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These FTSE 100 Stocks offer returns comfortably above the leading index average of 3.5%. Should I buy them for my investment portfolio?
british american tobacco
Companies whose products have strong brand power can offer excellent investor protection. These companies can increase prices to offset cost pressures without a significant loss of profit.
british american tobacco (LSE:BATS) is one of those stocks whose products can be considered market leaders. These include timeless tobacco products like Stroke of luck, Camel and pall Mall. However, I do not intend to invest in the FTSE 100 company in the near future.
Even the growing demand for your non-combustible products is not enough to tempt me. Sales of its next-generation technologies such as its Vuse E-cigarettes skyrocketed 40.9% in 2022 to £2.9bn.
I think the uncertain outlook for their industry makes British American Tobacco shares too risky. Bans or restrictions governing the sale, marketing and use of cigarettes continue to increase in number. And legislators are turning their attention to vaporizers and similar products.
Last June, for example, the US Food and Drug Administration banned all of the e-cigarette maker Juul’s products from shelves in the country. This reflected the agency’s concerns about the growing number of teen vapers. Regulators and legislators are getting tough in other parts of the world, too.
The British American Tobacco share price remains on a long-term downward trend. And I don’t see any reason to expect it to come off this slide. For this reason, I am willing to avoid the trade despite its forward dividend yield of 7.8% and its low price-earnings (P/E) ratio of 8.5 times.
taylor wimpey
Home construction is an industry with a more secure long-term future. that’s why i hold taylor wimpey (LSE:TW) stocks in my portfolio.
The UK property market is currently experiencing a painful downturn. The most recent data from Nationwide showed that median home values fell at their fastest rate in 11 years in February.
However, I feel like the outlook for Taylor Wimpey and his peers remains rock solid over the long haul. Steady population growth, combined with the failure of successive governments to boost homebuilding activity, means the company should increase its profits strongly when the economic cycle improves.
However, does this mean that I will buy more shares to increase my passive income in 2023? The answer is no.
City analysts expect Taylor Wimpey to cut the annual dividend this year. However, weak dividend coverage and a cloudy market outlook mean the final payout may disappoint investors.
The company announced last week that “our booking rate is significantly lower than in recent years.” Its futures portfolio was down by a quarter year-over-year to 7,499 homes as of December 31. Its balance sheet remains strong, but the company may increase cash conservation if the market worsens significantly.
I think there may be better UK high yield stocks to buy for dividend income this year. So for now, I’ll leave Taylor Wimpey on the shelf with British American Tobacco.
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