In a recent interview of Warren Buffett’s, I watched as he said that in business, you’ve got to expect good times and bad. This might sound like the most obvious fact, but is worth reiterating at a time when the equity markets are underwhelming. The FTSE 100 has been trading sideways in the recent past, and has been 4.5% lower on average in August compared to July. The US-China trade war, continued Brexit uncertainty and general prospects of a slowdown have undoubtedly spooked investors. But it’s worthwhile for the long-term investor to remember that this too, shall pass. And that the good times, will one day be back.
With this in mind, I like two FTSE 100 shares in particular for their potential to come out the other side relatively unscathed. Their global scale, sustained financials and a long history of share price performance make them stand out.
Track record to reckon with The first is the mining giant BHP (LSE:BHP). The company’s recent results weren’t bad. It reported an increase in profits and a decline in debt. But the highlight was one for investors with a preference for dividend income. It announced a record dividend of $0.78 per share, topping the previous year’s record-breaking dividend. Even if its share price does see a dip in the near future, a history of increasing dividends is a good place to begin with as an investor.
Its confidence in the future is also comforting. CEO Andrew Mackenzie said: “We enter the 2020 financial year with positive momentum and a strong outlook for both volume and cost”. The company’s share price trend-line also points firmly upwards, with almost no lasting dips since the start of 2016 that makes me more confident as an investor about its prospects, never mind the latest price decline.
Opportunity in price dip If you are feeling bolder and are willing to look more at a growth than a dividend option, insurance provider Prudential (LSE: LON:PRU) is a share to consider. Its price has crashed along with the broader market in recent days, with it trading 20% lower than the highs seen in the past year.
And this is despite strong fundamentals. It recently reported double-digit growth in profits across its geographies. I believe that its impending de-merger, to allow it to focus on the European business in one operation and rest of the world in the other, could hold it in good stead in years to come, with the potential to become a more efficiently run outfit.
That said, as I have pointed out earlier as well, the growth opportunity for the insurance business remains unchallenged. And as with BHP, this company also has the potential to reap good returns for the growth investor over the long term. And that’s exactly the kind of opportunity that we at the Motley Fool are most interested in.
In a nutshell, the times might be stressful for investors, but I think there are some very good shares to be bought at a discount right now. And these are just two examples.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.
Motley Fool UK 2019