FTSE 100 shares got off to a cracking start this week, on news of new Covid-19 vaccine success broke. US biotech firm Moderna reckons its vaccine has shown a 94.5% efficacy in trials. That’s pushed the index up to a new high. Well, its highest since June, anyway — FTSE 100 shares are still down 14% year-to-date.
I’ll have some money to invest over the next couple of months, so what do I have on my list of shares to buy? I’ll take a look at a few of my top picks, and I’ll cover some that I won’t be buying.
Let’s get perhaps the dullest out of the way first. I already hold shares in Lloyds Banking Group and Aviva, and I reckon both are looking good value now. To be fair, I’ve thought that for quite some time now. But I am very tempted to top up on both of them. Once we get back to full-strength dividends from financials sector stocks, I could see an uprating coming. But even without that, I’m mostly after solid dividend yields these days.
While I mostly invest in FTSE 100 shares for income, I’m still happy to look outside the top index and away from dividends. In this case, I really like online fashion retailer Boohoo now. I invested in growth shares more when I was younger. And I always loved to see early growth surges fall back and provide me with a cheaper buying opportunity.
I think I have that now with Boohoo, whose share price has fallen back from both its 2020 peaks. I might well buy within the next couple of weeks.
Getting back to dividends, if I can get a very reliable income that never falters, why should I worry about the share price? That’s what I think when I turn my attention to City of London Investment Trust. I like investment trusts generally anyway, but this one is a leader in the field in one key way.
Top dividend record
Along with Bankers Investment Trust, City of London has raised its dividend every year for 53 years in a row. That includes 2020 too, and I wish I’d bought some earlier in the year. But what about FTSE 100 shares?
Well, speaking of long-term income, I still have National Grid on my buy list. I confess it’s been on the list for years, and I’ve never bought. And it’s proved to be a resilient investment during the 2020 stock market crash. National Grid is at the very centre of the energy distribution business, and I can’t see it losing. Maybe 2020 will be the year I finally invest.
FTSE 100 shares I’m avoiding
Some fallen FTSE 100 shares look like attractive recovery prospects on the face of it, but I’ll avoid them for various reasons. Examples include International Consolidated Airlines, because the world is very tough for airlines anyway, even without pandemic crises.
Then there’s Rolls-Royce, a company I’ve always liked. It looks like a recovery is happening, but will more funding be needed? How much eventual dilution will there be? I won’t buy into recovery stocks until I see how the recovery is shaping.
Alan Oscroft owns shares of Aviva and Lloyds Banking Group. The Motley Fool UK has recommended boohoo group and Lloyds Banking 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.