How I’d aim to make a million from just 10 FTSE 100 stocks

If I could only add 10 FTSE 100 stocks in my portfolio, I’d go for these. It’s my best shot at making a million before I retire.

A front-view shot of a multi-ethnic family with two children walking down a city street on a cold December night.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

There are loads of FTSE 100 stocks I’d like to buy today, but I can’t buy everything I see. Long-term investing is all about choices.

I’m all in favour of diversification but I accept billionaire investor Warren Buffett’s argument that it’s also “protection against ignorance” and “makes little sense if you know what you’re doing”.

Buffett goes on to point out that “that a lot of great fortunes in the world have been made by owning a single wonderful business.” I wouldn’t go that far, but I can see the sense of aiming to build a £1m portfolio by selecting just 10 wonderful businesses. Here are mine.

I’m aiming for a million

I’m taking advantage of recent stock market volatility to load up on ultra-high yielding FTSE 100 dividend stocks.

I’ve bought wealth manager M&G, which yields 9.88%. I’ve also bought insurer and asset manager Legal & General Group, which yields 9.02%, trading at just 5.6 times earnings, and housebuilder Taylor Wimpey, which yields 8.52% and trade at a lowly 5.9 times earnings.

All three stocks have risks. M&G and L&G have fallen with stock market volatility, while Taylor Wimpey is at the mercy of our fragile housing market. Yet since I aim to hold all my picks for a minimum 10 years, and ideally longer, I can give them time to recover. I don’t expect to make a million overnight. It will take a seriously long time of patient portfolio building.

I’ll add two more dividend stocks to that list, Lloyds Banking Group, which is cheap and yields 5.98%, and mining stock Rio Tinto, also cheap and yielding 7.98%. Both require a full-blooded economic bounce to recover, and that could take time. While I wait, I’ll reinvest all my dividends to build up my stake.

Choices, choices

Private equity manager 3i Group is my favourite growth stock on the FTSE 100. I’ve bought it twice over the summer. It’s smashed the index and trades at a premium valuation, but I still reckon its experienced management team can deliver long-term growth.

I’ve also taken a chance on two beaten-down FTSE 100 stocks, consumer goods giant Unilever and growth fund Scottish Mortgage Investment Trust, in the hope they bounce back from recent struggles.

I’m confident Unilever will get its act together but Scottish Mortgage is a high-risk, high-reward play. I had to include one.

Spirits giant Diageo has also slipped lately but I think it will recover as the cost-of-living crisis ebbs and drinkers have more cash in their pockets. The risk here is that eventually alcohol falls out of favour, like smoking. Could happen.

Finally, I’d invest in two technology stocks, information and analytics firm RELX and accounting software specialist Sage Group. Both have delivered solid growth over the years and I’m hoping that will continue. There’s only one problem. That takes me to 11 stocks. I can only pick one of these two, and I haven’t decided which yet. Well I said investing was about choices.

Having picked my stocks, I’d throw the kitchen sink at them. That means investing all I can afford, as soon as I can afford to do so, and reinvesting all my dividends. Making a million takes time. But I can’t afford to waste it.

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.

Harvey Jones has positions in 3i Group Plc, Legal & General Group Plc, Lloyds Banking Group Plc, M&g Plc, Rio Tinto Group, Scottish Mortgage Investment Trust Plc, Taylor Wimpey Plc, and Unilever Plc. The Motley Fool UK has recommended Diageo Plc, Lloyds Banking Group Plc, M&g Plc, RELX, Sage Group Plc, and Unilever 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.

More on Investing Articles

pensive bearded business man sitting on chair looking out of the window
Investing Articles

The Dr. Martens share price just crashed 25%! Time to buy?

The Dr. Martens share price has plummeted. Is this an opportunity for our writer to add the stock to his…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Dr. Martens: is this collapsing FTSE 250 stock now a contrarian buy?

Shares of this well-known FTSE 250 firm just dropped to a record low following a poorly received report. Is this…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Why I’d start putting money into dirt cheap UK shares this December

Our writer isn't waiting until the New Year to consider opportunities for his share portfolio. Here are some reasons why…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

What are the best shares to buy in December for 2024?

Christopher Ruane explains why he's not waiting until 2024 to make moves in the stock market and would be happy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

£5k of savings? I’d target income of £7,544 a year by investing in just 3 dividend shares

I'm building a portfolio of dividend shares to give me a passive income in retirement. It's astonishing how the rewards…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

One dividend giant I’d buy over Aviva shares

Aviva shares still look a good buy to me, but I think right now another high-yielding dividend stock looks even…

Read more »

Newspaper and direction sign with investment options
Investing Articles

I would grab these cheap shares before prices rise again

With the UK market in a slump, this Fool UK contributor is looking at buying up some cheap shares before…

Read more »

Girl buying groceries in the supermarket with her father.
Investing Articles

Down 55% since 2007, can the Tesco share price turn around?

The Tesco share price has fallen by more than half in recent decades. Our writer explains whether the stock has…

Read more »