2022 has been a surprisingly good year for blue-chip UK shares with the FTSE 100 defying the global downturn. Wall Street crashed but London did not burn.

Now the FTSE 100 has started to rise, up 6.55% in the last month. Year to date, it is broadly level. I am happy because I embarked on a buying spree recently, purchasing Persimmon, Rio Tinto, and Rolls-Royce in short order. 

At the time, the FTSE 100 had dipped below 7,000, and I thought they looked unmissable value. These are early days but so far, I feel vindicated. All three are up 10% or more since I bought them.

UK shares are on the up

I am keen to add to my recent purchases, and a number of top stocks are now lined up on my watchlist.

These days I am mostly buying dividend stocks. Ideally, those trading at low valuations with high dividend income yields. Aviva is near the top of my shopping list, with Unilever close behind. Both UK shares are market stalwarts, that I would be happy to buy at any time. But I would particularly like to buy when they are trading on low valuations, and offer maximum possible dividends.

Yet as I write this, the FTSE 100 has climbed to 7,475. While it still looks cheap, it is not as cheap as it was a month or so ago. The same applies for Aviva and Unilever, whose share prices have jumped 9.29% and 4.93% respectively over the last month.

Both stocks still look good value to me. Particularly Aviva, which is trading at 8.09 times earnings (a P/E of 15 is considered fair). Unilever looks more expensive, trading at 18.30 earnings, but for years it rarely fell below 24 times.

They were cheaper a month ago but sadly, I cannot go back in time and buy them at the old price. I could always delay my purchases, I suppose, crossing my fingers and hoping the FTSE 100 will fall back to where it was.

However, experience tells me that hanging on for the perfect time to buy is a mug’s game. For some reason, it never seems to arrive. There is another disadvantage to waiting. The FTSE 100 may climb higher, as could the Aviva and Unilever share prices. 

Always a good time to buy FTSE 100 stocks

Another downside to hanging around is that my money will sit idly in the bank earning next to nothing while I wait for the ideal moment to invest. Also, I will also miss out on any dividends these stocks pay in the interim.

When I buy FTSE 100 stocks, I aim to hold them for a minimum of 10 years, and ideally much longer than that. It’s nice to buy at the bottom of the market, but given that lengthy investment timeframe, hardly essential.

Aviva is a solid business but the attraction is the dividend, rather than share price growth. Unilever still has a long haul ahead of it, before it recovers recent glories. The real benefits of buying either stock will be measured over years, rather than weeks.

So forget that they were a bit cheaper a few weeks ago. What really matters is that both these UK shares still look good value today. I will buy them as soon as I have the cash.

The post UK shares still look cheap despite the stock market rally. I’d buy these 2 now appeared first on The Motley Fool UK.

More reading

• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Trying to make a million from FTSE 100 shares? Here’s where to start today

Harvey Jones holds shares in Persimmon, Rio Tinto and Rolls-Royce. The Motley Fool UK has recommended 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.

I never stop being amazed by the number of top-quality FTSE 100 companies paying generous passive income via their dividends at the moment.

Some of these dividends are too generous and liable to be cut (I’m looking at you, Persimmon), but not all of them. Insurer Aviva (LSE: AV) tempts me right now.

I’m on the hunt for passive income

Currently, Aviva yields passive income of 8.7% a year, covered 1.5 times by earnings. That is solid cover, although not completely convincing. So will the company generate the cash flows it needs to keep shareholders happy?

CEO Amanda Blanc has done a good job since taking the helm in July 2020, when the share price stood at 273p. Today, it trades at 439p. Growth has slowed this year, unsurprisingly, but Aviva shares are still up 5.5% year to date. The FTSE 100 as a whole is down 1.90%.

Blanc has turned Aviva into a leaner, meaner operation, selling eight divisions for £7.5bn and returning £4.75bn to shareholders. Now it is focused solely on the UK, Ireland, and Canada, which should stop its attention wandering.

Last week, Aviva reported a 46% jump in new business across its UK and Ireland life division to £466m in Q3. General insurance premiums increased too, although other parts of the business grew at a slower speed or fell slightly.

Times are “challenging”, Aviva said, but it’s still on track to deliver it £750m savings target by the end of 2024. Better still, it expects to launch a new share buyback programme with its 2022 full-year results, subject to market conditions and regulatory approval.

