The old adage never put all your eggs in one basket applies. I think the following five FTSE 100 companies could all make attractive long-term buy and holds. Just make sure they balance any existing holdings you have.

Aviva

Insurance giant Aviva (LSE: AV) may seem a surprise pick, as its share price has underperformed in recent years. However, that means you can buy it at a bargain 6.9 times forecast earnings, against 17 times for the FTSE 100 as a whole. Today makes a tempting entry point, as the share price may rise nicely when investors tune back into the stock.

The Aviva share prices trades 6% lower than it did three years ago, even though profits have nearly doubled and dividends have jumped 44% in that time. It now offers a fabulous forecast yield of 7.7%, covered 1.9 times by earnings. Aviva could be ripe for a rebound.

GlaxoSmithKline

Pharmaceutical giant GlaxoSmithKline (LSE: GSK) has held its prized dividend at 80p a year for years, as it focuses its resources on rebuilding its drug pipeline. Some investors have shunned the £87bn company as a result, yet it still offers a steady forecast yield of 4.5%, roughly in line with the FTSE 100 average, covered 1.5 times by earnings.

The Glaxo share price is now showing signs of life, up almost 20% over the last year. Short-term swings don’t matter that much; you should invest in Glaxo for the longer run. Buy, hold, reinvest your dividends and reap the rewards.

Diageo

Spirits giant Diageo (LSE: DGE) is an old favourite of mine. Investors are having a party right now, with the Diageo share price up 17% this year, and 75% over five years.

While there are signs of people drinking less, Diageo has caught the spirit of the times by encouraging them to drink better, by purchasing its premium brands instead. The £74bn group trades at a premium valuation of 23.9 times forward earnings, with a relatively low yield of 2.2%, covered 1.9 times. Then again, it usually does. The higher price has been worth paying.

DCC

International sales, marketing, and support services group DCC (LSE: DCC) has seen its share price double in five years, and is maintaining its momentum this year.

Management recently forecast another year of profit growth and development, and with four divisions covering liquified petroleum gas (LPG), retail & oil, technology, and healthcare, it has plenty of diversification. Recent share price growth is reflected in a slightly pricey forward valuation of 17.8 times earnings, but not that pricey. The DCC share price could be Brexit proof, too.

BHP Group

I’m throwing in a stock from the mining sector, as this gives you exposure to global growth. BHP Group (LSE: BHP) is my pick, because this £87bn group has massive diversification across copper, silver, lead, zinc, uranium, gold, iron ore, coal, and even petroleum.

The complicating factor is the US-China trade war, as China is by far the biggest source of global demand for commodities. BHP Group is cheaper as a result, trading at 11.8 times forward earnings, while the forecast yield is a bright and bouncy 6.2%.

If those don’t tempt you, try these…

The post £5k to invest? I’d pop these 5 stocks into a FTSE 100 starter portfolio appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Diageo. 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.

The support services giant’s desire for acquisitions has already delivered sparky earnings expansion, and DCC is showing no sign of slowing down on this front. Just last week it snapped up Canada’s Jam Group (a sales, marketing and services provider to the professional audio, musical instruments and consumer electronics product sectors), marking the second such takeover at its DCC Technology arm in the North America region in less than three months.

An aggressive approach to M&A has kept profits on an upward charge in recent years, so there seems little reason to expect DCC to change course any time soon. Latest financials this week underlined the rationale behind such a strategy — for the six months to September the company said that it expects that “group operating profit will be well ahead of the prior year, driven by acquisitions completed in the prior year.”

A proven dividend hero

The FTSE 100 businesses’s long history of strong and sustained earnings growth has allowed it to light a fire under dividends over the past several years. It’s hiked the annual payout for 24 straight years since its IPO back in 1994, and by 60% during the past five fiscal periods, culminating in the total reward of 122.98p per share for fiscal 2018.

With the City anticipating additional profits expansion in the medium term — advances of 17% and 5% are predicted for the years ending March 2019 and 2020 respectively — dividends are expected to keep ripping higher at a sprightly pace. A 136.9p reward is anticipated for this year and a 146.3p payout for next year, figures that yield a handy 1.9% and 2% respectively.

