1 FTSE 100 stock from my best shares to buy now list

Jabran Khan details a FTSE 100 mining pick on his best shares to buy now list that could help make a passive income.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A FTSE 100 incumbent from my ‘best shares to buy now list’ is Rio Tinto (LSE:RIO). Rio Tinto is a leading global mining group that focuses on finding, mining, and processing the Earth’s mineral resources. RIO’s diversified mining operations make it a behemoth of a business. It sells iron ore, copper, diamonds, gold, and uranium across the globe.

Best shares to buy now dividend champion

On my best stocks to buy now list, there is a section for shares to make me a passive income. 2020 was a year to forget for investors aiming to make a passive income from dividends. Back in 2019, dividends paid out by UK-listed shares totalled over £100bn. Thanks to Covid-19, this figure was slashed by approximately half in 2020.

RIO is a dividend king in my eyes. For example, for 2020 it is expected to pay out in excess of £5bn. It’s dividend yield is a juicy 5%, which is 2% higher than the FTSE 100 yield of 3%. It must be noted that RIO’s dividend payout has fluctuated year to year but there has historically always been a payout.

Should you invest £1,000 in Apple right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Apple made the list?

See the 6 stocks

RIO is a commodity producer which brings its own risks. In simple terms, this means its performance and financials are subject to the boom-bust cycle. A boom-bust cycle is a series of events in which a rapid increase in business activity in the economy is followed by an equally rapid decrease. So good times are usually really good for the company, and bad times are really bad. 

FTSE 100 growth opportunity

As I write, RIO’s stock trades around 5,900p per share which values the group at just over £100bn. At this level, RIO trades on a price-to-earnings ratio of close to 18. Although the current price could be considered expensive, I believe there is potential for growth.

In the past year, RIO’s share price has grown approximately 42%. I would be hard pressed to find many other FTSE 100 firm’s that have enjoyed a similar bounce during the downturn. Looking further back over the past five years, RIO’s share price has increased over 200%. Looking through my best shares to buy now list, I am unable to find many companies with RIO’s size, dividend yield, and growth potential that have experienced such a rise.

Risk and reward

As with any share there are risks involved. Firstly, I do not solely rely on past performance alone. Furthermore as I mentioned earlier, shares like RIO are cyclical and will profit when the world needs metals and minerals. When there is a downturn, it will be affected. An example of this is iron ore, which is used to make steel. Countries require steel for building purposes, especially developing countries. Iron ore prices fell sharply between 2011 to 2016. It has since risen and this rise means I would describe iron ore as being in the boom phase of the boom-bust cycle.

From a reward perspective, I am tempted to buy RIO shares from my best shares to buy now list. I believe the world will come out of Covid-19 lockdowns later this year and RIO could benefit from huge demand. As well as RIO, here is another FTSE 100 share I really like right now.

Should you buy Apple now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan 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 on Investing Articles

Investing Articles

Up 21% with dividends on top! See the stunning Shell share price forecast for 2025

Brokers are feeling optimistic about the outlook for the Shell share price, predicting solid growth this year. But Harvey Jones…

Read more »

Investing Articles

£10,000 invested in AstraZeneca shares 1 year ago is now worth…

AstraZeneca shares have recovered from their brief slump with investors broadly buoyed by the company’s long-term business prospects.

Read more »

Investing Articles

What’s going on with Nvidia stock?

Nvidia stock has slumped, and it seems that CEO Jensen Huang may have lost the Midas touch after his AI…

Read more »

Investing For Beginners

Starting at 46, how much would need to be invested in the FTSE 100 to have £445k by retirement?

Jon Smith provides a rundown of the strategy, specific ideas and the numbers involved to grow a FTSE 100 portfolio…

Read more »

Investing Articles

3 top AIM stocks to consider buying before they recover

AIM stocks aren't for faint-hearted investors. But here are three high-quality examples for the risk-tolerant to ponder buying while they're…

Read more »

Black father and two young daughters dancing at home
Investing Articles

The M&G share price soars 5% as it raises its dividend outlook despite £1.9bn in outflows

The M&G share price was given a boost this morning after its full-year results revealed a progressive dividend policy. Our…

Read more »

Girl buying groceries in the supermarket with her father.
Investing Articles

Down 12% in a week! Here’s what I’m doing about the Tesco share price

Following an announcement by a rival supermarket, the Tesco share price fell sharply lower. But our writer sees an opportunity.

Read more »

Investing Articles

How many cheap BT shares does an investor need to get £100 in monthly ISA income?

BT shares have jumped more than 50% in a year but still yield around 5%. Harvey Jones crunches the numbers…

Read more »