It feels like 2008 all over again. Still, Lloyds (LSE: LLOY) shares have held up well so far this year.

Lloyds Banking Group has a nice dividend yield of about 5.7%. Is it time to top up my holding in this bank?

Retail banks can be seen as leveraged bond funds. Regulators forced retail banks to buy more and more “safe” bonds since the financial crisis of 2008.

Those bonds are trading a lot lower in the market now.

The insurance marketplace Lloyd’s of London just booked a pre-tax £800m loss. The loss was caused by a £3.1bn drop in the value of the investment portfolio.

Now guess what that investment portfolio was largely made of?

Government bonds…

Silicon Valley Bank (SVB) got unwanted attention from the financial markets after realising losses by selling bonds.

Now the market is playing a game of whack-a-mole

All these regulations and added compliance rules since 2008 have solved exactly nothing.

If a bank’s share price goes down a lot, deposit holders start withdrawing money.

Every bank is leveraged up to their eyeballs, and none can survive a run-on-the-bank.

Luckily, Lloyds Banking Group still has the trust of the market. I am a happy long-term shareholder.

I will not add to my position, however.

Management of the bank cut the dividend in recent years. Dividend-cutting stocks tend to underperform on average going forward.

As seen in 2008, banks can go from hero to zero very fast. My investments in broad based stock market ETFs give me more than enough exposure to banking stocks already. No need to double up.

Shareholders’ property rights are not held in high esteem currently in the banking sector anyway.

The owners of SVB UK got back £1 for their troubles. Some call banks un-investable as a result.

Wall Street versus Main Street

The sausage roll king of the UK high street is Greggs (LSE: GRG). The dividend yield is a lot lower at about 2.4% excluding special dividends.

Lockdowns are a risk for this stock. In 2020, investors had to go without a dividend from Greggs.

The popular pastry chain has raised the price of the sausage roll four times since 2021 from £1 into £1.20 now. Still, the bakery chain has a good value proposition compared to the likes of Starbucks and Pret a Manger.

The company has pricing power. The stock trades at a price-to-earnings ratio of 23.

Greggs worked hard in 2022 to effectively stand still. The upside from higher sales was eaten up by higher costs.

Longer opening hours may boost sales this year.

At the same time, the impact of higher tax rates on profits is negative.

Have your sausage roll and eat it

I would rather buy more shares in Greggs than Lloyds.

In a market sell-off, this investor will try to pick up some more shares in the sausage-roll maker. The shares are not cheap enough for me to be in a rush today

For now, I will instead buy the sausage rolls in its shops!

The post Better buy: Lloyds vs Greggs shares appeared first on The Twelfth Magpie.

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• Here’s how much I think Lloyds shares will be worth at the end of 2027

Rogier van de Grift owns shares in Greggs, Lloyds and Starbucks. The Motley Fool UK has recommended Lloyds Banking Group Plc. 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.

Over the last year, the FTSE 100 index has outperformed a lot of other indices.

That outperformance of the FTSE 100 may well continue in the current market. The UK stock market is deeply out of fashion. A combination of negative sentiment and outperformance may well mean the valuation has become too cheap for the FTSE 100.

CRH just announced it wants to leave the London Stock Exchange and try its luck on the New York Stock Exchange instead.

If CRH gets its primary stock exchange listing in the US, it will no longer be included in the FTSE 100 index.

A lot of CRH’s earnings come from America. It is also the biggest building materials supplier in the United States. When the company announced its earnings and the listing plans the stock jumped by 10%. I believe management probably hopes for CRH to trade at a higher valuation with a stock exchange listing in New York.

Ferguson already changed its primary listing to the US. Flutter Entertainment and WANdisco have also announce they are eying a primary listing on the other side of the ocean.

Do US primary listings increase the valuation?

It is hard to tell objectively if changing the listing does any good for the share price valuation. Only when 10 to 20 companies have actually swapped London for New York can that be measured more sensibly.

If, however, it does turn out that the valuations can be raised this way, management of FTSE 100 companies could have a fiduciary duty to look into this to their shareholders.

One Footsie firm for which this would make a lot of sense as well is Ashtead Group (LSE:AHT).

