After such a strong rebound following the spring stock market crash, there are still many FTSE shares I’d buy now. There’s a good chance the stock market may climb higher over the coming years because of the TINA effect.
FTSE shares I’d buy now could beat other assets
TINA is an acronym derived from the expression, There Is No Alternative. And the snappy statement is used in several walks of life. But in the world of investing, it tends to mean that investors will keep buying shares because there is no viable alternative.
Indeed, cash savings accounts offer paltry interest rates. And we’ve seen interest rates from bonds and gilts slip to low levels too. Meanwhile, the property market could be suffering from a mini-bubble in prices driven by the stamp duty holiday in England and Northern Ireland.
Those asset classes look unattractive to me, but shares on the stock market still have a lot to offer. For example, the coronavirus crisis knocked valuations, making some shares cheaper than they were before the recent stock market crash. And although some companies have axed their shareholder dividends, some still pay a decent yield.
On top of that, the UK economy is recovering from the lockdowns fast. And many firms are achieving decent earnings in the current economic climate. Generally, earnings drive share prices higher. But shares need positive sentiment from the investing community as well. And I reckon the TINA effect could be a ‘thing’ that helps to drive the stock market higher in the months and years ahead.
How I’d approach the stock market now
The recent wave of dividend-slashing because of Covid-19 has revealed some strong players. Indeed, those firms that haven’t cut shareholder dividends could prove to be robust contenders for a long-term portfolio. And they are certainly worth your research time.
For example, I’ve discovered some decent dividend-payers lately that haven’t missed a beat with shareholder payments through the coronavirus crisis. One example is infection prevention and contamination control products maker Tristel. Business has been strong for the company and it’s in the middle of an impressive programme of international expansion.
And business software and solutions provider Sage kept up its dividend payments too. The company is at an advanced stage of migrating its customers to cloud-based services. Much of the revenue is subscription-based and therefore ‘sticky’. I think that augurs well for the security of operations going forward.
Meanwhile, business recovery and property services consultancy Begbies Traynor has remained a robust dividend payer during the Covid-19 crisis. When other businesses get into financial trouble, Begbies Traynor usually sees its own revenue tick upwards. Indeed, business recovery and financial advisory services tend to be in demand when the economy is weak or suffering a shock, such as now.
These are just some of the many stock ideas you could research with a view to holding for the long term. Ten years from now, your careful stock-picking could have combined with the TINA effect to produce decent investment outcomes for you.
Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Sage Group. 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.