Do you have a spare £2k you’re looking to invest in FTSE 100 stocks? The global financial markets are experiencing some extreme fluctuations as geopolitical tensions rise and the pandemic fails to subside.
This throws up a selection of bargain buys and shines a spotlight on resilient shares that can go the distance. The FTSE 100 is a great place to shop when looking for viable stocks for your ISA.
There are many strategies available to stock market investing. But I think the safest way for beginners to start is with a long-term value investing strategy. Attempting to get rich quick by cashing in on short-term price spikes is the quickest way to get burnt.
Billionaire investor Warren Buffett has always advocated a long-term approach to investing, and I think newcomers would do well to heed his advice. Dividend shares that offer stability and a regular income are among the best stocks to buy for this strategy.
If I was to invest in the FTSE 100 with £2k today, I would consider adding the following picks to a Stocks and Share ISA.
A defensive FTSE 100 dividend stock
The FTSE 100 features well-established companies with a proven track record and often a global presence. National Grid (LSE:NG) is one such business. It provides power to the UK and the USA, ensuring it remains in demand no matter what state the financial markets are in.
This £31bn multinational stock offers investors a dividend yield of 5.4%, its earnings per share are 36p, and price-to-earnings ratio (P/E) is 24 today. It’s expanding its asset base in the UK and the US and actively working towards a clean energy future.
Ofgem recently proposed changes to overhaul the energy networks in its bid to deliver emissions-free energy. This could be detrimental to National Grid’s own clean energy ambitions if it limits the profits it can make.
Globally, businesses remain reliant on utilities to provide them with their power. This puts National Grid in a defensive position. Operating under government regulations also gives shareholders additional confidence. The Ofgem proposals do add an element of risk to the National Grid share price. But as a long-term income buy, I think this is a good stock for those looking to invest in the FTSE 100.
A financially stable stock
A second FTSE 100 dividend stock I like the look of is M&G (LSE:MNG). The UK insurance and asset management business is a relatively new listing on the lead index after separating from its parent company Prudential in October 2019.
Its share price has soared 104% since the March market crash. It’s now offering a dividend yield of 8.8% at today’s price. This £4bn company has dividend cover of 2.7 times, which gives shareholders confidence the dividend will remain in place.
It’s also a stock with growth potential as it’s acquiring Ascentric from Royal London. This is a wealth management platform for UK independent financial advisers. Ascentric brings £14bn of assets under administration to M&G, along with potentially lucrative relationships with over 1,500 advisory firms and their 90,000 customers. It’s also launched a hostile bid for UK Mortgages, which could bring complementary assets into its fund.
M&G has a P/E of 4 and earnings per share are 43p. Overall, M&G has remained financially strong throughout the pandemic and looks a good addition to an income investor’s portfolio.
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Kirsteen has no position in any of the shares 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.