You’re Pretty Smart If You Own These Shares

NEWSFLASH: markets can be unpredictable.

I mean, one minute there’s a herd of market gurus queuing up to predict the FTSE would soon breach 7,000…

Then the next minute the sky darkens, emerging markets fall apart, the index loses 400 points and we’re all wondering if it’s next stop FTSE 6,000.

And then, as if by magic…

…the clouds lift again, buyers return, the FTSE rallies 100 points in a day…

…and the bull market is back on!

I’ve translated that as “sell your granny and fill your boots”

I just hope Jonathan, Brenda, Tim, Paul and Guy – and all the other upbeat gurus in the City – weren’t bounced out by the recent falls… and continue to keep their fingers crossed for 7,000 later in the year.

Me? Well, it goes without saying that I still have the champagne on ice and the party hats on hand. My only complaint is I was looking forward to picking up some bargains for my portfolio while stocks were on sale.

Nonetheless, I’m busy studying many shares right now… If you’ve been in the investing game as long as I have, you’ll know I see falling markets as opportunities to buy quality stocks on the cheap.

Sadly, most investors don’t see things that way. Instead, they run for the hills at the first whiff of panic.

They hope to wait out the storm, but ultimately they end up buying back in with Johnny Latecomer at much higher prices…

Or even worse, they sit on the sidelines and wait, and wait, and wait, and wait…

…and never get back into shares and instead let their money fester in a savings account earning 0.5% a year.

Sure, investing always involves an element of risk. Shares prices can fall. Companies can go bust. You can lose money.

But show me a rich investor who didn’t take a risk?

I mean, I don’t know many people who made their fortune investing in deposit accounts at 0.5% a year.

But there are plenty of millionaires (and a few billionaires…) out there who made their money from shares.

P***-poor savings accounts or FTSE stocks. You choose…

“On a really good day the FTSE 100 could hit 7,500 this year”

Anyway, there’s at least one more FTSE 7,000 bull charging around the Square Mile right now.

Renowned Old Mutual stockpicker and punchbowl regular Richard Buxton popped up in the Telegraph the other day and said:

“I think FTSE 100 shares will break through 7,000 but it will have several attempts at it first. It’s not seen much progress since 1999 but now, I think, we are in a range between 6,500-7,500, and on a really good day the FTSE 100 could hit 7,500 this year.”

Let’s hope we all get to see that “really good day”. For what it’s worth, Mr Buxton is buying banks and reckons…

“There is material upside as these organisations are still working through the legacy losses and getting back to generating returns on their core businesses.”

Certainly if the economy revives and sentiment lifts, banks may be the stocks to own this year…

Indeed, there are even signs we may see Lloyds Banking return to the dividend list within our lifetimes.

You see, Lloyds has announced it plans to apply to the regulators to restart dividend payments, albeit “commencing at a modest level”.

It’s all a bit of light in the tunnel for hapless Lloyds shareholders, who last received a payout more than five years ago

And on the subject of dividends…

Dividend alert: ARM +27%, BP +11%, Diageo +9%

…I see there’s been GOOD NEWS on the payout front from many blue chips.

Yes, while emerging markets may have been up and down, many of Britain’s biggest and best businesses have been announcing what really matters to long-term Fools – solid dividend progress.

Some 12 blue chips have issued dividend updates during the last few weeks…











British Sky Broadcasting






Hargreaves Lansdown


Rangold Resources


Royal Dutch Shell


Smith & Nephew




…with the average payout advancing a lovely 8%.

I don’t know about you, but I’ll take a 3%-plus yield on the FTSE 100 – and that income growing 8% a year – over a 0.5% savings account any day.

The type of opportunity that sensible investors should always look for

To me at least, that 12-strong list offers a mix of established, illustrious and first-class blue chips… and if you own a spread of those names, I think you’re pretty smart.

Maybe you’ve been buying a few of them, too.

I wouldn’t blame you. Some of those 12 stocks have dropped more than 10% from their 52-weeks highs, while their dividends have kept on rising…

…so creating the type of opportunity that sensible, long-term investors should always look for with quality blue chips.

And while the last few weeks have been a great chance to pick up your favourite companies on sale…

there is still time to invest. The FTSE remains lower today than it was at the beginning of the year.

So just keep buying, holding and collecting the dividends… and your fingers crossed for FTSE 7,000.

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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended shares in British Sky Broadcasting, GlaxoSmithKline and Unilever, and owns shares in Smith & Nephew.