I believe that building a portfolio of top British stocks is a great way of investing for my future. If I was starting from scratch, I’d start by investing in a range of blue-chip companies from the FTSE 100, operating across different sectors with different levels of risk.
I’d hold at least a dozen top British stocks in my portfolio, possibly increasing that to 15 or 20 over time. First, I’d buy pharmaceutical giant GlaxoSmithKline. This longstanding Motley Fool favourite is out of favour right now but, as a result, is valued at just 11.69 times earnings. It also yields an astonishing 5.89%.
Glaxo has to work hard on replenishing its drugs portfolio, and the dividend payout has been held for years as management diverts resources to R&D. I’m investing for a minimum of 10-15 years though, and that should give its share price plenty of time to recover.
I’d buy FTSE 100 stocks for income and growth
I’d supplement that with some top income-generating British stocks, such as utility giants National Grid and United Utilities Group. While their shares may show little growth, they offer solid yields of 5.19% and 4.31% respectively, with relatively low risk. For income, I’d also buy Tesco.
I’d then buy household and hygiene goods supplier Unilever. This also offers strong defensive qualities, as consumer demand for its products typically holds firm in a recession. Unilever is usually expensive, so today’s valuation of 19.9 times earnings looks attractive to me.
Its 3.46% yield is also more generous than normal. Some investors have fallen out of love with Unilever as they seek faster growth prospects in the post-Covid recovery. However, I believe top British stocks like this one merit long-term loyalty.
For more excitement, I’d target the commodity sector by investing in global miner Rio Tinto. This is another top British stock trading at an attractive valuation. In this case, just 11.02 times earnings. It also yields a mighty 5.75%. This is an attractive way to play the post-lockdown global rebound, assuming mutant strains don’t knock it off course.
I’d also buy these top British stocks
It’s hard to ignore the banks, and I’d include both Barclays and Lloyds Banking Group. Both are on the road to restoring their reputations and dividends, although there will no doubt be further bumps along the road.
If inflation and interest rates rise, they could widen their net interest margins and increase profitability. The risk is that inflation squeezes economic growth, and banking profits. As with all the stocks, holding for the long term should reduce my risks.
Finally, I find it hard to draw up a list of top British stocks without including the housebuilders, given the central importance of property to our economy. As house prices hit new highs, I’d include Barratt Developments and Taylor Wimpey.
They could slip back if the property market slows, but I believe their long-term futures remain bright, as supply is likely to outstrip demand for years and years.
I would also consider these.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, GlaxoSmithKline, Lloyds Banking Group, and Unilever. 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.