What a year it’s been. And what a week. I’ve spent much of 2020 trying to pick buys for my portfolio during the stock market crash. Now, we’ve had Joe Biden’s success in the US presidential election, and good news on the Covid-19 vaccine front. Does that change anything, and what are the best shares to buy now?
I’m going with two approaches. One is to look for shares that have remained resilient throughout the crash. The other is to dig out stocks that I think have been unfairly punished. Today I’m looking at one of each. Both, though, are shares I’d want to buy and hold for the long term.
Always one of the best shares to buy?
My first pick is National Grid (LSE: NG), which released first-half results Thursday. The energy networks operator has suffered from Covid-19 pressure along with most. It’s been hit by US bad debts and storm costs too. As a result, though statutory operating profit grew 13%, the underlying figure took a 12% hit at £1.1bn.
Something similar happened to earnings per share. The statutory figure rose 51%, but underlying EPS fell 14% to 17.2p. And capital investment dropped 6% to £2.6bn. Looking forward, the firm predicted a 2021 Covid-19 hit on operating profit of approximately £400m.
But for me, National Grid has always been on my list of the best shares to buy, and it still is. The main reason is its dependable long-term dividend. On that score, I see nothing to worry about. The company announced a 17p per share interim dividend, in line with policy. That’s up a little from the previous 16.57p.
Forecasts suggest yields of above 5%, in keeping with the past few years. And National Grid’s annual payments have kept pace with inflation too.
My second pick is in a sector that’s always been in my list of best shares to buy. It’s Taylor Wimpey (LSE: TW), and its share price has spiked up strongly on the recent positive news. It’s still down 25% year-to-date, so there’s still some way to go before Taylor Wimpey shares regain 2020’s losses.
But for me, that means there’s still time for me to buy. There is serious competition for my money, mind, and I’m into housebuilders with my Persimmon shares. If I didn’t already own those, I reckon I’d definitely be buying now. And I might still extend my holding in the sector anyway.
Taylor Wimpey released an update on 9 November, saying it expects next year’s operating profit to come in “materially above the top end” of previous guidance. That gave the shares a 12% boost on the day. And they’re up 34% since the beginning of November.
But even after that, the forecast 2021 dividend would still yield 7.5%. My difficulty is that my list of best shares to buy now is way too big for the money I have available. But I reckon that’s not a bad problem to have.
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Alan Oscroft owns shares of Persimmon. 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.