We have some exciting news to share! The Motley Fool UK has now become The Twelfth Magpie -- an independent, UK-owned company, led by our long-serving UK management team — Mark Rogers, Chris Nials and Heather Adlington. In practical terms, it’s the same team you know, now fully focused on serving our UK readers and members.

Just as importantly, our approach remains unchanged: long-term, jargon-free, and on your side. This site is our new home, and there will be extra tweaks made across the coming few days as we settle in. So if anything looks a little off, please bear with us!

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Prediction: 2026 will be the FTSE 100’s worst year since 2020

The FTSE 100 had a brilliant 2026, easily beating the US S&P 500 index. But after four years of good gains, I’m worried about that 2026 could disappoint.

| More on:
pensive bearded business man sitting on chair looking out of the window

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Twelfth Magpie’s Premium Investing Services. Become a member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more, and get a free 'Best Buy Now' stock!.

With this year almost done, 2026 has been very rewarding for investors. Major stock markets — such as New York, London, and Tokyo — have surged to new heights this year. However, after four highly profitable years, I’m worried 2026 could be a poor year for the UK’s FTSE 100, US S&P 500, and the like.

Fabulous FTSE

Over the last six years, the outstanding shares to own for global investors have been US mega-cap tech stocks. Shares in the so-called Magnificent Seven have surged to all-time highs, delivering many trillions of dollars of gains. However, with US stock markets trading close to record levels, some fear this is a bubble doomed to burst.

Should you buy Bunzl Plc shares today?

Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.

That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them.

However, what many people may not have noticed is that the ‘boring, old-economy’ FTSE 100 index has absolutely thrashed the S&P 500 over the past year. The Footsie has leapt by 22.2% over 12 months, versus 14.4% for its American cousin.

Furthermore, FTSE firms often pay generous cash dividends — the index’s dividend yield is hovering around 3.1% a year. Meanwhile, the current yearly cash yield for the S&P 500 is just over 1.1%. That’s another couple of percentage points in the UK index’s favour.

In sterling terms, this gap is becomes a gulf, thanks to the pound rising against the US dollar. For UK investors, the S&P 500’s total return is just 10.8% over the last 12 months — less than half that of its British rival.

My family are delighted that UK shares have surged since 2024, as our portfolio includes around 25 FTSE 100 and FTSE 250 value/dividend/income shares.

Trouble in 2026?

When investors buy assets at sky-high prices, future returns generally suffer. Hence, I’m worried that next year might be poor for the major US indexes (the S&P 500 and Nasdaq Composite). Alas, falling US markets would likely drag London down, because “when New York sneezes, London catches cold” — as one old City saying goes.

In short, I expect 2026 to be the FTSE 100’s worst year since Covid-hit 2020, when the index returned -11.6%. As the future is inherently uncertain, I won’t guess London’s returns next year. That said, I’m convinced they won’t match the galloping gains of the last four years.

Bargain Bunzl?

As a value investor, I often rummage in the FTSE 100’s bargain bin for undervalued stocks. Earlier, I spotted that one of my family portfolio’s latest purchases is among the Footsie’s worst performers this year.

The index’s second-biggest loser in 2026 is bombed-out Bunzl (LSE: BNZL), whose shares collapsed on 15 April after poorly received results. At its 52-week high on 13 February, this stock briefly touched 3,488p. At their 2026 low on 17 December, the shares hit 2,050p, having collapsed more than two-fifths (-41.2%).

On Friday, 19 December, Bunzl stock closed at 2,094p, valuing this global distribution and outsourcing business at just £6.8bn. Meanwhile, Bunzl’s plunging share price has reduced its valuation to 14.4 times trailing earnings. This delivers an earning yield of 6.9%, thus the firm’s market-beating dividend yield of 3.5% a year is covered almost twice by historic earnings.

If global stock markets do head south next year, then I expect Bunzl stock to follow suit. Yet its conservative business model should turn this business around over time, so we won’t sell our stake!

The Motley Fool UK has recommended Bunzl. Cliff D’Arcy has an economic interest in Bunzl shares. 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.

More on Dividend Shares

House models and one with REIT - standing for real estate investment trust - written on it.
Investing Articles

How investing £4.50 a day could set you on the way to a £1,505 monthly second income

How can UK stocks with high dividend yields help investors earn a meaningful second income from the price of a…

Read more »

Front view of a young couple walking down terraced Street in Whitley Bay in the north-east of England they are heading into the town centre and deciding which shops to go to they are also holding hands and carrying bags over their shoulders.
Investing Articles

How much is needed in an ISA for passive income that covers the UK’s monthly average rent of £1,381?

The UK’s monthly average rent for May 2026 is £1,381. Muhammad Cheema looks at how much is needed to aim…

Read more »

A rear view of a female in a bright yellow coat walking along the historic street known as The Shambles in York, UK which is a popular tourist destination in this Yorkshire city.
Investing Articles

How have BAE Systems shares become a dividend powerhouse? 5 reasons why!

Dividends on BAE Systems shares have risen every year without fail since the early 2000s. So what's the FTSE 100…

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

BP shares: still priced as an oil major — but the market may be behind the curve

Andrew Mackie looks at BP shares and why investors may be underestimating the quality and concentration of its underlying asset…

Read more »

A rear view of a female in a bright yellow coat walking along the historic street known as The Shambles in York, UK which is a popular tourist destination in this Yorkshire city.
Investing Articles

At 8.1%, are investors missing the bigger story behind Legal & General shares?

Andrew Mackie explores Legal & General shares and asks whether investors are still viewing it too narrowly as a yield…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

At 8% is this eye-popping FTSE 100 dividend yield simply too good to be true?

The dividend yield is to die for, but the share price is lacking in life. Harvey Jones examines whether this…

Read more »

Young female hand showing five fingers.
Investing Articles

How have HSBC shares become a dividend machine? 5 reasons why!

HSBC shares are proving hugely popular at present, helped by the company’s reputation as a guiding stalwart, among other positives.

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

A cheap UK dividend share with a P/E of 10.2 to consider buying for the AI boom

This dividend share has produced fantastic returns in recent years amid the AI boom. But it still looks cheap, so…

Read more »