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The FTSE 100 has been all around the store recently. Like each different market, it’s taken successful from Donald Trump’s commerce tariffs.
Though possibly it’s not wobbled fairly as a lot as folks suppose. I simply checked how the UK’s blue-chip index carried out final week and surprisingly, it climbed 4.6%, clawing again most of its current losses.
Issues are powerful, however not catastrophic. Over the previous 12 months, the FTSE 100 has edged up 5%, with whole returns pushing nearer to 9% as soon as dividends are included.
One purpose it’s held up is that the index wasn’t overpriced to start with. The FTSE 100 is filled with prime dividend-paying shares, the sort that bought left behind through the US tech frenzy.
UK shares look good worth to me
With central banks prone to reduce rates of interest to melt the influence of tariffs, UK earnings shares might turn into much more engaging.
FTSE 100 shares have a tendency to supply greater yields than their US counterparts. Proper now, the common sits at 3.65%, versus simply 1.4% on the S&P 500.
If rates of interest fall, money and bond yields will observe. However there’s no speedy purpose for dividends to drop. That would push extra traders again in direction of shares.
Ten days in the past, I added British Airways-owner Worldwide Consolidated Airways Group to my SIPP. Earlier than that, I topped up on coach and athleisure agency JD Sports activities Trend. And earlier than that, I picked up extra shares in life insurer Phoenix Group Holdings.
All appeared first rate worth to me amid the present turbulence. I’m now absolutely invested. I don’t have a penny of my SIPP in money.
Annoyingly, which means I can’t snap up extra shares whereas they’re low cost. However I nonetheless count on to be rewarded when at the moment’s uncertainty clears.
I’m backing my Taylor Wimpey shares
One inventory I feel might rebound properly is housebuilder Taylor Wimpey (LSE: TW). Just some months in the past, its shares had been flying as markets priced in a number of rate of interest cuts for 2025, that will slash mortgage charges and revive demand for brand new properties.
Issues haven’t panned out that method. The Financial institution of England has delivered only one reduce up to now. Home value development has slowed, with costs flat in February, in accordance with the most recent HM Land Registry information. Affordability stays a serious hurdle, and with the momentary stamp responsibility break having ended on 31 March, patrons now face greater prices too.
The Taylor Wimpey share value has slumped virtually 33% within the final six months, and practically 14% over the 12 months.
It appears cheap worth at 13.7 occasions earnings, however the actual enchantment is the dividend. The trailing yield now sits at a whopping 8.4%, one of many highest on the FTSE. I maintain the inventory, and the subsequent cost hits my account on 9 Might. I can’t wait.
In fact, at the moment’s issues might drag on, for months, possibly even years. Taylor Wimpey’s shares may not bounce again shortly. However for now, the dividend appears secure sufficient, and I’ll be reinvesting each penny to construct my stake, prepared for the restoration. When it does, I reckon my Taylor Wimpey shares could lead on the cost. No ensures although.
