£4k to invest? 2 FTSE 100 firms I’d consider for a Stocks and Shares ISA now

These companies offer decent dividend income and growth potential, so I’d research them now for my Stocks and Shares ISA.

| More on:
Happy young female stock-picker in a cafe

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.

With £4k to invest, I’d consider two companies for a Stocks and Shares ISA. The first is Screwfix and B&Q owner, Kingfisher (LSE: KGF).

With the share price near 269p, I think the valuation looks attractive, and I’m optimistic that the general economy will thrive over the coming few years. If that happens, the retailer may see steady business recovery and growth, although that outcome is not certain.

Steady trading

City analysts expect normalised earnings to rebound by just over 17% in the trading year to January 2026. Meanwhile, they’ve pencilled in a dividend of about 12p a share.

That puts the company on a forward-looking price-to-earnings multiple of just over 11 and a yield of almost 4.5%. Fair value, I’d say, when compared to the FTSE 100 index multiple of about 14 and its yield near 3.3%.

In May, the company issued a first-quarter trading update reporting steady trading and an outlook statement predicting more of the same. That was after such trends continued into the second quarter.

The business looks unlikely to shoot the lights out with revenue and earnings growth, at least in the short term. There’s also a risk that trading may deteriorate if the economy falters or if we are hit with another unexpected economic shock. After all, the retail sector is cyclical, and that shows in Kingfisher’s share price chart and trading record.

However, I’m encouraged by the steady progress the business is making and I like the chunky dividend yield. So I’d dig in with further research now and consider the stock for inclusion in a diversified Stocks and Shares ISA.

But I’m also keen on Coca-Cola bottling and distribution business Coca-Cola HBC (LSE: CCH).

The firm has an impressive record of multi-year earnings and dividend growth, powered by the enduring strength of the Coca-Cola brand.

Consistent growth

The company buys concentrates, bases, and syrups from The Coca-Cola Company for making beverages for sale and distribution under an exclusive agreement. It also sells other sparkling drinks, all across a territory covering 30 countries in Africa, Asia and Europe.

Growth has been steady and that shows in the firm’s trading record and in the share price chart.

We’ll find out more about the strength of current trading with the half-year results report due on 7 August. Meanwhile, City analysts have pencilled in a single-digit percentage uplift in earnings for 2024 and a more than 10% increase next year.

The steady progress looks set to continue. However, one risk that may materialise one day is the company could lose its exclusive right to distribute Coca-Cola products. It’s even possible for the brand to lose its popularity with consumers.

Nevertheless, with the share price near 2,716p, the forward-looking dividend yield is running at about 3.4% for 2025. Meanwhile, the compound annual growth rate of the dividend is just over 10%.

I’d be keen to analyse the business further with the aim of securing that growing income stream for my portfolio by buying a few of the shares.

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.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

What kind of return could I expect by investing £100 monthly in a Stocks and Shares ISA?

Using a Stocks and Shares ISA to avoid capital gains tax could grow a £100 monthly investment into a second…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Can strong operational momentum keep the Informa share price rising?

FTSE 100 company Informa has been performing well, but this may be just the beginning of a multi-year trend for…

Read more »

Market Movers

What’s going on with the Britvic share price?

Jon Smith flags up why Britvic's share price is surging on Friday, but believes that the company is in a…

Read more »

Cheerful young businesspeople with laptop working in office
Dividend Shares

2 super-cheap passive income shares I’m eyeing up right now

Jon Smith discusses two of his favourite passive income shares in the banking and property sectors, both featuring yields above…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
Investing Articles

Up 37.5% in just 12 months, I think this is one of the FTSE 100’s best investments

Our author says this FTSE 100 company is likely to keep on capitalising on the AI and data boom. But…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

This UK share just spiked 15% on bid news. Can we bag a quick profit?

UK share prices are having a good 2024, so far, and this one's already up 39%. Two takeover bids in…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

I’m ‘blowing a raspberry’ at Raspberry Pi shares. Here’s why

Some early investors have made great profits from Raspberry Pi shares. But our writer's questioning whether the 'easy money' has…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Dividend Shares

Here are brokers’ new price targets for Legal & General and National Grid shares

City analysts are generally very positive on National Grid shares. But they're not quite as bullish on the Legal &…

Read more »