Ashtead also has a lot of its earnings in the US. The company has, however, just pledged its loyalty to London. A primary listing for Ashtead in America, though, could be a future catalyst for the stock.

Ashtead had good third-quarter earnings and raised its full-year guidance. The stock trades only at 19 times earnings and has a modest dividend yield of just over 1%.

Considering there is only one quarter left in Ashtead’s book year, soon investors will start looking at next year’s price-to-earnings (P/E) ratio. The forward P/E for Ashtead is only 16. That valuation is becoming similar to the valuation of the FTSE 100 .

What to buy this ISA season: the FTSE 100 index or Ashtead?

Clearly, the FTSE 100 is more diversified than a single stock like Ashtead. The former is therefore safer and it also has a higher dividend yield. So more ‘jam today’ for the FTSE 100 index.

Growth, however, is a lot higher for Ashtead. The company has easily managed double-digit growth this year and in the past. If growth continues, Ashtead could offer more ‘jam tomorrow’.

So I will add to my Ashtead position this ISA season. Its high growth at a reasonable price prospect is simply too tempting to ignore…

The post Shares of this FTSE 100 firm are still good value for money appeared first on The Twelfth Magpie.

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Rogier van de Grift owns shares in Ashtead. The Motley Fool UK has no position in any of the shares mentioned. 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.

Over the last year, the Diageo (LSE:DGE) share price is flat. After the release of its interim results in January, the shares fell by 5%.

Some financial analysts apparently were disappointed with a US sales growth of 3%. Considering that over the last five years the annual average sales growth for Diageo was only around 5%, I do not share that disappointment. For a long-term investor like me, the earnings trend over multiple years is much more important than the short-term earnings noise.

Warren Buffett’s shareholder letter to Berkshire’s shareholders just got released at the end of February as well. It was a very short letter this time. Warren at his old age must think that less is more. I think he wanted to keep it brief but really focus on topics close to his heart. He focused on the “secret sauce” and highlighted two of his stock holdings.

He completed buying Coca-Cola in 1994. Berkshire’s American Express holding was essentially completed in 1995. Both investments turned out to be 10 baggers. In a couple of years, the dividend income of Coca-Cola may be higher than the total initial cost of the Coca-Cola position for Berkshire Hathaway. That is always something like the Holy Grail achievement of investing.

What British stock could be the UK’s version of Warren Buffett’s Coke and Amex holding?  

Here, I want to come back to Diageo.

Raise your glasses

My ISA holding of Diageo has more than doubled since inception. One mistake investors make is not buying enough shares of a good stock. I fear I have made that mistake. With the tax year coming to an end in the UK, I am looking to add to my Diageo holding in my ISA and my SIPP account as Diageo could be the UK’s version of Warren Buffett’s Coke and Amex holding.

Luxury stocks have outperformed this year as China has lifted Covid restrictions. Diageo can be seen as a luxury stock as well. The Chinese can be expected to go out more in 2023 and mix expansive cognac and Scotch whisky with Coca-Cola once again while doing so. So Diageo’s Asia sales are likely looking better this year.

Also, Diageo has only really started to buy back its own shares since 2018. Fewer shares remaining of Diageo’s shares outstanding could be good for long-term investors. Nick Train made the same point in the January Factsheet of Finsbury Growth & Income Trust.

On the other hand, the UK corporate tax rate is expected to go up in April. That will shrink the part of Diageo’s income pie available for shareholders in the years to come.

If Diageo can keep growing its profits by 5% a year and return to a price-to-earnings multiple of 30 times in 10 years’ time, there is a chance shareholders like me can make around 22% a year holding its stock. Hopefully Mr Hunt’s UK corporate tax raid will not mess that prediction up. I think it is time for a tipple of the Diageo share price, and I plan to add to my holding. Fingers crossed.

The post Is it time for a tipple of the Diageo share price? appeared first on The Twelfth Magpie.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Rogier van de Grift has positions in Diageo, Berkshire Hathaway, Coca-Cola, American Express and Finsbury Growth & Income Trust. The Motley Fool UK has recommended Diageo Plc and Finsbury Growth & Income Trust Plc. 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.