It’s quite normal for investors new to the game to head for the FTSE 100 first. I know I did. In fact, one of my first investments was in an FTSE 100 index tracker fund. And it did well for me for the several months I held it.
But since then, I’ve regularly invested in the shares of individual companies. And if I wanted an instant starter portfolio now, I’d go for these top FTSE 100 stock buys. I think both the following shares are offering decent-looking value right now.
This FTSE 100 stock serves the attractive FMCG sector
Smurfit Kappa (LSE: SKG) operates as a paper-based packaging solutions provider. And, as such, it serves the supply chain feeding the attractive Fast-Moving Consumer Goods (FMCG) sector.
The company issued a positive trading update at the beginning of November declaring that trading for the nine months to 30 September had been ahead of the directors’ expectations. And statements like that are music to the ears of most shareholders.
One feature in the firm’s five-year financial record is the strong and rising cash flow. And I see that as a mark of a business well equipped to keep shareholder dividends flowing and rising over time. Indeed, I reckon the enterprise has defensive qualities and growth potential.
The shares change hands near 3,164p, as I write. And, at that level, the forward-looking dividend yield for 2021 is about 3.2%. I’d buy some of the shares now with a holding period of at least five years in mind.
A green energy firm with a modest valuation
Energy company SSE (LSE: SSE) strikes me as operating in the right place at the right time. And, on 26 November, the firm updated the market about its 50:50 joint venture with Equinor to build the Dogger Bank wind farm. The two companies plan to proceed with the first two phases of the project. And SSE said, once all three phases are complete, the Dogger Bank wind farm will be “the largest in the world.”
The development is the biggest of SSE renewable energy projects in construction. The company is also “leading” the construction of the Seagreen offshore wind farm, which will be Scotland’s largest on completion. On top of that, SSE owns the Viking wind farm, which it describes as “the UK’s most productive onshore wind farm.”
Meanwhile, SSE’s valuation remains modest. And with the share price near 1,381p, the forward-looking dividend yield for the trading year to March 2022 is around 6%. I’d buy some of the shares today and hold them for the long haul.
These two aren’t the only stocks I’m keen on in the FTSE 100. And if I was starting up my portfolio from scratch, I’d aim to invest in at least five carefully-chosen stocks to achieve basic diversification. Or, I might buy these two and invest in an FTSE 100 tracker fund as well.
I also like these five stocks.
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Kevin Godbold has no position in any share 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.