The prospects for many UK shares are uncertain, which could lead some investors to buy gold. Although the precious metal may provide some defensive appeal in the short run, many FTSE 100 shares offer long-term growth potential after the stock market crash.
In fact, here are two such companies. They appear to have sound strategies, strong market positions and offer good value for money at the present time. Buying them now may boost your financial prospects and provide a more attractive return in the coming years than gold.
Attractive dividend prospects relative to other UK shares
While many UK shares have cut their dividends this year, GSK (LSE: GSK) currently offers a 5.3% dividend yield. This could increase demand among income investors for its shares in the coming months. Its recent financial performance has also been relatively robust. For example, the company’s first-half results showed an 8% rise in sales despite some disruption from coronavirus occurring in the second quarter.
Looking ahead, GSK continues to prepare for the separation of its business. This could improve its efficiency and lead to stronger financial performance. It’s also making progress in key areas, such as HIV and Oncology, which could boost its long-term financial outlook.
Clearly, disruption from coronavirus could persist in the second half of the year. However, with an attractive dividend yield and a sound long-term strategy, GSK appears to offer investment appeal relative to other UK shares following the stock market crash.
A sound business model for the future
Segro (LSE: SGRO) is another FTSE 100 company that could outperform UK shares over the long run. Its portfolio of warehouses could experience rising demand in the coming years, as consumers shift their spending online at a faster pace following the pandemic.
The company has a large land bank and recently reported its pipeline of near-term pre-let projects is twice the size than it was a year ago. It also delivered a resilient financial performance in the first half of the year. This could increase its appeal among risk-averse investors due to the uncertain economic outlook.
Despite Segro’s 5% share price rise this year, the company appears to offer good value for money. For example, it has a price-to-book (P/B) ratio of 1.3. This suggests it offers a margin of safety, and could deliver further share price growth in the long run.
While UK shares such as GSK and Segro may experience difficulties in the short run caused by coronavirus and an uncertain economic outlook, their long-term prospects appear to be sound. Therefore, with gold trading close to a record high, now could be the right time to avoid the precious metal and buy a slice of each company as part of a diversified portfolio of FTSE 100 and FTSE 250 shares.
Peter Stephens owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. 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.