The FTSE 100 has a broad range of stocks from different industries that I can choose to invest in. As we’re now in September, most companies have reported a trading update over the summer to notify investors how the year is going. This allows me to have a relevant pulse on how things are for most businesses. From here, I can then have a look and identify some of my favourite stocks right now.
Good results supporting an economic recovery
Barratt Developments is one FTSE 100 stock that I think offers me upside going forward. Full-year results came out yesterday, as the financial year runs June-to-June for the business.
The share price actually initially fell after the release of results. Rising costs and lower demand going forward due to changes in the Help To Buy scheme and stamp duty holiday weighed on investors. Yet given the exceptional growth from last year (profit before tax was up 65.1%), I think it can still support further growth this year. Even if growth slows slightly, I still think the foundation built since the pandemic will enable a profitable 2022.
With the thinking that the UK (and global) economy can continue to recover, another area aside from property that I’d look at is retail. One company here that I’d consider is Burberry.
Burberry is a well-known fashion stock in the FTSE 100 that operates globally. In July, a trading update showed that comparable stores sales for the period were up 90% versus last year. It was even up 1% on the same period in 2019. With physical stores now back open and able to benefit from local and tourist footfall globally, I think the next year should support further growth.
A risk here is that a potential economic slowdown that’s being spoken of in China could hurt sales. Asia is a dominant market for the brand, so caution here is needed.
A FTSE 100 dividend star
Another angle I can look at is stocks that are offering me good yields at the moment. If a FTSE 100 stock has a share price I think is attractive, I can buy and lock in the dividend yield. The only change here would be if the dividend is altered in the future.
Phoenix Group is an insurance company that currently offers me a dividend yield of 7.69%. The firm has a track record of having high cash generation, something that’s great for a dividend investor like myself.
The recent half-year report showed operating cash generation of £872m, up from £433m in 2020. This enabled the dividend per share of 24.1p to be declared.
One risk is that I think growth could stagnate going forward. This would be due to the size of assets under management and customers served. The company will naturally find it difficult to maintain revenue and dividend growth as it spends more time trying to maintain and not lose market position.
Overall, I think all three FTSE 100 stocks offer different benefits to add to my portfolio. With recent reports indicating positive news, I’m considering buying all shortly.
