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The FTSE 100 has been everywhere in the store currently. Like each different market, it’s taken a success from Donald Trump’s commerce tariffs.
Though possibly it’s not wobbled fairly as a lot as individuals assume. 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 latest losses.
Issues are powerful, however not catastrophic. Over the previous 12 months, the FTSE 100 has edged up 5%, with complete 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 high dividend-paying shares, the type that received left behind through the US tech frenzy.
UK shares look good worth to me
With central banks prone to minimize rates of interest to melt the influence of tariffs, UK earnings shares might develop into much more engaging.
FTSE 100 shares have a tendency to supply larger 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 comply with. However there’s no instant purpose for dividends to drop. That might push extra buyers again in the 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 Style. 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 right this moment’s uncertainty clears.
I’m backing my Taylor Wimpey shares
One inventory I believe might rebound properly is housebuilder Taylor Wimpey (LSE: TW). Only a few months in the past, its shares have 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 approach. The Financial institution of England has delivered only one minimize up to now. Home worth development has slowed, with costs flat in February, based on the most recent HM Land Registry information. Affordability stays a serious hurdle, and with the short-term stamp responsibility break having ended on 31 March, consumers now face larger prices too.
The Taylor Wimpey share worth has slumped nearly 33% within the final six months, and almost 14% over the yr.
It appears cheap worth at 13.7 occasions earnings, however the true 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 following fee hits my account on 9 Might. I can’t wait.
In fact, right this 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 may lead the cost. No ensures although.