If it can afford to launch a new share buyback, that suggests to me that the dividend must be pretty secure. In August, Aviva declared an interim dividend of 10.3p, in line with its full-year dividend guidance of roughly 31p. That also looks promising. As did Blanc’s bullish outlook, as she reported that “Sales are up, operating profit is higher, our financial position is stronger”.

Aviva shares look cheap, too

The dividend yield is forecast to dip to 7.1% next year, with cover shrinking slightly to 1.4. Again, I’m not too concerned, given the fundamentals. Aviva won’t cut the dividend unless absolutely necessary, and right now it faces few serious threats. The company still generates loads of cash. 

Also, its Solvency II shareholder cover ratio stood at 223% in Q3, dipping only slightly by 11%. Surplus capital above a 180% cover ratio increased from £2.3bn to £2.5bn. It’s a solid operation.

What also attracts me is that Aviva’s shares look cheap right now, trading at 7.8 times earnings. That looks like an attractive entry point, although I accept the shares have looked cheap for years so there’s no guarantee they will increase in the near future.

I’m adding Aviva to my buy list watchlist but before I buy it, I also want to check out FTSE 100 rival Legal & General Group. That is another dividend aristocrat, yielding 7.51% and trading at just 7.20 times earnings. Remarkably similar to Aviva, as it happens. These are good times to be an investor hunting for passive income.

The post I’d buy this stock to generate passive income of 8.7% a year appeared first on The Motley Fool UK.

More reading

• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Trying to make a million from FTSE 100 shares? Here’s where to start today

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

I’m hunting for dividend income, and there are so many FTSE 100 stocks to buy offering sky-high yields that I’m getting a little dizzy.

I’ve just taken a gamble and bought housebuilder Persimmon, which at the time was yielding almost 20% a year. Not only that, it was trading at just five times earnings.

It still felt like a risky move, given that house prices are starting to fall as interest rates rise. Yet I’m betting that the shortage of property supply should sustain demand. Also, mortgage rates may not rise as much as we expected just a couple of weeks ago.

Top income stocks to buy

Persimmon’s dividend cover is thin at 1.1% but even if management does cut its shareholder payout, it should still be pretty substantial.

At the other end of the risk spectrum, I think it is nearly always a good time to buy shares in National Grid. This is one of the most solid income stocks on the FTSE 100, supported by its regulated earnings, while exposure to North-Eastern US energy market gives it a bit of buzz.

The 5.3% yield is only covered 1.2 times but this is less of an issue with utilities, as their earnings are more secure so they can pay out more of them. National Grid’s shares are valued at 15.6 times earnings, pretty much in line with the long-term average.

Supermarket chain Sainsbury’s has just reported a 29% drop in first-half profits to £376m as grocery prices rocket and consumer incomes plunge. However, last week’s results got a positive reception, as group revenues rose 4.4%.

I expect Sainsbury’s to continue struggling, as the cost-of-living crisis drags on and German discounters Aldi and Lidl continue to grab market share. Yet I am relatively confident about its dividend. This is now the main reason to hold the stock, and management will be reluctant to cut it.

I’m hoping that won’t be necessary, anyway, as its attractive 6% yield is covered 1.9 times by earnings. Trading at just 8.6 times earnings, many of the challenges Sainsbury’s face are in the share price.

Dividend investors spoilt for choice

Aviva’s shares have finally come alive after years of going sideways, bouncing 12% in 12 months. It’s the dividend that matters here, though, and the stock currently yields a whopping 8.8%, nicely covered 1.5 times by earnings.

The Aviva share price doesn’t exactly look expensive, either, trading at 7.5 times earnings. It is not the most dynamic stock on the FTSE 100, but I would still want it as a cornerstone of my portfolio. Today’s entry price looks attractive to me.

Finally, I’d like to add a commodity stock to my list of stocks to buy for sustainable income, and I’m plumping for Anglo American. The mining sector has picked up in recent days, as hopes grow that China is finally easing its Covid lockdowns. 

The upcoming global recession could squeeze demand for metals and minerals. Yet I’m not too worried, given that Anglo American’s 8.4% yield is covered 2.5 times, and the stock is valued at a dirt-cheap 4.8 times earnings. Anglo American is well worth its place on my list of best FTSE 100 dividend income stocks to buy today.

