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Here are 3 of my best stocks to buy for 2022!

Lady researching stocks

This is the time when stock-pickers think about their favourite shares to buy for the coming year. After a stormy 2020-21, this is no easy task. Furthermore, with monetary policy tightening and interest rates set to rise, things might get nervy for investors globally. Nevertheless, I’ll stick my neck out by revealing three companies I’d back for market-beating future returns. Each of these stocks are large-cap FTSE 100 shares that I’d expect to weather the worst storms. I don’t own any of these shares, but I’d happily buy all three today.

#1 best stock to buy: British American Tobacco

As I expect stocks to be quite volatile next year, I’m looking for shares that — in my view — are solid enough to weather stormy conditions. Thus, the first of my stocks to buy for 2022 is tobacco titan British American Tobacco (LSE: BATS). As a leading manufacturer of tobacco, cigarettes and smoking products, BAT isn’t popular with ethical investors. But its huge cash flows enable its to pay massive cash dividends to shareholders. On Friday, it closed at 2,758.96p, up 67.96p (+2.5%), valuing the group at a hefty £63.3bn. At present, the shares trade on a price-to-earnings ratio of 10.2 and an earnings yield of 9.8%. What’s more this FTSE 100 giant’s shares offer a dividend yield of 7.8% a year — almost double the Footsie’s 4%. For me, BAT is a solid stock, even though the group does have a towering £40.5bn of net debt on its balance sheet.

#2 top stock: Unilever

When I contemplate safe, solid stocks, consumer-goods colossus Unilever (LSE: ULVR) often springs to mind. Its steady, solid business model appeals to me. It sells hundreds of popular brands, servicing 2.5bn people every day. In effect, one in three people on the planet is a Unilever customer. Wow. On Friday, Unilever’s share price closed at 4,020p, gaining 38p (+1%), valuing this FTSE 100 super-heavyweight at £102.6bn. But the second of my picks has been in decline since summer 2019, when it hit a record closing high of 5,324p on 4 September 2019. Currently, the shares trade at a discount of roughly £13 from their peak. They trade on a chunky multiple of 22.8 times earnings and offer an earnings yield of 4.4%. Plus ULVR’s dividend yield is 3.7% a year. The company’s sales growth has been slowing, but I’d hope to see it rebound in 2022-23.

#3 recovery share: Lloyds Banking Group

The third of my stocks is a recovery play. Lloyds Banking Group (LSE: LLOY) is Britain’s largest retail bank, serving 30m customers. Thus, its fate is closely tied to spending and borrowing by consumers and businesses. On Friday, Lloyds shares closed at 46.42, losing 0.27p (-0.6%), valuing the Black Horse bank at £33bn. But as fears over Covid-19 rose and fell, Lloyds’ share price ranged from 32p on 21 December 2020 to 51.58p on 2 November 2021. For me, Lloyds is a binary bet on the war against coronavirus. If the UK conquers Covid-19, then Lloyds’ prospects should improve markedly, but viral setbacks could harm the bank’s future. Right now, this stock trades at 7.1 times earnings, for an earnings yield of 14.1%. The dividend yield (axed in 2020 and later restored) is 2.7% a year. I hope humanity and Lloyds both bounce back strongly in 2022!

The post Here are 3 of my best stocks to buy for 2022! appeared first on The Motley Fool UK.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco, Lloyds Banking Group, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.