If investing in individual stocks and shares, you need to spread your money around. Invest in a spread of different companies, operating in different sectors, so if one struggles, others may compensate.
The old adage never put all your eggs in one basket applies. I think the following five FTSE 100 companies could all make attractive long-term buy and holds. Just make sure they balance any existing holdings you have.
Insurance giant Aviva (LSE: AV) may seem a surprise pick, as its share price has underperformed in recent years. However, that means you can buy it at a bargain 6.9 times forecast earnings, against 17 times for the FTSE 100 as a whole. Today makes a tempting entry point, as the share price may rise nicely when investors tune back into the stock.
The Aviva share prices trades 6% lower than it did three years ago, even though profits have nearly doubled and dividends have jumped 44% in that time. It now offers a fabulous forecast yield of 7.7%, covered 1.9 times by earnings. Aviva could be ripe for a rebound.
Pharmaceutical giant GlaxoSmithKline (LSE: GSK) has held its prized dividend at 80p a year for years, as it focuses its resources on rebuilding its drug pipeline. Some investors have shunned the £87bn company as a result, yet it still offers a steady forecast yield of 4.5%, roughly in line with the FTSE 100 average, covered 1.5 times by earnings.
The Glaxo share price is now showing signs of life, up almost 20% over the last year. Short-term swings don’t matter that much; you should invest in Glaxo for the longer run. Buy, hold, reinvest your dividends and reap the rewards.
Spirits giant Diageo (LSE: DGE) is an old favourite of mine. Investors are having a party right now, with the Diageo share price up 17% this year, and 75% over five years.
While there are signs of people drinking less, Diageo has caught the spirit of the times by encouraging them to drink better, by purchasing its premium brands instead. The £74bn group trades at a premium valuation of 23.9 times forward earnings, with a relatively low yield of 2.2%, covered 1.9 times. Then again, it usually does. The higher price has been worth paying.
International sales, marketing, and support services group DCC (LSE: DCC) has seen its share price double in five years, and is maintaining its momentum this year.
Management recently forecast another year of profit growth and development, and with four divisions covering liquified petroleum gas (LPG), retail & oil, technology, and healthcare, it has plenty of diversification. Recent share price growth is reflected in a slightly pricey forward valuation of 17.8 times earnings, but not that pricey. The DCC share price could be Brexit proof, too.
I’m throwing in a stock from the mining sector, as this gives you exposure to global growth. BHP Group (LSE: BHP) is my pick, because this £87bn group has massive diversification across copper, silver, lead, zinc, uranium, gold, iron ore, coal, and even petroleum.
The complicating factor is the US-China trade war, as China is by far the biggest source of global demand for commodities. BHP Group is cheaper as a result, trading at 11.8 times forward earnings, while the forecast yield is a bright and bouncy 6.2%.
If those don’t tempt you, try these…
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Diageo. 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.
Motley Fool UK 2019