Picture supply: Getty Photographs
The FTSE 100 received’t be the most effective place for each investor. No, everybody must base their selections on their very own wants and their very own analysis. Nevertheless it’s the place I most wish to put my cash in 2024, and past.
Over within the US, each the S&P 500 and Nasdaq hold hitting new all-time highs. The truth is, the S&P 500’s up 23% to this point in 2024, whereas our pricey previous FTSE 100 has placed on simply 9%. And the Footsie nonetheless hasn’t matched the 52-week excessive of 8,474 factors it reached as way back as Might.
So the UK inventory market’s a loser then, and finest averted? No, it’s nonetheless my favorite, for just a few key causes.
However low, proper?
The principle motive is that I wish to purchase shares after they’re low-cost. Isn’t that what everybody needs? It would make economists completely satisfied when inventory markets are buzzing. But when we plan to maintain shopping for shares for the long run, we must always certainly need costs and valuations to remain low.
My different key motive is that I’m going principally for dividend shares, and the FTSE 100 has a number of the finest yields I can discover. We’re a forecast common dividend yield of three.7% this 12 months, together with all of the low ones, rising to 4% in 2025. That’s simply unusual dividends, and doesn’t embody any specials.
And we even have what must be a long-term increase from the £50bn in share buybacks which have been introduced to this point in 2024.
Lengthy-term favorite
For example, let’s take a look at one in every of my prime FTSE 100 shares, Aviva (LSE: AV.)
The five-year share value chart above, won’t look nice. Nevertheless it’s precisely what I need, and I hope it stays unimpressive for at just a few extra years but.
What it means is I should buy extra Aviva shares on a ahead price-to-earnings (P/E) ratio of 12 this 12 months, with forecasts dropping as little as 9.2 by 2026 (based mostly on immediately’s value).
And I might snag a fats 7% dividend yield, if these forecasts are correct. Oh, and the analysts suppose it’ll carry on rising within the subsequent few years too.
Dangers
The Aviva dividend, like all dividend, isn’t assured. The insurance coverage sector carries cyclical danger too, and immediately’s upbeat outlook might change faster than we would count on. Inflation and rate of interest uncertainty don’t assist.
Investing on this sector, as in any sector, means we have to perceive the companies we purchase. And that brings me to a different motive why I like FTSE 100 shares a lot.
I perceive the insurance coverage sector moderately nicely, particularly within the context of the UK market and economic system. And that should give me a bonus.
Backside line
So to sum up, investing in FTSE 100 shares places me in companies I perceive within the economic system that I do know finest. And at occasions like these, it could actually maximise my possibilities to purchase low-cost, and hopefully lock in years of dividend revenue.
Oh, and there are different FTSE 100 sectors I additionally like and perceive, additionally at good valuations. So there’s loads of scope for diversification.