The post 5 stocks to buy for high and rising dividend income appeared first on The Motley Fool UK.

More reading

• Down 45% in 5 years, this UK stock now offers a stunning 11% dividend yield!
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• £5,000 invested in high-yield FTSE 250 stock Domino’s Pizza on 7 April is now worth…
• Tesla stock’s up 50% in a year. Could it go even higher?
• Up 9% today, is this FTSE 250 share’s recovery gaining pace?

Harvey Jones holds shares in Persimmon. The Motley Fool UK has recommended Sainsbury’s. 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.

If I had as much as £10,000 to pump into a Stocks and Shares ISA right now I’d be looking to load up on top FTSE 100 dividend shares.

After years of trailing major indices such as the S&P 500, London’s blue-chip index is showing it’s made for tough times. US tech stocks may have cashed in on the cheap money era, but FTSE 100 shares now offer bruised investors a welcome safety net.

Investing goes in cycles and the tech splurge lasted beyond its natural term. That came as central bankers piled on the stimulus during the Covid crisis. Now investors are prioritising ‘value’ stocks, dividend-paying companies trading at low valuations. 

My ISA line-up

The FTSE 100 is full of them and I’d start by exploring these 10 companies. All have risks, but offer big opportunities too.

Insurer Aviva has delivered little share price growth in recent years. But it’s a dividend aristocrat paying income of 9.95%. Trading at a dirt-cheap 6.8 times earnings, it’s hard to resist.

Barclays is even cheaper at just 3.7 times earnings, while yielding 4.28%. Sticking with financials, I also like Lloyds Banking Group, cheap at 5.5 times earnings with a 4.82% yield (and future dividend growth).

The financials sector is being shaken by the gilt crisis, while rising interest rates could squeeze both small business and retail customers. But I reckon those risks are reflected in their rock-bottom valuations.

I’d also include transmissions giant National Grid. Frankly, this is a stock I’d buy at any time, as a core portfolio holding. Today it yields 5.77% and looks fair value at 14.4 times earnings. It’s a solid long-term buy and hold for my ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Higher yields

With that as security, I’d take a bigger punt and buy a housebuilder such as Persimmon that yields a ridiculous 19.37%. Although I expect the dividend to be cut sooner rather than later, that won’t be a disaster given today’s starting point. House price crash fears are priced in at a valuation of 4.9 times earnings. At least, I hope they are.

Mining giant Rio Tinto is the second highest yielder on the FTSE 100 offering 14.21% and trading at 4.2 times earnings. Chinese demand for commodities is slowing and the dividend may be reduced at some point. Now still looks like a great entry point for contrarians like me. I’d also consider gold miner Fresnillo. It may benefit when inflation easies, the US dollar softens and the gold price recovers.

Clothing retailer Next will obviously suffer as discretionary consumer spending falls. But it looks better placed than most, and I’d consider it for my ISA too. Then I’d buy Unilever, because I’ve never seen it this cheap at 17.2 times earnings (it’s usually around 24 times) while yielding 4.42%.

Finally, I’d include spirits giant Diageo in my top 10. Yes, it looks expensive trading at 24.1 times earnings while the yield is just 2.08%.But it’s a solid, recession-proof business and they come at a premium in these troubled times.

The post How I’d invest £10k in a Stocks and Shares ISA today appeared first on The Motley Fool UK.

More reading

• Down 45% in 5 years, this UK stock now offers a stunning 11% dividend yield!
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• £5,000 invested in high-yield FTSE 250 stock Domino’s Pizza on 7 April is now worth…
• Tesla stock’s up 50% in a year. Could it go even higher?
• Up 9% today, is this FTSE 250 share’s recovery gaining pace?

Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended Barclays, Diageo, 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.

The State Pension isn’t enough to secure a fun-packed retirement, and I’ll supplement mine by building a passive income from shares.

My chosen way of doing this is to invest in dividend-paying FTSE 100 stocks, as they offer some of the most generous shareholder payouts in the world. Today, the index yields a steady income of 3.93% a year. That should rise over time, as companies listed on the index look to increase their dividends as profits rise.

