The FTSE 100 is chock-full of big and exciting companies. Having trawled through the index, I’ve found two firms in which I’d like to invest £200 per month. Why am I attracted to these two industry giants? Let’s take a closer look.
A silver lining?
At the moment, Mexico-based silver miner Fresnillo (LSE:FRES) has a dividend yield of 3.57% and it paid a dividend of $0.34 last year. Currently trading at 718p, the shares are down 13% in the last year.
For the three months to 30 June, silver production increased 8.1% quarter-on-quarter. However, a yearly comparison reveals a decline of 3.6%. Despite this, CEO Octavio Alvidrez said that it was a “solid” quarter and in line with forecasts.
And the business was recently hit by a fall in the silver price from $21 to $18 per ounce. In the past week, though, it has recovered and sits back above $20.
The underlying price of silver is important for Fresnillo, because it largely dictates the value of the company’s produce. Given that silver is a good hedge against inflation, it’s quite possible that this precious metal could have higher to climb. This may only be good news for Fresnillo.
In addition, the firm has enjoyed growth in revenue, pre-tax profit, and earnings per share (EPS) between 2017 and 2021, and appears to be in a solid financial state.
Undersupplied market, growing profits?
BP (LSE:BP) shares are up 33% in the last year, but down 2% in the past month. At the time of writing, they’re trading at 403p.
Similar to Fresnillo, BP has a dividend yield of 3.94% and paid a dividend of $0.22 last year. The oil and gas mammoth enjoyed a bumper year of profits in 2021, after pre-tax losses of $24.8bn in 2020. Last year’s pre-tax profits amounted to $15.2bn.
The invasion itself heightened concerns within the oil market that supply would be affected. This was chiefly because of sanctions placed on Russian exports, leading prices to shoot up to as much as $130 per barrel.
With a global recession potentially on the horizon, however, many in the oil industry believe demand could dry up. This could lead to significant falls in the oil price and may be bad news for BP.
On the flip side, the long-term view of oil still shows that the market is undersupplied, thus potentially driving up the share price.
Overall, these are two heavyweight members of the FTSE 100. By investing the relatively small amount of £200 per month, I could gain exposure to the oil and metal markets. Over a longer period, this monthly investment will start to mount up. The consistent buying should eventually lead to the formation of large holdings, so I’ll add both companies soon.