2 wonderful FTSE 100 stocks I’d snap up in June

Sumayya Mansoor explains why these two FTSE 100 stocks are attractive prospects and why she’d love to buy some shares when she can.

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The next time I have some investable cash, I’m planning on buying Vodafone (LSE: VOD) and Diageo (LSE: DGE) shares.

Here’s why!

Vodafone

As one of the world’s largest telecoms businesses, the day to day for Vodafone hasn’t been smooth sailing in recent months. An announcement to rebase dividends hasn’t been met well by investors and the market.

I reckon this is reflected in the share price. Vodafone shares are down 2% over a 12-month period from 77p at this time last year, to current levels of 75p. However, the meandering chart below displays the up and down journey the business has been on recently.

My attraction to the stock is primarily related to the long-term growth prospects that could deliver excellent shareholder value and returns.

A big part of this is the rollout of 5G, which is ramping up. Plus, Vodafone’s foray into the African market, as well as its established presence already, is exciting. Demand for mobile services have taken off in recent years and there’s still lots of room to grow. This could mean boosted earnings, as well as juicy returns.

The natural risk here is that a complex geopolitical picture with the potential for issues could halt Vodafone making inroads and, in turn, profit. This is something I’ll keep a close eye on moving forward.

Otherwise, Vodafone is a profitable business, with a wide presence, and brand power. From a fundamentals perspective, the shares look decent value for money on a price-to-earnings ratio of 10. Plus, a dividend yield of close to 7% is attractive. However, I do understand that dividends aren’t guaranteed.

Diageo

If you like a tipple every now and then, there’s a good chance you’ve consumed one of Diageo’s popular brands. The spirit maker is a dominant player in the market, and has a worldwide presence.

The shares haven’t had the best time lately, down 21% over a 12-month period. At this time last year they were trading for 3,332p, compared to current levels of 2,630p.

I reckon a big part of this is weakened consumer spending due to economic uncertainty. The business has pointed to this in its Latin American, Caribbean, and even US segments in recent updates. As most of its brands are on the premium side, consumers are buying less, or turning to cheaper alternatives. This is an ongoing risk that I’ll keep an eye on moving forward.

From a bullish view, it’s hard for me to ignore Diageo’s brand power, as well as investor return policy. What’s known as a Dividend Aristocrat, the firm has increased payouts for 37 years. However, I do understand that past performance is not a guarantee of the future.

Diageo’s dividend yield stands at 3.1% at present, which isn’t the highest. However, I reckon once economic volatility dissipates, the firm could deliver growing returns for years to come.

Finally, Diageo shares are trading on a price-to-earnings ratio of 19. Although not the lowest, this is significantly discounted compared to its historical average of closer to 24 in recent years.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo Plc and Vodafone Group Public. 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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