This is how I’m building passive income

Some FTSE 100 stocks would give me a far higher passive income than that. Mining giant Anglo American currently yields 9.07% a year, while insurer Aviva offers income of 8.73% and Barratt Developments yields 8.81%. All three are dividend aristocrats, and I haven’t even got past the Bs.

The FTSE 100 is fertile ground for investors like me, who want the highest possible passive income in retirement.

These yields are not guaranteed though. As we saw in the financial crisis and again during the Covid pandemic, companies can cut them in times of trouble. Yet management will only do that in extremis, because investors don’t like it.

Let’s say I invested in a spread of FTSE 100 stocks, so I bagged that average yield of 3.93% (even though I reckon I could do better).

Now assume I wanted to generate £1,000 a month of passive income, which adds up to £12,000 a year. To achieve that, I would need to build an investment portfolio of £305,344. So that’s the capital target I have to aim for.

Of course, if I drew my passive income from a pool of FTSE 100 offering higher yields, I could generate the same passive income from a smaller portfolio. If my stock picks yielded on average 6% a year, I could generate £1,000 a month from a portfolio of just £200,000.

I think that target is achievable, even for newbie investors. Take someone who is 35 today, and plans to retire at 68. They still have 33 years to build the portfolio they need.

Tax-free inside a Stocks and Shares ISA

If they invested £200 a month in a Stocks and Shares ISA, and their investments grew by 7% a year, on average, they would have £305,421 by age 68. That’s enough to generate a decent passive income, entirely free of tax.

This highlights the importance of investing as early as possible. The first £1 invested is the most important, because it has longest to compound and grow. Naturally, there is no guarantee that my portfolio would grow at an average rate of 7% a year, although that is roughly what the FTSE 100 has delivered over the decades.

On the other hand, it could grow at an even faster rate, giving me an even larger pool of money to generate my passive income. Even if I don’t hit that target, I will still enjoy a more comfortable retirement then if I relied solely on the State Pension.

The post Here’s how much I’d need to invest to earn passive income of £1,000 a month appeared first on The Motley Fool UK.

More reading

• Down 45% in 5 years, this UK stock now offers a stunning 11% dividend yield!
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• £5,000 invested in high-yield FTSE 250 stock Domino’s Pizza on 7 April is now worth…
• Tesla stock’s up 50% in a year. Could it go even higher?
• Up 9% today, is this FTSE 250 share’s recovery gaining pace?

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

More people are working beyond 65 than ever before, but I would like to have the opportunity to retire early if I can. The only way I can do that is to save enough money for a sustainable retirement income, and I reckon FTSE 100 shares are a great way to do that.

In recent years, US tech stocks have grabbed the limelight. That is now going into reverse as investors wake up to the charms of the FTSE 100, as UK blue-chips offer a solid, steady income stream from dividends. That’s what I need to retire early.

Despite this year’s volatility, the index has escaped the stock market crash. It trades at a similar level to the start of the year. By contrast, the S&P 500 has fallen more than 20% year-to-date, and is in a bear market.

I’d retire early on these stocks

Yet a whole heap of FTSE 100 stocks are trading at cut-price valuations, while also paying hugely generous dividends. Better still, many of these dividends are comfortably covered by earnings, which makes them relatively secure.

One stock that jumps right out at me is insurer Aviva. It generates solid cash flows, year after year, from selling pensions, protection and general insurance. Yet it habitually trades at a low valuation. Right now, I can buy it at just 7.8 times earnings. Better still, this will give me a staggering income of 8.7% a year, covered 1.5 times by earnings.

Dividend income is never guaranteed. Aviva suspended its payout during the pandemic, although quickly restored it. Management knows how important the dividend is to shareholders, and will be reluctant to cut again except in extreme circumstances. The £13bn group recently reported “continuing momentum” in the six months to 30 June. Interim operating profits rose 14% to £829m. It looks steady enough for me.

The Aviva share price has not moved much over the years, although it has jumped 13% over the last 12 months. Over five years, it’s down 9%. I’m not buying Aviva shares for growth though. I’m sure that will come over time, but income is my main goal and this stock offers that in spades.

Oil giant BP is my second income pick. It is slightly more expensive than Aviva, trading at 13.7 times earnings. That is hardly surprising given that its share price has rocketed 47.75% over the last year. Five-year performance is less impressive at just 1% though.

