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Shopping for high quality FTSE 100 shares can ship an excellent mix of capital features and dividend revenue over the long run. With this in thoughts, listed below are a few my favorite blue-chip shares to contemplate at the moment.
BAE Techniques
Defence shares like BAE Techniques (LSE:BA.) are sometimes thought-about traditional defensive investments moderately than thrilling progress shares. The lengthy file of dividend progress at this explicit weapons builder (courting again to 2011) illustrates the predictability of its earnings from yr to yr.
However the complete defence sector’s income outlook has been remodeled since Russia invaded Ukraine three years in the past. BAE’s order backlog rose £8bn in 2024 to finish the yr at file highs of £77.8bn. This implies Metropolis analysts anticipate earnings right here to continue to grow strongly.
Analysts tip bottom-line rises of 12% and 11% for 2025 and 2026, respectively.
In opposition to this backcloth, dividends are maybe unsurprisingly tipped to continue to grow as nicely. So the dividend yields on BAE Techniques shares are a solid-if-unspectacular 2.2% for this yr and a couple of.4% for 2026.
With Europe embarking on substantial rearming not seen for many years, main weapons contractors like this have a terrific alternative to supercharge earnings. BAE is a serious provider to continental armed forces, particularly the UK, which accounts for 26% of annual revenues.
Be conscious, nonetheless, that the corporate additionally makes greater than four-tenths (44%) of turnover from the US. This additionally due to this fact leaves it susceptible to falling defence spending Stateside below President Trump’s drive to enhance effectivity.
In the present day the BAE Techniques share worth instructions a higher-than-normal price-to-earnings (P/E) ratio of twenty-two.3 instances. I’m assured it could proceed to climb in worth, although do not forget that that premium ranking might show the share worth’s undoing if group revenues seem below risk.
Sage
Tech shares hardly ever earn a popularity as profitable dividend shares. These firms sometimes reinvest any extra capital for progress moderately than distributing it to shareholders.
However Sage (LSE:SGE) — which makes software program for accounting, payroll, and HR features — has proved an honest passive revenue share to purchase down the years. Because of glorious money era, dividends right here have grown yearly since 2012.
Metropolis analysts anticipate this robust file of proceed over the close to time period at the very least, too. So Sage shares throw up dividend yields of 1.9% and a couple of% for the monetary years to September 2025 and 2026, respectively.
Forecast earnings progress of 13% and 14% for these years helps these predictions
Bear in mind, nonetheless, that — like that of BAE Techniques — Sage’s share worth trades on an elevated P/E ratio, at 27.8 instances. Whereas meaty valuations are typical for high-growth tech shares, this would possibly nonetheless go away the corporate susceptible to a worth correction if information stream worsens, as an example if cooling financial progress dampens enterprise spending.
But I’d anticipate Sage’s shares (that are up 114% over the previous 5 years) to rebound from any weak point over the long run. Ongoing company digitalisation ought to imply demand for its merchandise jumps from present ranges. I additionally just like the early successes the corporate’s having within the fast-growing subject of synthetic intelligence (AI).
