asset management businesses. Its aim is to generate £500m to £600m in operating profit from alternative assets management by 2025. Operating profit for this division doubled to £250m in the recent half-year results. I consider this an exciting area within its asset management business.

There’s always a risk of a stock market crash next year which would lower the fees that Legal & General earns on its assets under management. Nevertheless, I view the stock as a great buy and hold for my portfolio in 2022.

A stock that’s underperformed

The next company I’m going to buy and hold in 2022 is London Stock Exchange (LSE: LSEG). It’s the largest stock exchange in the UK today. Because of this, it has a wide economic moat that protects its business from potential competitors.

The share price has had a torrid time in 2021. In fact, over one year the stock has plummeted over 20% as I write. This is largely due to the acquisition of Refinitiv, the financial data and analytics platform. London Stock Exchange guided for a significant increase in costs as it integrates Refinitiv into its current business. This increase in costs will reduce future profitability, so the stock has re-priced lower to reflect this.

However, I view this as a short-term issue. There’s great potential here for London Stock Exchange to offer leading financial data and analytics services once Refinitiv is integrated. I think this could widen the economic moat of the company.

There are still risks at play here. For one, the integration of Refinitiv into London Stock Exchange’s business might not work out as acquisitions are never guaranteed to be successful. With this in mind, the costs associated with Refinitiv may be higher than I anticipate. This would no doubt cause the share price to underperform again.

Taking everything into account, I’m still going to buy and hold the stock in my portfolio in 2022.

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Dan Appleby owns shares of Legal & General and London Stock Exchange Group. 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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