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Shares to buy in 2021: 3 FTSE 100 shares I’d buy for great returns now

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We are only one week into 2021, but FTSE 100 companies are already hard at work, going by the number of updates they have released.

It’s even more heartening to see that despite the crash and burn year of 2020, they are posting positive developments. 

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Here are three that encourage optimism for 2021, making them great shares to buy for now:

#1. Morrison Supermarkets — growth and dividends for this FTSE 100 stock

The FTSE 100 supermarket, Wm Morrison Supermarkets (LSE: MRW), like the other grocers, has seen a discouraging share price trend in the recent past. But its share price has fallen so much now that I think there could be room for gains in 2021. 

It already started making gains in the stock market rally that began in November.

A few days ago, it posted a Christmas update, which has clearly gone down well with investors too. With a price-to-earnings ratio of 16.6 times, it also looks more attractive than many other shares that have run up sharply in the recent months. 

Moreover, it pays a dividend. With a dividend yield of 3.7%, this is I’d consider both as a growth and dividend investment. In fact, it announced a special dividend as well for the second half of the year.

#2. Rentokil Initial — strong demand continues

The FTSE 100 hygiene and pest control services provider Rentokil Initial (LSE: RTO) has been more than resilient through the past year. While many others have unfortunately floundered, it has made some gains. This has shown up in its latest update, where it reports that profits could be higher than expected. 

It has also made a slew of acquisitions in the US, which should bode well for its revenues going forward, going by the size of the economy and its good prospects for 2021.  

Unlike MRW, it hasn’t yet started paying dividends. It terminating them after the stock market meltdown in March. Yet, what it lacks in income generation, it makes up for in growth.

I made a case for RTO in March when it had just stopped dividends. It’s share price has jumped more than 50% since. I think it’s likely to rise further from here, so I have it on my good share to buy list. 

#3. Barratt Developments — optimism about 2021

The FTSE 100 housebuilder Barratt Developments too has posted a positive trading update recently. Even though it acknowledges the support received from government policies and continued uncertainties because of both Brexit and Covid-19, it’s quite confident about 2021.

It’s also planning to resume dividends shortly.

Also, there’s a possibility that the stamp duty holiday will be extended beyond the 31 March deadline. 

Investors have reacted well to this latest update and I think here, too, there’s further room for gains. It has an earnings ratio of 18 times, which isn’t low, but it isn’t the highest around either. Further, its share price is still way lower than it was at the start of 2020, making it a share to buy for me. 

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Manika Premsingh owns shares of Rentokil Initial. 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.

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