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Don’t waste the stock market crash! 3 FTSE 100 shares I’d buy to retire early

Roland Head
Dots over the earth connecting the world

The stock market crash has left many of us facing big losses in our portfolios. Of course, it’s only a loss if you sell. Share prices often recover strongly after a crash. That’s why I’ve been searching the market for FTSE 100 shares that could be bargain buys.

In this piece, I want to look at three FTSE stocks I’d be very happy to buy at current levels.

This 10% yield looks safe to me

Legal & General Group (LSE: LGEN) has been an excellent performer in recent years. This £11bn firm has consistently generated strong cash flows and a return on equity of more than 20%. These qualities have supported a generous dividend, which has risen by about 6% each year.

Investors are now worried that big insurers like Legal & General might be forced to follow that banks’ lead and cut their dividends. Personally, I’m not sure this is really justified. L&G and its peers seem to have pretty strong balance sheets. I think the impact from coronavirus should be limited.

In any case, I think a fair amount of bad news is already reflected in the share price. The LGEN share price has lagged the index in 2020, falling 45% compared to 30% for the FTSE 100. The shares now trade on just 6 times earnings, with a forecast dividend yield of 10%. I rate this FTSE 100 share as a good long-term income buy.

A FTSE 100 share I’d hold forever

My next pick has managed to stay ahead of the index during the market crash. I’m not surprised. In my view, healthcare group Smith & Nephew (LSE: SN) is a much safer bet than many other companies in the index.

The group’s main business is making replacement joints for the world’s ageing population. Sales are suffering as a result of coronavirus, which has caused non-emergency operations of this kind to be widely postponed.

However, the world’s population is getting older and wealthier. I don’t see COVID-19 changing this trend, so I expect demand to recover after the pandemic. It’s worth noting that business in China is already said to be returning to normal.

This FTSE 100 share rarely looks cheap, but Smith & Nephew is very profitable and doesn’t have much debt. With the shares now trading on 16 times forecast earnings and offering a 2.3% yield, I think this stock is priced to buy.

Dig deep – this FTSE 100 share will survive

My final pick is mining and oil group BHP (LSE: BHP). The firm’s shares have suffered more than some of the other big miners, thanks to the group’s exposure to the crashing oil price.

However, it’s this diversity that attracts me to BHP, which also has low-cost mines producing iron ore and copper. I see this business as a low-risk way to generate an income from commodities.

This business has a consistent focus on dividends and is large enough to survive almost any storm. Management have cut debt and controlled spending carefully in recent years, leaving the firm with strong cash flows and a flexible outlook.

The market crash has left BHP shares trading on just 8 times 2020 forecast earnings, with a dividend yield of 8%. Although I can see some risk that a global slowdown might hurt the firm’s profits, I think BHP is cheap and strong enough to be an excellent long-term buy at this level.

The post Don’t waste the stock market crash! 3 FTSE 100 shares I’d buy to retire early appeared first on The Motley Fool UK.

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Roland Head owns shares of BHP. 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.

Motley Fool UK 2020