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The 2 best FTSE 100 shares I’d buy now

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I think your best chance to beat a market trending sideways is to buy the best FTSE 100 shares as cheaply as you possibly can. Then simply wait for regular dividends and reinvest to compound your gains. No fuss, no muss.

Both of these highly-popular FTSE 100 companies shocked the market by halting or cutting dividends in the depths of the Covid crisis. But I think investors can be reasonably confident that dividends will return in full force by Q4 2020.

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At current share prices, the yields would be a tidy 8% to 9%.

So I’d say these two are the best FTSE 100 shares that I’d buy now to achieve more wealth.

Playing favourites

Aviva (LSE:AV) is a low-debt, well-managed multinational savings and insurance company. So why is this on my list of the best FTSE 100 shares to buy?

Firstly, it’s undervalued by any metric: a P/E ratio of 4.5, price-to-book value of 0.6 and super-cheap price-to-sales ratio of 0.15.

Secondly, it is still winning very large contracts even in the midst of all this chaos.

Take for example a £95m bulk annuity deal with the British Bankers Association in late May. This will be a large and ongoing revenue generator.

Trustee director Sean Burnard said the deal with Aviva “represents excellent value” and is “a real lesson in positive collaboration.” That’s the kind of service I like to hear about.

Lastly, when sentiment turned more positive from early May to early June, the Aviva share price gathered steam for a 30% rise up to 296p.

While Aviva CEO Maurice Tulloch decided to halt the 2019 dividend on 8 April, I think it’s a prudent cash saving measure. And he will revisit the decision in Q4 2020. I’m happy to hold until then.

Second-best FTSE 100 share?

The same sort of thing has happened with Royal Dutch Shell (LSE:RDSB). When oil prices bombed in February, the Shell share price dived as low as 982p. It has reclaimed 1,335p at time of writing.

That’s a 30% rise from the depths of the first-wave Covid crash. And a P/E of 6.8 is nothing for what I believe is one of the best FTSE 100 shares.

Since April’s shock headlines about negative oil prices, the US WTI benchmark has climbed to $38 a barrel while Brent crude has recovered to $40 a barrel. So Shell won’t be losing money for every barrel it pumps.

But when CEO Ben van Beurden cut the company’s dividend for the first time since the Second World War, it still came as a shock.

Chair of the board Chad Holliday then reminded his colleagues that “shareholder returns are a fundamental part of Shell’s financial framework”. He’s not wrong.

Shell has been paying ever-growing dividends like clockwork for decades. This regularity earned the oil supermajor an army of keen income investors. And I’d expect bosses to revisit the decision by the end of this year, at least.

Like Aviva, Shell has been making big deals to ensure its cost-cutting measures are not for nought. That’s what makes it one of the best FTSE 100 shares.

Just last week it announced a major renewable energy project under its drive to become carbon neutral by 2050. It joins BP to build two utility-scale solar panel projects across Trinidad & Tobago.

In my opinion, these are the best FTSE 100 shares that should top your buying list.

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Tom Rodgers owns shares in Aviva and Royal Dutch Shell. 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.

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