The FTSE 100 index hasn’t exactly boomed over the past five years. (You could say the same for the past 21 years, given the Footsie trades lower today than it did in late 1999.)
Over the past half-decade, the blue-chip index has gained around 680 points and hovers just below 6,600 today. That’s a gain of about a ninth (11.6%) in five years, or roughly 2.2% a year. Adding in dividends lifts the total return above 6% a year. That’s better than cash, but well below the Footsie’s bumper returns before 2000. Thus, it’s pretty much been a ‘lost millennium’ so far for FTSE 100 investors.
FTSE 100: 64 winners since 2016
Though the FTSE 100 has had a mediocre five years, returns from individual index members are extremely dispersed. For the record, 96 of the Footsie’s current crop of shares have been in the index for a full five years. Of these 96 stocks, 64 have risen in value since January 2016. Of these winning shares, 25 have doubled or better, with #1 up an enormous 825.7%. The remaining 39 rising shares are up by 0.1% to 92.1% over five years.
32 losers over five years
With 64 gainers among our 96 FTSE 100 shares, we have 32 losers over the half-decade. Losses among these fallers range from 0.4% all the way up to a 70.5% collapse for #96. What’s more, 18 of these 32 losers have fallen by 20% or more, making these the FTSE 100’s biggest dogs since 2016.
The FTSE 100’s five biggest fallers
Now to reveal the FTSE 100’s biggest dogs since January 2016. Here they are, in descending order.
Lloyds Banking Group -51.2%
Imperial Brands -56.1%
International Consolidated Airlines Group -63.3%
As you can see, losses among these five fallers range from 47.5% at advertising and PR giant WPP to 70.5% at telecoms veteran BT. Having any of these stocks in your portfolio over the past five years would have dragged down your performance. However, looking ahead to the next five years, which of these dogs do I believe could transform into stars?
I’d buy these three dogs today
If I were building a mini-portfolio from these five FTSE 100 fallers, I’d ditch two stocks: WPP and IAG. Since 2017, WPP’s share price has suffered as US tech giants have increasingly dominated the global ads market. As for British Airways owner IAG, I see a tough two or three years ahead for airlines. It might be 2023 before air travel returns to 2019 levels.
Thus, the three FTSE 100 dogs I’d buy today are Black Horse bank Lloyds, tobacco group Imperial Brands, and BT. I’ve written many times about Lloyds and how I’d back it as a low-risk winner in a post-pandemic recovery. With a fortress balance sheet and billions of pounds of excess capital, I think Lloyds will comfortably weather the current storm.
As for Imperial, I’m a fan of its shares for their huge dividend yield. At the current share price of 1,564.5p, this ‘sin’ stock offers a cash return of 8.8% a year. What’s more, with this stock over £5 below its 2020 high, there’s scope for future capital gains. Lastly, I’ve been negative on BT for maybe a decade, partly because of its massive pension shortfall. But on a price-to-earnings ratio of 8.8 and an earnings yield of 11.4%, I think this FTSE 100 stock could be a winner over the coming five years.
Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands 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.