Here are the 10 top FTSE 100 shares I’d buy right now

As valuations keep changing, I keep looking at FTSE 100 shares and thinking “What if I could start all over again today?”

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I see so many cheap shares on the FTSE 100 today, I’m spoiled for choice. But which 10 might make a good Stocks and Shares ISA, starting now?

We all have our own ideas of what makes good value, and I base mine on something ace investor Warren Buffett said:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Letter to Berkshire Hathaway shareholders, 1989

My criteria

So, what factors do I use to find wonderful FTSE 100 shares?

I want firms with vital goods or services, ones that we find it hard to live without.

I also want ones with good defensive positions, and protection against others trying to get in on their market.

The strength of the big banks is an example. In the financial crisis, challenger banks made inroads into the high street. Now we hear that Virgin Money is to close a third of its UK branches.

Top 10

Here are the 10 I think I’d pick today:

StockRecent
price
1-year
change
5-year
change
Forecast
P/E
Forecast
dividend
M&G204p-4.1%-9.5%11.810.2%
British American Tobacco2,669p-23%-33%7.49.2%
Aviva401p+2.9%-38%7.78.0%
Barclays165p+4.6%-12%5.14.7%
Lloyds Banking Group46p+5.3%-26%6.35.4%
National Grid1,048p-4.8%+24%15.15.5%
Tesco261p+0.6%-20%12.24.4%
GSK1,385p-22%-11%10.64.3%
Scottish Mortgage Investment Trust692p-17%+24%n/a0.6%
Taylor Wimpey116p-5.0%-34%13.29.0%
(Sources: Yahoo! Finance, MarketScreener)

Good dividends

Looking at these now, one thing stands out to me. The average dividend yield of that lot comes to 6.1%.

If I could invest my full Stocks and Shares ISA limit every year for the next 25 years, at that rate I could end up with more than a million pounds. Wouldn’t that be nice?

But that’s enough dreaming.

Scottish Mortgage is the outlier here, with a small dividend. It holds a lot of US tech stocks, and it’s my one growth pick to add a bit of spice.

Valuation

One other thing strikes me. I didn’t make my choices based on price-to-earnings (P/E) ratios.

But it turns out that the average (excluding Scottish Mortgage, which is down for an earnings loss this year) comes out at 8.9.

The long-term average for FTSE 100 shares is around 14 to 15.

So that makes me think my set of stocks here looks cheap. And it’s not just individual stocks. No, I think this is a well diversified set, and that makes me see shares in general as good value now.

Less risk

It brings me to a key aim for me. Anyone heavily into banks in 2008, or house builders in 2021, would have soon been looking at a sea of red.

In fact, all of my stocks here carry their own risks, which I can’t go into now. So anyone who might think they like them should do their own research first. To reduce risk, I always want good diversification.

So I spread these choices across a range of sectors. I did double up on banks, but that’s my favourite sector in 2023.

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 assessed. Consider taking independent financial advice.

Alan Oscroft has positions in Aviva Plc, Lloyds Banking Group Plc, and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended Barclays Plc, British American Tobacco P.l.c., GSK, Lloyds Banking Group Plc, M&g Plc, and Tesco Plc. 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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