I’ve been screening the FTSE 100 for stocks to buy in my portfolio for 2022. It’s a great index to look at for high dividend yields. But I also think there are some top growth stocks in the Footsie.
The index is up just about 13% as I write today. But I still need to dig a bit deeper into the individual companies to make sure I pick those I view as having the best prospects for 2022. So, here are the stocks I’d buy in the FTSE 100 today for the year ahead.
FTSE 100 growth stocks
My favourite type of investing is looking for growth stocks that I think could be much bigger businesses going forward. With this in mind, I think Auto Trader might offer me attractive growth potential next year. City analysts are expecting earnings per share (EPS) to rise 11%, and this is backed up by excellent cash flow generation. Because of this, the company is able to buy back its shares, which should boost EPS further.
Auto Trader also benefits from a wide economic moat, in my view. This is from its dominant online marketplace for vehicles.
I have to keep in mind that any slowdown in vehicle purchases will impact the company’s growth prospects. This risk will be heightened if the current supply chain issues continue to impact new car imports into the UK.
The next FTSE 100 growth stock I’m considering buying more shares of is JD Sports. It’s a retailer of branded sports and fashion clothing, shoes and accessories. The company navigated the pandemic very well via its online channel. Revenue growth has been impressive, and JD Sports is expanding in Europe and the US in particular. In fact, it’s just signed a huge deal to play a major part in Reebok’s expansion plans.
There are certainly risks here, such as any further lockdown related to the pandemic that restricts in-store sales. However, its well established online offering should help to mitigate this risk.
FTSE 100 income stocks
Dividend stocks are a great way to build passive income. I think the FTSE 100 index offers a number of excellent choices in this regard. The first company with a highly attractive forecast dividend yield for next year is Persimmon. As it stands today, analysts are expecting a yield of 8.6%.
The company is a major housebuilder in the UK and has benefited from a booming housing sector this year. Therefore, if the market does slow in 2022, Persimmon’s profits will suffer. However, the housing shortage in the UK should mean that demand for its new homes will stay high.
The final income stock I’ve been researching is British American Tobacco. The dividend yield forecast is a huge 7.9% for next year, which I view as excellent for my portfolio. The stock is also cheap, on a forward price-to-earnings ratio of 8.
The company has fallen out of favour over recent years as Environmental, Social and Governance investing has developed. The share price has actually fallen almost 1% this year too. This is something to keep in mind as the share price might not recover in 2022. Nevertheless, the high dividend yield makes the stock a buy for my income portfolio.
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Dan Appleby owns shares of Auto Trader, JD Sports and British American Tobacco. The Motley Fool UK has recommended Auto Trader and British American Tobacco. 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.