I’m buying FTSE 100 dividend income shares

BP now faces the huge challenge of transitioning from fossil fuels to renewables. Like Shell, it has only made tentative steps so far. The energy crisis has shown that the world still needs plentiful oil and gas during this year’s energy crisis, but management cannot rely on that continuing forever.

While acknowledging the risks, I’m backing BP to make the leap. Frankly, management has no choice. But this doesn’t have to happen overnight. The income looks rock solid at the moment. BP’s forecast yield of 4.4% is covered a stunning six times by earnings. Usually, two times is seen as comfortable.

I’m now scraping together some cash to go shopping for shares, and when I have it, these two will be at the top of my list. My plans to retire early depend on them.

The post I’d buy these 2 FTSE 100 stocks to help me retire early in comfort appeared first on The Motley Fool UK.

More reading

• Down 45% in 5 years, this UK stock now offers a stunning 11% dividend yield!
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• £5,000 invested in high-yield FTSE 250 stock Domino’s Pizza on 7 April is now worth…
• Tesla stock’s up 50% in a year. Could it go even higher?
• Up 9% today, is this FTSE 250 share’s recovery gaining pace?

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

At The Motley Fool, we like to ‘buy the dip’ whenever we can. That means picking up shares after the stock market has fallen, to gain exposure at a lower valuation than just a few days earlier.

We see it as the same principle as going shopping in the sales for, say, clothes or tech, or whatever. Who doesn’t like bagging a bargain? Yet many newbie investors looking to buy shares don’t view it like that. Some get nervous when the stock market dips, in case it heralds further trouble ahead.

I’d buy the dip after last week’s setback

Sometimes they will be right. The stock market may dip, then dip again. Nobody knows for sure what it will do next. However, I have learned that if I keep hanging on and on for the next dip, I never buy shares.

At some point, I have to take the plunge. Timing the stock market is impossible. But when I buy the dip, I am taking advantage of a move that has already happened, rather than second guessing where it goes next.

Stock markets suffered a minor setback last week. The US S&P 500 ended the week 5.15% lower. The FTSE 100 closed just 1.56% down on the week, with the FTSE 250 slipping 2.05%. That’s not a crash, just a little dip. Yet it has thrown up opportunities.

Some individual stocks have fallen by larger amounts. For example, InterContinental Hotels Group and Dechra Pharmaceuticals fell by 4.67% and 4.47% respectively on Friday. Neither are high on my shopping list, though. I’ll pass on these but others may be tempted.

I also like to take advantage of extended share price dips. For example, BT Group is down 11.49% over the last month. Fund manager Schroders has fallen 10.41%. In both cases, this is just the latest stage in a long-term share price decline. 

The two stocks look cheap, trading at P/Es of 6.95 and 10.56 times earnings, respectively. I am sorely tempted by BT, but would need to take a closer look at Schroders. I would never buy a stock solely because it is cheaper.

Two falling stocks I would happily buy

Insurer Aviva has experienced a much smaller drop of 4.02% over the last month. I would consider that dip worth buying because the FTSE 100 insurer has been on my watch list for some time.

The recent Anglo American dip really tempts me. The mining giant has fallen 7.82% over the last week, as global recession fears grow. Yet its long-term share price trajectory is positive, as it has grown 106.79% over five years.

The stock looks dirt cheap, trading at just 4.5 times earnings and yielding 8.99% a year. I need to do further research, but this looks like the type of dip I could happily buy.

The post I’d buy the dip in share prices as there are bargains to be had right now appeared first on The Motley Fool UK.

More reading

• Down 45% in 5 years, this UK stock now offers a stunning 11% dividend yield!
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• £5,000 invested in high-yield FTSE 250 stock Domino’s Pizza on 7 April is now worth…
• Tesla stock’s up 50% in a year. Could it go even higher?
• Up 9% today, is this FTSE 250 share’s recovery gaining pace?

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Aviva

Aviva (LSE: AV) is a British multinational insurance company. It has millions of customers across its core markets. Aviva is also the UK’s largest general insurer. This week, an influential director purchased shares through the firm’s Global Matching Share Plan.

