I’ve picked out some of the best FTSE 100 stocks to buy for 2022. Here’s why I’d load up on them today.
Vodafone Group faces significant competition in its core European market and its fast-growing African territory. But I think its lofty position in the highly-defensive telecommunications sector makes it a great buy as the economic recovery wobbles. In fact, I think it could receive a revenues boost if Covid-19 drags into next year and people use their mobiles to stay connected.
I think Vodafone is particularly attractive at current prices. The FTSE 100 firm trades on an undemanding forward P/E ratio of 12.8 times. However, its 6.9% dividend yield is what has really attracted my attention.
#2: United Utilities
I’d also buy United Utilities Group shares to bolster my investment portfolio in these uncertain times. Even if the Covid-19 crisis worsens and inflation keeps rocketing, Britons will still need the company’s water to shower, do the laundry, drink and more. This gives it the sort of earnings stability that many other UK shares would die for.
My main concern for United Utilities in 2022 is the prospect of multiple Bank of England rate hikes. This could push the cost of debt servicing much higher.
#3: Royal Mail
Royal Mail isn’t immune to Britain’s slowing economy. But I believe that at current prices it could still be too cheap for me to miss. The country’s oldest courier trades on a forward P/E ratio of below 8 times. Meanwhile it sports a jumbo 4.8% dividend yield. I believe the impact of Covid-19 on the retail landscape could benefit Royal Mail massively next year by turbocharging e-commerce activity and consequently parcels traffic.
I am wary, however, that the business is investing huge sums to capitalise fully on the online shopping boom. This has the potential to take a bite out of shareholder returns.
I’d expect Unilever to have a solid 2022, even though rising prices of key materials pose a huge risk. Studies show that demand for trusted consumer brands has ballooned during the pandemic. And this FTSE 100 firm has some of the best in the business like Domestos bleach, Dove soap and Persil washing powder.
Even if broader shopper spending power wanes, I’m confident beloved products like these can keep revenues moving higher. I’m also encouraged by Unilever’s robust position in the personal care and household goods markets, sectors that perform more resolutely when economic conditions worsen.
#5: B&M European Value Retail
Soaring inflation means that British shoppers will need to stretch their pennies out as far as they can. This bodes well for low-cost retailers like B&M European Value Retail in 2022. But this isn’t the only reason I’d buy this blue-chip today. I think its rapid store expansion plan will give profits an extra shot in the arm, even when inflationary pressures gradually subside. The business is aiming to have 950 B&M stores up and running eventually, up from just below 700 today.
I’d buy this FTSE 100 stock, even though supply chain problems could cause sustained pressure on profits.
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Royston Wild owns Unilever. The Motley Fool UK has recommended B&M European Value 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.