I think it’s a great time to buy FTSE 100 shares to hold for the long term. The general economic and geopolitical news has been gloomy for a protracted period now. And company valuations have been driven down in many cases.
But lots of companies keep releasing positive trading updates. And many businesses are paying generous-looking shareholder dividends and buying back their own shares. I think the situation speaks volumes about the resilience of incoming cash flows.
One day, investor sentiment will turn more positive. And that could drive share prices higher. On top of that, I expect ongoing operational performance to lift company earnings for years to come. Nothing is certain, but valuations may not look as attractive as they do now in the months and years ahead.
I’ve been buying some of these decent-looking FTSE 100 stocks. But I don’t have enough spare cash to buy every opportunity I see. Nevertheless, plenty of shares now inhabit either my portfolio or my watchlist.
Connecting Africa
For example, I like the look of Airtel Africa (LSE: AAF). The company is rolling out telecommunications and mobile money services across the African continent. And recently-announced radio spectrum acquisitions in Tanzania and Zambia prove growth is on the company’s agenda.
We’ll find out more about operational progress with the half-year report due on 27 October. Meanwhile, with the share price near 125p, the forward-looking dividend yield is around 6% for the trading year to March 2024.
It’s possible that a general economic slowdown in Africa could affect earnings ahead. And the company carries quite a bit of debt. Nevertheless, debt reduction appears to be a priority with the directors. And I bought a few of the company’s shares to hold for the long term as the growth story unfolds in the years ahead.
Energy infrastructure
I also like National Grid (LSE: NG), the electricity transmission and distribution company with operations in the UK and the US. Over many years, the business has been a steady payer of shareholder dividends.
But lately, the share price has dipped lower. And I reckon that move could be linked to rising interest rates. Indeed, National Grid has had a big pile of debt for as long as I can remember. And when interest rates rise, it could become harder for the business to service its interest payments and shareholder dividends.
However, National Grid isn’t the only company in the utilities sector to suffer from this challenge. High debts tend to be an outcome for businesses that always need to invest vast sums to maintain operations.
Nevertheless, I’m optimistic that interest rates won’t rise much further than they have already. And City analysts are not predicting any dividend cuts ahead for the company. In fact, they’ve pencilled in mid-single-digit percentage rises in the shareholder payment. And that’s for the current year to March 2023 and for the year following.
Meanwhile, with the share price near 919p, the forward-looking yield for next year is running at just above 6%. I think that’s attractive and I’d aim to buy some of the shares to hold for the long term in my diversified stock portfolio.