This year, Valentine’s Day spending in the UK is predicted to be worth over £1bn. Today, I’d like to talk about neither flowers nor chocolate, but about the ‘financial Valentine’. Some stocks may be fun for a fling. Others, you’ll want to keep in your portfolio for a lifetime.
So I’d like to bring to you attention three FTSE 100 companies in which I’d be willing to invest in 2020, especially if there’s any dip in their share prices. You may want to do your own research to see if they may be appropriate for your long-term portfolios.
Year-to-date, Smirnoff-to-Guinness giant Diageo (LSE: DGE) is down about 1%. The shares are hovering around 3,160p and offering a dividend yield of 2.2%. And the shares are going ex-dividend on 27 February.
There may be few consumer products as recession-proof as alcohol, as people tend to drink in both good and bad times alike. The strong brand names owned by Diageo give management pricing and competitive power within this non-cyclical market. Geographic diversification – especially into emerging economies, where consumers are increasingly showing brand loyalty – also provides a relatively defensive investment opportunity.
However, its forward P/E of about 23, P/S ratio of 9.8, and P/S metric of 5.7 make it a bit expensive in my eyes at this point. I’d be happy to invest in this drinks giant if there is any further weakness in the share price, especially toward the 2,750p level.
Lloyds Banking Group
Shares of Lloyds Banking Group (LSE: LLOY) are currently trading around 56p a share and year-to-date are down about 9%. The group’s forward P/E stands at 8.1.
Lloyds shares have a dividend yield of 5.7%, which beats the FTSE 100 average of 4.5%. Our readers may be interested to know that from 2020 onward, the banking giant is going to pay dividends quarterly. Thus following the ex-dividend date expected on 16 April for the final annual dividend payment, the shares will once again go ex-dividend on 21 May for the first quarterly dividend payment. Afterwards, the next ex-dividend date is expected on 20 August.
In early February, the group announced that it is to close 56 branches across the UK. The move is a reflection of changing customer behaviour which includes the move toward online banking services. I believe that management will continue to take further steps to keep the bank competitive among its peers and that the stock will offer value for shareholders in the months ahead.
Paper and packaging group Mondi (LSE: MNDI) has operations across more than 30 countries and multiple industries. The group has a diversified range of businesses as it manages forests, produces pulp, paper and plastic films. And it offers industrial and consumer packaging solutions as well as sustainable packaging products worldwide.
In January, Mondi share price suffered a drop, especially following the update that CEO Peter Oswald would be leaving the company in March, after less than three years on the job. February has so far treated shareholders better.
On 27 February, management will release its full-year results. I’m willing to bet that the growth in e-commerce in 2020 will likely benefit Mondi shares in the coming months. The market values the firm at about £8bn – a solid market capitalisation. At present, the business provides investors with a robust 4.2% dividend yield and the share price of 1,650p throws up a forward P/E ratio just over 10.
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tezcang has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Lloyds Banking Group. 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.