The FTSE 100 is falling! I’d buy and hold these 2 crashing dividend stocks in an ISA today

These two FTSE 100 (INDEXFTSE:UKX) shares could offer long-term recovery potential in my opinion.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

The FTSE 100’s slump is currently showing little sign of ending. Despite interest rate cuts and a major stimulus package announced by the Federal Reserve, investor sentiment is weakening day-by-day.

While things could get worse before they get better, now could be the right time for long-term investors to buy high-quality companies at low prices. History suggests that, ultimately, the FTSE 100 will recover.

With that in mind, here are two large-cap shares which seem to offer good value for money. They could be worth buying in a Stocks and Shares ISA today for the long run.

Taylor Wimpey

The UK housing market looks set to experience a challenging period. Many would-be home buyers are likely to have other priorities at the present time. This could negatively impact on demand for homes built by companies such as Taylor Wimpey (LSE: TW).

However, the housing market could be supported over the medium term by a looser monetary policy. The Bank of England has cut interest rates by 0.5%, and a stimulus package such as quantitative easing seems likely following the Federal Reserve’s lead.

Taylor Wimpey’s share price has now fallen by 37% since the start of the year. It trades on a price-to-earnings (P/E) ratio of around 6, although its bottom line may come under pressure in the short run.

Looking ahead, the stock could make a successful recovery. It has a strong market position, while its balance sheet may allow it to overcome challenging market conditions in the near term to post profit growth in the coming years. As such, further falls may be ahead. But now could be a good time to buy a slice of the business and hold it for the long term.

Whitbread

Hotel operators such as Whitbread (LSE: WTB) are likely to face a hugely difficult period in 2020. Many consumers and business travellers are likely to decide against hotel stays unless they are necessary, which could cause downgrades to the company’s financial prospects. Restrictions on hotel openings may also be put in place by the government. This has already started taking place in some countries.

In the long run, Whitbread’s strong financial position and its growth strategy could lead to a relatively resilient performance compared to its sector peers. It may even be able to gain market share at the expense of smaller and less financially-sound competitors. This may especially be the case in Germany, where the budget hotel market is highly fragmented.

Since the start of 2020, Whitbread’s share price has fallen by more than 50%. Further declines could be ahead depending on how the spread of coronavirus continues. This may lead to further difficulties for the company’s shareholders, but the track record of the business indicates that it has the capacity to deliver a successful turnaround in the coming years.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Peter Stephens owns shares of Taylor Wimpey and Whitbread. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

Publish Test

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut…

Read more »

Investing Articles

JP P-Press Update Test

Read more »

Investing Articles

JP Test as Author

Test content.

Read more »

Investing Articles

KM Test Post 2

Read more »

Investing Articles

JP Test PP Status

Test content. Test headline

Read more »

Investing Articles

KM Test Post

This is my content.

Read more »

Investing Articles

JP Tag Test

Read more »

Investing Articles

Testing testing one two three

Sample paragraph here, testing, test duplicate

Read more »