• Name: Jason Storah
• Position of director: Chief Executive Director
• Nature of transaction: Partnership shares and matching shares
• Date of transaction: 15 July 2022
• Amount bought: 38.413602 @ £3.93
• Amount received: 76.827204 @ £3.93
• Total value: £452.70

Royal Mail

Royal Mail (LSE: RMG) is Britain’s biggest postal service and courier company. The group runs the brands Royal Mail and GLS. It released its Q1 trading update this week. Two director dealings also occurred.

• Name: Mick Jeavons
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares (Deferred Share Bonus Plan 2019)
• Date of transaction: 18 July 2022
• Amount bought: 14,132 @ nil
• Total value: £N/A

• Name: Katherine Amsden
• Position of director: PCA of Mark Amsden, Group General Counsel and Company Secretary
• Nature of transaction: Purchase of shares
• Date of transaction: 21 July 2022
• Amount bought: 34,262 @ £2.92
• Total value: £99,977.21

Deliveroo

Deliveroo (LSE: ROO) is a British online food delivery company. It operates in over 200 locations across the UK and internationally. In the UK, it is the second-biggest food delivery platform. In this week’s transaction, a director exercised their option to redeem stock compensation.

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares
• Date of transaction: 15 July 2022
• Amount received: 83,400 @ £0.85
• Total value: £70,973.40

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Sales of shares to cover tax liabilities
• Date of transaction: 15 July 2022
• Amount sold: 40,407 @ £0.85
• Total value: £34,345.95

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s director dealings, Aviva’s CEO opted to purchase partnership shares. Partnership shares give employees the opportunity to buy shares via deductions from their salary, before tax deductions. But where partnership shares are offered, the company can also offer matching shares. This can range up to a maximum ratio of two free matching shares per partnership share purchased, as was the case. That being said, it’s important to note that matching shares must normally be held in a trust for at least three years, and held for five years in order to receive full tax relief. However, these shares may be forfeited if an employee withdraws their partnership shares from the trust.

On the other hand, the Royal Mail CFO received free shares. This occurred under the company’s Deferred Share Bonus Plan from 2019. Having said that, the director is expected to retain their share-based awards until they achieve an equivalent of 200% of their salary.

As for Deliveroo’s CFO, he received free shares. These are a form of restrictive stock units (RSU). RSUs are a form of stock compensation. It is a promise from the company to award a company’s shares in the future. RSUs are most often used in younger companies. This is because cash on its balance sheet is used to grow the business instead.

The post Director dealings: Aviva, Royal Mail, Deliveroo appeared first on The Motley Fool UK.

More reading

• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Trying to make a million from FTSE 100 shares? Here’s where to start today

John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Deliveroo Holdings Plc. 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.

After the Easter weekend, investors begin to look towards a traditionally weaker period for the stock market. May, June and September are traditionally the months with the lowest returns for FTSE 100 shares historically. Nonetheless, I’ll continue searching for cheap stocks to buy before the summer, despite concerns about seasonality.

Let’s explore the FTSE 100 stocks I’d buy in my Stocks and Shares ISA next month.

Aviva

The Aviva (LSE: AV) share price trails the FTSE 100 index over five years. It’s down 15% compared to the Footsie’s 7% gain. However, with a price-to-earnings (P/E) ratio of 8.74 and a dividend yield over 5%, I find Aviva stock attractive from both a value investing and passive income perspective.

The life insurance and pensions provider is returning total capital of £4.75bn to shareholders in addition to the £1bn share buyback it completed last month. This should provide downside protection to Aviva’s share price.

As inflation surges, Aviva shares could face some headwinds. For instance, the macroeconomic environment may result in lower consumer demand for retail annuity deals.

Conversely, with over £400bn assets under management, the company’s well placed to take advantage of a hawkish monetary policy response. Rising central bank interest rates afford Aviva the opportunity to move funds into higher interest-generating investments.

For me, Aviva looks like a reasonably valued FTSE 100 share with solid finances. I’d buy.

GlaxoSmithKline

At nearly $117.5bn, GlaxoSmithKline (LSE: GSK) is a top five FTSE 100 share by market capitalisation. Last year was tumultuous for this pharmaceutical giant. Activist investor Elliott Management unsuccessfully tried to remove the company’s CEO Emma Walmsley due to concerns over her non-scientific background.

