How would I start a brand new portfolio of FTSE 100 shares for 2023? Firstly, I’d want diversification. Our various economic crises of the past few years have shown how individual industries can suffer disproportionately, so I wouldn’t want to be too heavily invested in one sector.
Diversification
Ideally, if I had enough cash to invest, I’d like to build a portfolio of around 10 stocks. Some people prefer more, for greater diversification. But I think that can often lead investors to buying sub-standard stocks just to get more variety.
The following is not a recommended portfolio, as each individual investor needs to do their own research. It’s just a list of 10 stocks that I’d be happy to hold in a new Stocks and Shares ISA. And even if I wasn’t planning to buy 10, I think it’s a good first step in narrowing down the options.
FTSE 100 shares
| Company | Recent price | 12-month change | F’cast P/E | Dividend yield |
| Lloyds Banking Group (LSE: LLOY) | 46.5p | -2.2% | 6.8 | 4.6% |
| Legal & General (LSE: LGEN) | 253p | -15% | 7.3 | 7.5% |
| abrdn (LSE: ABDN) | 188p | -22% | n/a | 7.8% |
| WPP (LSE: WPP) | 820p | -27% | 10.4 | 4.1% |
| Taylor Wimpey (LSE: TW) | 104p | -40% | 5.7 | 8.8% |
| BAE Systems (LSE: BA) | 869p | +1.4% | 17.4 | 3.0% |
| Tesco (LSE: TSCO) | 226p | -22% | 11.6 | 5.1% |
| National Grid (LSE: NG) | 1,004p | -7.3% | 14.4 | 5.2% |
| Imperial Brands (LSE: IMB) | 2,097p | +30% | 8.2 | 6.8% |
| Scottish Mortgage Investment Trust (LSE: SMT) | 701p | -48% | n/a | 0.5% |
The first thing to notice is that there are some big dividend yields there. Yields are boosted by share price falls, though, and I think it’s likely some of those dividends will be cut. But I do think it’s a good time to be buying dividend stocks.
Risk
Bank shares have suffered for years, so there’s risk choosing one now. But every investment carries a risk. And often, those facing the biggest perceived risks can be seriously undervalued. I think it could be a good time to buy banks.
The housebuilding business is another where I think it’s good to buy shares when they’re down. They might face a couple of tough years. But in the long term, it’s a business that’s high on demand and low on supply.
Safety
What about some with more apparent safety? Tesco is the UK’s biggest groceries seller by market share. National Grid has a monopoly on the energy supply network. And Imperial Brands? Well, its products are daily necessities for a huge number of people around the world.
Scottish Mortgage Investment Trust is a pure play on US technology stock growth. And though Nasdaq stocks are down now, I see plenty of long-term potential there.
Variety
This is a selection that covers value stocks, dividend stocks, growth stocks, risker stocks, safer stocks, recovery stocks… Who says the FTSE 100 is full of boring old companies that all look the same?
I don’t have the space to cover all the pros and cons of each of these, and I’d definitely dig deeper before I made any buy decisions. But I reckon it’s a lot easier picking from a list of 10 than a list of 100.
