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The FTSE 100 has been on a terrific run, placing on greater than 1,200 factors since early October to interrupt by way of the 8,000 barrier for the primary time.
It has climbed 6.91% over 12 months, and is up 5.17% to date this yr alone. That is effectively beneath the requirements set by US tech shares throughout their golden run, however is spectacular given the various sturdy headwinds on the market.
London’s index of high blue-chip shares has shrugged off the conflict in Ukraine, the vitality shock, Chinese language lockdowns and rising inflation and rates of interest. It has outpaced most world markets, for instance, the US S&P 500 remains to be down greater than 10% over one yr, with the Nasdaq down 17.57%.
I’ve been having fun with the FTSE 100’s restoration. In October, I made a decision it was too low cost to disregard and loaded up on undervalued shares which have since risen neatly.
On the time, shopping for FTSE 100 shares was a no brainer. It was packed stuffed with high shares buying and selling at lower than 10 instances earnings and yielding something from 5% to 9%. However is it nonetheless time to purchase FTSE 100 shares in the present day?
Whereas many shares are dearer than they have been a yr in the past, some have barely moved in any respect. Barclays shares are up simply 0.69% in that point. Insurer Authorized & Basic Group has ticked up 0.85% over the identical interval. Housebuilder Barratt Developments is crashed 20.47%. Vodafone is down 22.39%.
That’s the great thing about shopping for particular person shares fairly than an index tracker. They behave otherwise, and supply traders like me various things at completely different instances.
When share costs rise, yields mechanically fall. That’s as a result of they’re calculated by dividing the dividend by the share value. But I can nonetheless spot some superb yields on the FTSE 100.
Prime dividend shares going low cost
From the above checklist, Barclays is forecast to yield 5.7%, coated 3.7 instances by earnings. L&G’s ahead yield is 7.91%, with cowl of 1.7 instances. Barratt’s ahead yield is 7.56%, properly coated twice. Vodafone yields 9.1%, however with wafer skinny cowl of simply 1.1 instances.
These shares are all dirt-cheap too, with Barclays buying and selling at 5.7 instances earnings, L&G valued at 7.52, Barratt at 5.4 instances, and Vodafone at 10.2 instances.
Simply because a inventory is reasonable, doesn’t make now time to purchase. I might be strolling into a price lure, and would want to look at the corporate’s accounts rigorously. Right here we’d have the ability to see how sustainable its income are, whether or not it generates sufficient money to fund the dividends, and what threats it’d face from new market entrants.
I reckon now might be time to purchase Barclays, L&G, or Taylor Wimpey, however I’m cautious of Vodafone. Whereas a few of my fellow Idiot writers admire this Dividend Aristocrat, I just like the prospect of producing capital development as effectively. The Vodafone share value has gone nowhere for twenty years.
I don’t know the place the index will go from right here (though I think it’d tread water for a bit). I wouldn’t purchase a tracker in the present day, however I’d purchase particular person FTSE 100 shares.
Time so as to add Barclays, L&G and Taylor Wimpey to my want checklist.