Regardless of whether you are an experienced investor or a stock market newbie, it can be hard to know where to make your next investment. Fluctuating economic conditions and geopolitical uncertainty mean that there is always a threat of volatility within the stock market.
However, the market has proved resilient despite tough conditions in the UK in recent years and, in my opinion, companies in the FTSE 100 represent a sound investment for portfolio growth.
Stocks and Shares ISAs are great ways for beginners and expert investors alike to take advantage of tax breaks on any income earned through stock market investing. You can invest up to £20,000 into these ISAs without being subject to income or capital gains tax, so that’s where I’d put £5,000 for investment purposes.
But what stocks would I add to my portfolio? Two established FTSE 100 companies I’d suggest looking at are Kingfisher (LSE:KGF) and Schroders (LSE:SDR).
Brexit woes?
DIY retailer Kingfisher has recently appointed a new CEO in Thierry Garnier, formerly the head of French supermarket giant Carrefour’s Asian operations.
The new boss will have a job on his hands in reversing the falling share price, which is down more than 40% in the last four years. The company has been weighed down by the uncertainty surrounding Brexit, with a weak consumer backdrop in Britain leading to falling sales in its last earnings report.
Like-for-like sales were down 1.8% in Kingfisher’s half-year results, with B&Q again one of the underperforming operations for the business.
Despite that, Kingfisher remains a solid dividend stock, based on a current yield of more than 5%, with its payout covered more than twice by net profit.
While the retail sector is still likely to be majorly affected by the final outcome of Brexit negotiations, the granting of an extension to the end of January is another sign to me that both sides want to avoid a no-deal exit at all costs.
On that basis and with a solid dividend to fall back on, I see value in the Kingfisher share price, particularly with the energy of a new CEO at the helm.
Solid dividends
FTSE 100 mainstay Schroders is a favourite among investors as it has a reputation for solid management focusing on long-term growth for the business.
While the market for wealth management may be challenging, assets under management have shown consistent growth, with the firm’s trading update for the first three quarters of the year showing assets to the value of more than £450bn, rising from £407bn at the beginning of 2019.
Earnings per share have also grown consistently at Schroders, with management responding by raising the dividend accordingly. The company has not cut its dividend in more than 20 years.
The stock currently supports a yield of just under 4%, and I see that as strong enough to add to a Stocks and Shares ISA with a good prospect of share price growth as well.