3 top FTSE 100 shares I’d buy in February

I reckon the best shares to buy are those big, cash-generative companies that fill the top slots in the FTSE 100. And what better time to pick the best than when they’re delivering results? Here are three bringing us full-year figures in February.

Big oil

Throughout the oil slump, Royal Dutch Shell (LSE: RDSB) dividends didn’t falter. Earnings crashed, but the dividend remained constant. And with the share price depressed, it even reached a massive yield of 9.6% in 2015 — if you’d bought the shares in early 2016, you’d have locked in that high yield for the long term.

Even today, with the shares back up to 2,298p, the expected yield for the year ended December 2016 (and for the next two years) stands at around 6.3% — and it should be back to being covered by earnings this year. Three years of strong earnings forecasts would drop the P/E to 12 by 2018, which is surely cheap.

Even though the dividend has remained strong, you’d have lost money on the shares, right? Actually, the share price is at almost exactly the same level today as it was five years ago, and you’d have made an overall gain of around 30% from dividends — and that was during crisis times.

Full-year results from Royal Dutch Shell are due on 2 February.

Cash cow

On 23 February we’ll have annual figures from Centrica (LSE: CNA), the company behind British Gas and Scottish Gas, and we’re looking at another provider of good long-term dividends here.

Centrica shares have taken a tumble over the last couple of years as increasing competition from smaller energy suppliers took its toll, but December’s update told us that it expected to beat its 2016 targets and that domestic customer numbers remained “broadly flat“. Now, flat might not be what growth-focused investors are looking for, but for a mature cash cow like Centrica, which expects to report operating cash flow in the range of £2.4bn to £2.6bn, it seems fine to me.

Centrica shares are on a forward P/E of around 13.5 based on 2017 forecasts, after the shares have fallen 44% in five years. That fall has pushed the expected dividend yield up to 5.6% for this year — and that’s what I’d buy Centrica for.

Best bank?

There are two big UK banks I like the look of these days, Lloyds Banking Group and Barclays (LSE: BARC) — Lloyds for what I see as a simple undervaluation, and Barclays for its profit potential over the next 10 years. And Barclays is scheduled to release 2016 results on 23 February.

The investment case for Barclays is, I think, quite simple — after cutting its dividend to retain the necessary capital, the bank is restructuring itself to become “a simplified transatlantic, consumer, corporate and investment bank,” its liquidity measures are strong, and when it gets back to progressive dividends they should be very well covered with potential for impressive rises.

The shares have recovered nicely since last summer, but we’re still looking at a P/E that should drop to only 10 if forecasts to December 2018 prove accurate. And the pundits are expecting the dividend to bounce back by then too — the 3p we’re going to see this year, should next be lifted to around 7.6p if they’re right.

That would only provide a yield of 3.3%, but it would be more than three times covered by earnings.

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Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Barclays, Centrica, and Royal Dutch Shell. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.