It’s also good value for money. A forward P/E ratio of 19.1 times is a bit heady on paper, sitting above the widely-accepted value region of 15 times or below. However, a corresponding PEG reading around or below the bargain benchmark of 1, in this case 1.2, suggests that it is in fact attractively priced relative to its anticipated growth trajectory.

It’s clearly not the biggest yielder, but for those seeking reliable dividend increases year after year, DCC is hard to fault.

Eateries star

I’d like to draw your attention to SSP Group (LSE: SSPG), another London-quoted dividend growth share releasing bright trading news last week. The business — which operates food and beverage outlets in airports and rail stations across 30 countries — pumped out news of another satisfying quarter and expectations of a 2%-3% like-for-like sales rise in the year to September 2018.

City analysts are expecting earnings to keep booming by double-digit percentages and they are predicting rises of 19% and 11% for fiscal 2018 and 2019 respectively. It’s hardly a shock that SSP is predicted to keep lifting dividends at quite a pace too.

Last year’s 8.1p per share payout should climb to 10p for the period just passed, and again to 11.2p in the current year, resulting in a forward 1.5% yield. As with DCC, yields might not be the biggest, but as commercial flight demand grows steadily across the world, SPP could prove to be a wise selection for growth and income seekers alike. In my opinion it’s a great selection in spite of its high prospective P/E multiple of 27.6 times.

The post Forget the cash ISA, this cheap FTSE 100 dividend growth stock could help you to retire early appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of SSP Group. 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.

One year top performers

Over the last 12 months, the best performing stocks have been Fresnillo (+95%), Randgold Resources Limited (+66%), Paddy Power Betfair (+60%), Admiral Group (+46%) and Mediclinic International (+43%).

This is certainly a diverse selection of stocks and there’s every chance that investors who own a portfolio of ‘mainstream’ popular stocks might not own any of these stocks.

Fresnillo and Randgold Resources produce silver and gold, respectively, and their share prices have clearly been boosted by the market uncertainty over the last year. Indeed, on the back of the EU referendum result on Friday, Randgold spiked 28% higher, while Fresnillo jumped 12%.

Paddy Power Betfair has steamed ahead after the merger, while Admiral Group has enjoyed strong momentum after lifting its dividend by 16% for FY2015.

Mediclinic International has likely gone under the radar for many investors since joining the FTSE 100 in March. But with revenues forecast to power ahead over the next two years, it’s no surprise this stock is on the top performer’s list.

Three year stars

On a three year view, the best performing stocks on an annualised basis have been Hikma Pharmaceuticals (+37%pa) , DCC (+37%pa), Mediclinic International (+35%pa), London Stock Exchange Group (+30%pa) and Shire (+28%pa).

Once again, several of these stocks are not mainstream ones. Furthermore, many have been promoted into the FTSE 100 quite recently, which illustrates the importance of looking outside the FTSE 100 when looking for growth opportunities.

Headquartered in Jordan, Hikma joined the FTSE 100 for the first time last year, before being demoted from the index in March and then re-entering the index earlier this month. The company has an excellent record of generating strong shareholder returns and could certainly provide an alternative to the larger slow-burning healthcare stocks such as GlaxoSmithKline.

International sales, marketing, distribution and business support services group DCC has seen strong earnings growth in the last few years and the company’s promotion to the FTSE 100 in December last year has clearly generated extra interest in the stock.

London Stock Exchange Group jumped after acquisition interest from Deutsche Bourse earlier this year, although this merger may clearly face challenges after the recent Brexit vote.

Shire makes the ‘three year best performing’ list despite the company’s share price falling from over 5,700p in August last year to 4,100p today.

Five years champions

Lastly, over a five year period, the top performing stocks on an annualised basis are Ashtead Group (+47%pa), Barratt Developments (+34%pa), easyJet (+34%pa), Taylor Wimpey (+34%) and Persimmon (+33%pa).

There’s a clear theme here, with property development stocks taking three of the top five positions, even after all three companies were hit heavily on Friday after the EU referendum result.

International equipment rental group Ashtead claims the top spot after enjoying fantastic growth in earnings over the last five years, although it was starting from a low base after the Global Financial Crisis.

EasyJet joins makes the top five after seeing earnings rise dramatically in the last five years.  

The post Do you own the FTSE 100’s best performing stocks? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Edward Sheldon owns shares in GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

So who are these fabulous five and can they maintain their winning streak?