Tensions eased last week following GSK’s takeover of US cancer drug developer Sierra Oncology in a $1.9bn deal. Moreover, 2021 saw GSK grow its revenues for the seventh year in a row — up by 5%. The healthcare business forecasts a 12%-14% rise in operating profits this year.

The GSK share price reflects the company’s strong recent performance, soaring 31% over the past year. Shareholders also currently pocket a healthy 4.52% dividend yield.

GSK carries a P/E ratio of 20.33, which is considerably lower than some direct competitors, such as AstraZeneca. As a defensive investment, with lower susceptibility to seasonal and cyclical fluctuations, GSK is my FTSE 100 pharma pick for May.

Whitbread

Whitbread (LSE: WTB) manages a range of hotels, restaurants and leisure clubs in the UK and Germany. The hospitality firm’s share price is down 18% over the past year following substantial revenue declines during the pandemic.

However, brighter days lie ahead, in my view. There are no longer any testing or quarantine requirements for international arrivals to the UK. Additionally, the rising cost of living means staycations are an attractive option for British holidaymakers this summer.

The combined effect of these developments should benefit Whitbread, which owns the Premier Inn brand. Indeed, like-for-like accommodation sales in the UK were up 5.5% over pre-pandemic levels in the third quarter of Whitbread’s 2022 financial year, although a 33.3% decline in Germany brought the total gain down to 5.1%.

Should a return to pre-Covid normality continue in both countries, Whitbread’s budget hotels should do well. I’d buy this FTSE 100 share before a summer recovery.

The post Sell in May and go away? I’d buy 3 FTSE 100 shares instead appeared first on The Motley Fool UK.

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Charlie Carman does not own a position in any of the companies mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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.

FTSE dividend shares offer some incredible yields right now. Solid, defensive businesses like GlaxoSmithKline and Unilever currently pay income of around 5% a year. Insurer Aviva pays 5.22%, while one of my favourite FTSE dividend shares, Legal & General Group, pays an incredible 6.71%. These are just the first that spring to mind. Some stocks yield 8%, or more. I’m looking at you Imperial Brands Group (8.68%), and you Persimmon (10.34%).

I’m buying FTSE dividend shares

At the same time, the returns on cash are low. Even though the Bank of England has hiked base rates for three months in a row, Halifax, Lloyds, NatWest, Bank of Scotland and Santander are still paying just 0.01% on easy access.

Savers now have an estimated £250bn sitting in savings accounts that pay no interest, Hargreaves Lansdown figures show. I believe it makes sense to have a bit of rainy-day cash on instant access, to fund emergencies such as a broken boiler or car repairs.

Yet I’m not leaving my long-term wealth on deposit, because I feel it can work so much harder elsewhere. Investing in FTSE dividend shares is riskier than leaving money in the bank. Stock markets can go up and down (in fact, they do it all the time). They can crash (they do that pretty regularly too). Individual companies can run into trouble. Profits can plunge. Management may cut dividends. Even apparently big, solid firms can go out of business.

Cash is a safe haven, but with inflation set to hit 8% later this year, and possibly even 10%, it also carries risk. If I leave money sitting in a savings account paying 0.01%, the value of my money will plunge in real terms. Inflation is called the silent assassin because you do not see it at work. If I have £10,000 in the bank earning zero interest and look at it one year later, my statement will still say £10,000. But if inflation averaged 10% in that time, it would only buy me £9,000 worth of goods and services. So I’m relying on FTSE dividend shares to help my money maintain its value as prices rise.

I’m facing down the inflation threat

Right now, FTSE 100 dividend shares offer an average yield of 3.22%. Better still, that is a rising income, because most companies aim to increase their dividend payouts over time. I also have instant access to my money.

There is another reason why I favour FTSE dividend shares. I should get capital growth as well, if their share prices rise. That is far from guaranteed, of course. My stock picks may fall in value, possibly dramatically. Some may never recover.

Yet I limit my exposure by buying a spread of 15-20 FTSE dividend shares and hope my winners outweigh my losers. And I will keep reinvesting my dividends for growth, turbo-charging my returns. I’m hoping they will protect me against the growing inflation menace. 

The post I’m not accepting 0.01% on cash when FTSE dividend shares pay 6% or 7% appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended GlaxoSmithKline, Imperial Brands, 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.