The Motley Fool

£5k to invest? 2 FTSE 100 stocks I’d buy in this market crash

Image source: Getty Images

Shares in FTSE 100 stocks Hiscox (LSE: HSX) and RSA Insurance (LSE: RSA) have slumped over the past few weeks. Investors have been dumping shares in these insurance giants as the coronavirus outbreak devastates the global economy.

The companies, which were once some of the best income FTSE 100 stocks, have also been asked to cut their dividends by regulators.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The regulators hope freezing dividends will free up more cash for financial companies to deal with the coronavirus crisis. While this is a disappointing development, it could be an excellent opportunity for long-term investors.

FTSE 100 stocks on offer

As FTSE 100 stocks go, Hiscox is one of the best. The company is one of the largest insurance businesses in London.

It hasn’t got to where it is today by accident. The group has a reputation in the insurance industry for shrewd and conservative underwriting — essential qualities to make it big in the market.

Unless the company suffers a sudden outflow of talent, it is unlikely that the crisis will cause the business to lose this reputation. As such, Hiscox seems well placed to weather the storm and could potentially come out stronger on the other side.

Insurance is an essential product for many businesses, homeowners and drivers. That’s unlikely to change over the next three to six months. 

The crisis could even drive customers to Hiscox rather than other competitors. The company’s size and reputation will help it stand out if peers start to fold due to market uncertainty.

Therefore, long-term investors should look past the company’s recent dividend cut and focus on its long-term potential.

Former income champion

RSA Insurance has also announced that it is has postponed its final dividend payment for 2019.

While this is disappointing, it could be an opportunity for patient investors willing to buy FTSE 100 stocks today.

Shares in the company have fallen around 30% this year, sending the stock down to a five-year low. After this decline, shares in the insurance giant are dealing at a forward P/E of 8.7. That suggests the stock offers a wide margin of safety at current levels.

Further, while RSA has put its dividend on ice for the foreseeable future, the company should reinstate the dividend when the economy returns to normal.

This suggests that investors could be in line for a dividend yield of around 6.6%. That’s assuming the payout is reinstated at 26.4p. Before the coronavirus crisis, City analysts were expecting the dividend to hit this level in 2020.

Like Hiscox, RSA’s greatest asset is its reputation. The company has been successfully providing insurance for around 100 years. This is unlikely to change over the next few weeks and months.

As such, when the economy returns to normal, RSA’s growth should pick up again. That’s why long-term investors should consider taking a closer look at this industry stalwart after recent declines.

When the economy recovers, both of these FTSE 100 stocks should see a healthy recovery, I feel.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Rupert Hargreaves owns no share 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.