Fresnillo

And the winner is… Fresnillo (LSE: FRES). Perhaps it’s only fitting that a gold and silver miner should come first in last year’s medals placing. Its 12-month return of 47% simply couldn’t be beaten. This is only partly due to the rising price of  gold: growth was a modest 4.6% in the last year to $1,292 an ounce while silver did only slightly better, rising 5.6% to $17.81 an ounce.

Fresnillo’s share price really started flying in the middle of January’s market rout, and is up nearly 60% in the last three months on the weaker dollar and dash for safe havens. Its share price could go anywhere from here and this stock remains a glittering portfolio diversifier for today’s anxious investors. 

DCC 

International sales, marketing, distribution and business support services firm DCC (LSE: DCC) was last year’s runner-up growing 42%. This ambitious company is growing fast, having made two large acquisitions lately, Esso Retail France and Butagaz. In today’s troubled markets it’s good to hear bullish management predicting that “both operating profit and adjusted earnings per share will be very significantly ahead of the prior year.“

Earnings per share (EPS) leapt 25% in the year to March and although it’s set slow to around 10% this year, that still looks promising. You pay a premium for DCC’s bright growth prospects, in this case more than 30 times earnings. DCC’s recent momentum suggests this may be a price worth paying.

Randgold Resources

In third place sits gold miner Randgold Resources Limited (LON: RRS), its share price up 31% in the last year, helped by market volatility, a dovish Fed and the weaker dollar. Randgold’s annual gold production exceeds 1m ounces but it has been successfully replenishing reserves as they deplete. Again, performance is subject to gold price swings, which nobody can control, but the diversification benefits are clear.

Paddy Power Betfair

International multi-channel betting and gaming group Paddy Power Betfair (LSE: BET) rose 29% in the last year. The merged company will need no introduction to anybody who has seen a Premier League game on Sky lately, as gaming adverts seem to take up more time than the actual match.

The share price has fallen 20% in recent weeks but Morgan Stanley says this is a great buying opportunity. It’s hardly a cheap one, trading at more than 33 times earnings, so you’re still playing for high stakes. 

Intertek Group

Last but by no means least, Intertek Group (LSE: ITRK) returned 23% last year. 2015 wasn’t all good for the inspection & testing services specialist, which enjoyed a 4% rise in profits to £323m and 20 basis point rise in margins to 15.9%. But it also suffered a £308m pre-tax loss, primarily due to a non-cash impairment charge of £577m. It looks expensive at 23.2 times earnings but once again, that’s the price of success.

The post These are the 5 BEST stocks of the year appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown, Intertek, and Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Top of the stocks

But 2015 hasn’t been a total washout for many of the FTSE 100 constituents with at least half of them showing a gain, and some of them a significant one. Indeed, if I could have foreseen the gains made by three stocks in particular,  I would have sold my house at the start of the year and invested in them. One would have been the diversified investments group  DCC (LSE: DCC), which has seen a near-60% gain so far this year. The other two would have been the fund supermarket and asset manager Hargreaves Lansdown (LSE: HL) and housebuilder Taylor Wimpey (LSE: TW).

Of course, no sensible investor really invests so narrowly. To do so is foolhardy, as we know shares come with risks that can seriously harm your financial health should the performance sour.

History repeating?

However, it does pay to select certain types of shares that exhibit characteristics like operating in the sweet spot in the economic cycle, boasting a competitive moat, and enjoying strong trading momentum.

Looking at the three companies being reviewed today, it’s fairly easy to see what caused their outperformance. Can they repeat it in 2016?

Winning strategy

DCC seems an unlikely winner given its energy sector links. But win it has. Management has made a number of acquisitions for future growth. One such back in June 2015 saw the company complete the acquisition of the assets that comprise the Esso Express unmanned retail petrol station network and the Esso Motorway concessions in France.

The acquisition should provide DCC Energy with a scalable platform for further growth, particularly in the unmanned retail sector. When management last updated in November, they guided the market to expect slightly higher-than-forecast earnings, though given the recent warm weather the actual outcome could be slightly weaker than management expected.

Feel the quality

Trading at nearly 40 times expected 2016 earnings, shares in asset manager Hargreaves Lansdown don’t come cheap but you’re paying for quality. Indeed, there are few blue chips that can boast such high quality metrics. Return on Capital is north of 80% ranking it at number 12 in the market. Return on Equity is nearly 68% (even more impressive due to the company having no debt) and the company has 50% operating margins.

