If you think you’ve missed out on the opportunity to buy bargain FTSE 100 shares after the stock market recovery, think again.
The index is still packed with top companies at reduced prices, and many could make great long-term buy- and-holds. If I had £5k to invest, or any other sum, I’d aim to buy before the next leg of the stock market recovery.
Recent volatility seems likely to continue. But I still think the following five stocks are too good to resist today.
I’d buy these bargain FTSE 100 shares today
I’m impressed by the handful of FTSE 100 companies whose share prices have held firm, or risen, during the crash. Pharmaceutical stocks AstraZeneca and GlaxoSmithKline and food delivery firm Ocado Group spring to mind. However, right now, I’d prefer to buy top companies that were knocked by the sell-off, and are now available at bargain prices.
That way you can pick them up at a discount, then hold for the long term while waiting for the stock market recovery.
I’m particularly impressed by FTSE 100 companies that are standing by their dividends, as others cut theirs. This could be a sign of financial strength. On Friday, household goods giant Unilever was the latest to stand by its payout. It’s been one of my favourite stocks for years, so I’d take advantage of the 12% drop in its share price since January. Unilever now yields 3.45%, relatively high for this in-demand stock.
I also can’t look past spirits giant Diageo. Its shares have fallen around 17%, yet alcohol sales are rising as Britons drink their way through the lockdown. That should continue once we’re all allowed out again, leaving the company well-placed for the stock market recovery. Diageo’s yield may seem low at 2.52%, but management tends to increase it quickly.
Insurer Prudential is still paying a dividend, and now yields 3.58%. Again, it’s cheap, as its share price has fallen by a third. People still need protection and pensions. Prudential is also focused on Asia and should benefit if the region continues to recover faster than the rest of the world.
Get set for the stock market recovery
So far, I’ve chosen companies selling household goods, alcohol and insurance. I’d balance this out with a utility, and my long-term favourite here is National Grid. Its share price is down around 12%, and now yields 5%. A solid long-term buy-and-hold.
Finally, I’d buy either BP or Royal Dutch Shell. The Covid-19 and oil price crashes have hammered their shares, but they yield more than 10% as a result. If they can stand by those dividends, investors should reap the rewards, especially when the stock market recovery comes.
It’s a great time to go shopping for shares, provided you choose them carefully.
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and Prudential. 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.