As the name suggests, the FTSE 100 comprises 100 shares at any given time. Many UK investors will probably own at least a couple of them, if not all of them through a Footsie index tracker.
When Warhammer maker Games Workshop joined the FTSE 100 just before Christmas, it became the 14th Footsie name in my 41-stock portfolio. In no particular order, here are the other 13.
Dividends shares
One great strength of the UK’s blue-chip index is the dividend income on offer. It yields a very respectable 3.6%, but you don’t have to rummage too long to unearth dividend stocks yielding far higher than the average.
My portfolio has four of these high-yielders in the shape of Legal & General, British American Tobacco, Aviva, and HSBC. Respectively, they yield 9.2%, 8.2%, 7.2%, and 6%.
Beyond the income potential, I like HSBC’s positioning in Asia, the world’s fastest-growing region. And I want my portfolio to have long-term exposure to the UK’s ageing population, which Aviva and Legal & General offer in spades. Meanwhile, British American Tobacco stock appears undervalued to me.
Naturally, dividends aren’t assured, and financial services stocks are exposed to the fluctuations of markets. British American Tobacco’s having to manage a decline in the number of smokers worldwide while building up its non-cigarette business (vapes, pouches, heated tobacco, etc).
Nevertheless, I think this little basket of FTSE 100 high-yielders offers my portfolio solid dividend prospects and decent diversification.
Growthier names
I also hold other dividend-paying stocks where, over time, I hope for a decent bit of share price growth on top. These include bottler Coca Cola HBC and Diageo, which yield 2.9% and 3.3% respectively.
Between them, they sell a number of timeless brands, including Coca-Cola, Sprite, Fanta, Johnnie Walker, Smirnoff, and Guinness.
I’d put 2.6%-yielding defence giant BAE Systems in this bucket too. As EU Commission president Ursula von der Leyen said in 2024: “The world is as dangerous as it has been for generations.”
BAE’s helping European countries re-arm in an age of rising external threats. While an unpredictable Donald Trump administration adds uncertainty, I think BAE will do well moving forward.
Two turnaround stocks I hold are JD Sports Fashion and Rolls-Royce. But the former has just tanked after Christmas profits underwhelmed, so the turnaround may take a while. I’ll remain patient.
Rounding out this category are diversified pharma giant AstraZeneca and plant hire firm Ashtead Group.
Investment trusts
Finally, I hold a pair of FTSE 100 investment trusts in my portfolio. One is Pershing Square Holdings, which offers exposure to Bill Ackman’s hedge fund. He has a tremendous record of beating the market.
The other is Scottish Mortgage Investment Trust (LSE: SMT). The fund invests in innovative firms with high growth potential, including Amazon, Nvidia, and Instagram owner Meta Platforms.
But Scottish Mortgage also gives exposure to exciting private companies that I can’t invest in myself. One is SpaceX, Elon Musk’s extraordinary rocket company whose valuation has swelled to $350bn. Its Starlink internet service now has over 4.6m subscribers.
Due to the trust’s sole focus on growth companies, it can underperform badly during bear markets. But the portfolio’s packed with innovators that I expect to be much larger in future, which should boost Scottish Mortgage’s value over time.