The company has held up very well given the fact that it’s a geared play on the stock market, though a market crash wouldn’t bode well for shareholders buying at these prices.

Shiny happy people

There are plenty of happy shareholders at FTSE 100 housebuilder Taylor Wimpey, though not as happy as those who purchased shares at sub-7p in October/November 2008.

The shares, along with other housebuilders have been on a strong run. When management updated the market back in November, they pointed to a strong summer and autumn. And although build costs were rising on the back of higher labour costs, this was more-than-offset by increases to selling prices and business efficiencies.

On a 2015 price-to-earnings ratio of just over 13 and a near-5% yield, I wouldn’t be surprised to see the shares making further progress in 2016. However, the book value at nearly 3 times tangible book suggests that these shares are no longer the bargain they once were.

Dividend winners

Another attraction for this basket of shares is the dividend appeal. While the yields on offer do range from sub 2% through to nearly 5%, all the companies here have grown the dividend since 2011, some longer still. And as patient income seekers will know, a well-covered growing yield when taken over time, can provide a wonderful return that keeps you warm at night.

Will you grow richer in 2016?

The post Top Of The Stocks – Can DCC plc, Hargreaves Lansdown plc And Taylor Wimpey plc Soar Again In 2016? appeared first on The Twelfth Magpie.

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Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Reaction/Price Target

DCC is up over 10% today on the back of strong annual results, propelled by a wise use of funds. A price target of 7,000p a share to the end of 2017 is conceivable, I’d argue — for an implied 45% pre-tax return, excluding dividends. 

If DCC’s flawless strategy persists, a 2017 forward valuation as low as 10x its net earnings could become a distinct possibility. That would imply an astonishing 2012-2017 compound annual growth rate (CAGR) of 20.6% for earnings, which could come along a 12% CAGR for dividends over the period, according to my calculations.

Here are three reasons why upside could be greater than that, though. 

1. Growth 

A Dublin-based support services firm with a market cap of £3.7bn and a very solid balance sheet (its enterprise value is £3.7bn), DCC is one of the most appealing business services propositions in the marketplace. 

It operates five units, all of which are growing fast and present defensive features. With combined revenues of more than £10bn, its energy and technology divisions dwarf the healthcare, food and beverage and environmental units, whose combined sales amount to less than 7% of the group’s total.

While DCC continues to grow organically and by acquiring assets, its stock offers plenty of value at 4,800p, where it currently trades, based on a few factors including steady margins and sound strategy, rising free cash flow and dividends, sustainable leverage metrics and efficient use of capital. 

A top-down approach also suggests that GCC is well positioned to grow across several sub-sectors and industries where demand will outpace supply for a few years from now, in my view. The industrial world is a good example. 

2. Deals

That said, its shares could offer greater long-term value should DCC entertain a soft break-up at some point — the separation of some of its assets — even under a remote scenario according to which its equity valuation struggles to keep up with its fast pace of growth.

That’s a good option to have if demand for its services subsidies.  

The majority of its sales are generated in the UK, which testifies to the huge potential offered by DDC, which is exploiting its strong equity valuation to do deals. 

“Underlying EBITDA and EBIT multiples of 3.8 and 6.2, respectively” was the implied valuation of Butagaz, which testifies to the opportunity offered to buyers in this market. 

3. Valuation 

The divided is rising and is projected to yield 2% in 2016 — there’s a lot to like in DCC’s rising free cash flow yield and in its dividend policy, which is clearly sustainable and could surprise in future, base on DCC’s cash flow profile. 

The shares trade on net earnings and adjusted operating cash flow multiples of 21x and 12x, respectively, for 2016. Taking into account favourable conditions for support services businesses at this point of the business cycle, as well as considering the way the group is managed, there’s no reason to worry about a stock performance that already reads +65% over the last couple of years. 

“We believe there will continue to be opportunities and maybe some of them bigger over the next few years, coming out of the oil majors,” chief executive Tommy Breen said today. 

Go and get them, Mr Breen!

The post 3 Reasons Why DCC PLC’s Rally Is Set To Last Into 2020 And Beyond appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.