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.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

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.

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

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.

Created with Highcharts 11.4.3Vodafone Group Public PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

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.

Created with Highcharts 11.4.3Diageo Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

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.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »