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He FTSE 100 reached an all-time high on Wednesday of 7,934 points. How long will it be before I finally break through the 8,000 point level?
Now that the Footsie is on the rise, there is something for long-term investors to take seriously. If everyone invested long term and ignored short term sentiment, this should happen every day. What do I mean? Well, instead of going back and forth, based on emotions and daily headlines, wouldn’t it be safe for stocks to move up a little, little by little, every day?
The fact that they do not may give private investors an advantage. By keeping our eyes on the long term, we can take advantage when irrational markets cause stock prices to fall.
dividends
Now that stocks are up, I still prioritize dividends. And 2023 could hit an all-time high, with forecasts suggesting a total payout of more than £85bn.
Mining shares suffered cuts in 2022. But red river has an expected dividend yield of almost 9%. That comes as China has abandoned its zero-covid lockdown policy and is opening up to the world again. I expect demand to increase and commodity stocks are among my priorities.
Homebuilder stocks continue to fall as we face a real estate squeeze. taylor wimpey, for example, has an expected return of 7.5%. and in Barratt developmentswe are looking at 7.9%.
defensive actions
Defensive stocks still look weak, and that includes builders. I really can’t see the chronic housing shortage in the UK ending anytime soon.
Some actions are defensive for specific reasons, such as british american tobacco and Imperial Marks. Addictive products and barriers to entry for just being that big make this a couple of sources of income. Analysts expect dividends of around 7%.
Businesses that provide essential goods and services are high on my list. That includes Tesco, the UK’s largest grocery retailer by a fair margin. Power distribution is also critical, and I don’t see anyone usurping National Networkeffective monopoly.
vital sectors
What is the most essential sector of the economy? I would say it is the financial sector. Without it, nothing else could work. Banks have been hit, but they are vital to long-term economic health. And right now, I think they’re still cheap.
Lloyds Banking Group it has an expected price-earnings (P/E) multiple of just eight, with a dividend yield of 4.5%. And the P/E in barclays it is lower, just 6.5, with a yield of 4%. I rate them cheap.
Insurance stocks are also down. There is a dividend yield of 6.7% on fanwith an expected 2023 P/E below nine. legal and general is in a similar valuation.
Wait a minute…
Do you see anything that most of these actions have in common? That’s right, most are in vital sectors, have defensive qualities and offer high dividends. They match my three criteria.
All of these carry individual risks that I don’t have space to discuss here, and investors should do their own research. But if I had enough money, I’d probably buy them all right now. As it is, I have them on my list for when the cash becomes available.
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