There are some FTSE 100 shares that never go out of fashion. It’s just a matter of watching the market closely and waiting for your opportunity to strike at the right price.
Those shares that offer the careful income investor good quality dividends are among the best options.
If you’re so minded, you could add a high-paying UK dividend ETF to your portfolio, like the 6.6% yielding iShares UK Dividend UCITS ETF, but there are some sound investment options in individual shares right now too.
Take a position with these two top picks in a Stocks and Shares ISA and a buy and hold strategy will allow you to collect your payments throughout 2020 and far beyond.
Now is a very good time to buy the Unilever (LSE:ULVR) share price. A recent trading update suggested that sales growth would slow a little more than expected in 2020 before returning to previous levels in 2021. This will have little impact on earnings.
The market did what it always does and overreacted, in my opinion, sending the ULVR share price down as much as 7%. For you, this dip means you can pick up shares at a relatively cheap entry point at 21 times trailing earnings.
The consumer goods manufacturer makes a whole range of household-name products you’ll have heard of. Among these billion-pound selling brands are Walls ice cream, PG Tips, Hellmann’s mayonnaise and even Marmite.
You would be hard-pressed to find a safer blue-chip share to invest in and I’d say it would take the collapse of the entire stock market to see it go under. If that happens, we’ll each have bigger things to worry about than share prices.
Sales growth missing high expectations isn’t the worst thing in the world. The FTSE 100 giant is still generating vast profits that are up year-on-year, from $8.1bn in 2017 to $12.4bn in 2018, and dividend cover remains stable at 1.5 times earnings.
For investors seeking a little more bang for their buck, BP (LSE:BP) continues to make a lot of sense. You’ll pick up a juicy 6.5% yield at a trailing P/E ratio of 13 times earnings, which is super cheap for this FTSE 100 stalwart.
The focus for BP bosses has been on deleveraging the balance sheet in recent months, bringing more free cash flow back into the business and delivering better returns for shareholders.
City analysts like where this is going, and I would hasten to agree. The price you’ll pay for BP’s shares, given the vast sums of cash they are generating, make it a decent bit of business for your Stocks and Shares ISA.
A quarterly cash flow of $6.4bn and strong underlying growth mean that BP makes a huge amount of sense as a buy-and-hold share.
CEO Bob Dudley is due to end his 40-year career with the firm when he steps down in February, and I think having engineering wizard and BP lifer Bernard Looney coming in as the new chief executive will provide the share price with a refreshed vigour in 2020 and far beyond.
Tom has no position in the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.