Most of the FTSE 100’s members have recorded significant declines in their share prices during the recent market crash. As such, now could be the right time to consider buying a diverse range of them. It could mean you benefit from a likely recovery in the index’s price level over the coming years.
With that in mind, here are two FTSE 100 shares that have recorded large falls in their prices over recent weeks. While further drops cannot be ruled out, they appear to offer impressive total return potential over the long run.
SSE (LSE: SSE) recently announced that it will pay its dividend for the 2020 financial year. Its dividend for the 2021 financial year is not guaranteed, but it currently plans to maintain its shareholder payouts, despite coronavirus. And they are due to rise by inflation over the medium term. This could make the stock highly attractive to income investors at a time when many of its FTSE 100 peers are cancelling their dividends.
Having fallen by 17% since the start of the year, SSE’s share price appears to offer a margin of safety. The stock has a dividend yield of 6.6%. This suggests it could offer good value for money as well as an attractive income return.
In response to coronavirus, SSE recently said it is reviewing its spending plans in the short term. In the long run, the company’s investment in renewable forms of energy could provide it with earnings growth that allows it to raise its dividend at a similar rate to inflation. Therefore, while it offers a high yield, now could be the right time to buy a slice of the business for the long term.
Another FTSE 100 share that could offer good value for money at the present time is GSK (LSE: GSK). The pharmaceutical company’s share price has declined by 12% since the start of the year. It now trades on a price-to-earnings (P/E) ratio of around 13, which is relatively low compared to many of its industry peers.
The business recently updated investors on its plans to collaborate with Sanofi to develop a vaccine against coronavirus. This follows a period of change for the business. Divestments have been made and it has plans to split into two separate companies. This may enable it to become more efficient, and could lead to improving profitability in the long run.
GSK’s financial performance is likely to be less impacted by the current lockdown than many of its FTSE 100 index peers. So it could offer some defensive characteristics on a relative basis. It has long-term growth potential in an industry that is likely to experience rising demand. So I think this could make it an attractive stock to own following the FTSE 100’s recent market crash.
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Peter Stephens owns shares of GlaxoSmithKline and SSE. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.