Picking FTSE 100 stocks to invest within the current environment has its challenges. On one hand, you want to be investing in companies that are set for solid growth in the years ahead. On the other, you also want an element of defensiveness. Economic uncertainty remains extremely elevated due to Covid-19 and we can’t rule out a second stock market crash.
Finding FTSE stocks that offer a nice mix of growth potential and resilience isn’t that easy. There are some stocks, however, that tick both boxes. Here’s a look at one such stock I like the look of right now.
The perfect FTSE 100 stock to own?
Reckitt Benckiser (LSE: RB) is a leading FTSE 100 consumer goods company that focuses on health and hygiene products. It owns a leading portfolio of brands that are sold in nearly 200 countries and are trusted by millions of people worldwide. Its major brands include the likes of Dettol, Lysol, Finish, and Nurofen.
Growth potential in a post-Covid-19 world
In terms of growth potential, I see Reckitt Benckiser as very well-placed in a post-Covid-19 world. Given that we’re all likely to be far more focused on hygiene, demand for Reckitt’s products, such as Dettol antibacterial soaps and wipes, and Lysol disinfectant sprays, should be high. I’ll point out that in the first quarter of 2020, Reckitt reported like-for-like growth of 12.8% in its hygiene division with strong growth in most markets. That’s certainly encouraging.
There are other growth drivers here too. One is the world’s ageing population. With the number of over 60s worldwide set to rise to 1.4bn by 2030, up from 901m five years ago, I can see demand for RB’s trusted healthcare products such as Nurofen, Gaviscon, and Mucinex steadily rising in the years ahead too.
Overall, Reckitt Benckiser appears to have plenty of growth potential, in my view.
A resilient FTSE company
At the same time, Reckitt Benckiser can also offer investors portfolio protection. If the global economy does experience a prolonged recession due to Covid-19, you can be sure Reckitt will survive. That’s because it sells everyday products that people tend to buy, no matter what the economy is doing.
And if the stock market crashes again, RB is likely to provide portfolio stability. In the recent crash, the stock only fell 20%, versus a decline of around 35% for the FTSE 100 index.
Reliable dividend payer
On top of all this, Reckitt Benckiser is a very reliable dividend payer. Since the FTSE 100 company was formed in 1999, it has never cut its dividend. And in that time, the company has lifted its payout from 24p per share to 175p per share. Currently, the prospective dividend yield is about 2.4%.
Putting this all together, Reckitt Benckiser has a lot going for it, in my opinion.
However, I’ll point out that Reckitt Benckiser shares aren’t super-cheap. With analysts forecasting earnings of 310p per share this year, the forward-looking P/E ratio is about 24. But I wouldn’t let that valuation put you off. Recently, Barclays raised its target price for the stock to 9,000p – 20% higher than the current share price.
All things considered, I believe RB is the perfect stock to own right now. I’d buy the FTSE 100 stock today and hold it for the long term.
Edward Sheldon owns shares in Reckitt Benckiser. 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.