These are my 3 biggest FTSE 100 SIPP holdings. Here’s why!
I believe in having a diversified portfolio, so mineâs packed with many different FTSE 100 shares. I’m confident each will deliver a healthy return over time. But I’m especially excited about the wealth I might make from three in particular.
These are Legal & General (LSE:LGEN), Ashtead Group (LSE:AHT) and Games Workshop (LSE:GAW). Right now, I hold more shares in this trio of FTSE stocks than any other UK or US share, trust or fund.
But why have I bet big on these blue-chip beauties and think they’re worth considering? Read on to find out.
Game on
I added more Games Workshop shares to my portfolio this month following recent price weakness. As a result, it represents the third-largest single holding in my Self-Invested Personal Pension (SIPP).
Over the last 10 years, the tabletop gaming specialist’s delivered an average annual return of 45%. That smashes the broader FTSE 100’s corresponding 9%.
Can it continue delivering these sorts of titanic returns though? Some have their doubts, citing market maturity and rising competition as a threat to future growth.
I could be wrong but I’m not buying into this argument. I feel that Games Workshop’s Warhammer brand give it a competitive edge others haven’t found a way to match. I’m optimistic they won’t, given its standout quality and deep connection with hobbyists.
Games Workshop’s profits leapt 11% in the six months to November, underlining its market-leading position and strong sector growth. As it prepares to rev up film and TV licensing sales with Amazon, I’m hopeful about further big returns.
Expecting a rebound
Ashtead hasn’t been having such a smooth ride of late. Its share price has been more volatile over the last year though — thanks to outperformance in previous years — it’s still delivered an average yearly return of 19% during the past decade.
The US’s second-biggest rental equipment supplier’s struggled amid a construction market downturn. Things could remain tough if economic conditions worsen.
But I’m hopeful Ashtead’s shares will rebound, potentially as soon as this year as interest rates drop. A raft of major new infrastructure projects Stateside should supercharge plant demand, as could booming data centre construction and investment in US onshoring.
Ashtead’s strong balance sheet could help it seize this opportunity with further acquisitions too.
FTSE 100 income star
I bought Legal & General shares as a way to supercharge my passive income. Today, it’s the largest single holding in my SIPP, narrowly beating Ashtead.
Over the last decade it’s been a brilliant dividend share for me, regularly offering a yield that smashes the 3%-4% long-term average for FTSE 100 shares.
Can the company be a top dividend payer though, even as tough economic conditions are likely to impact its profits? I think it should be able to — dividends have risen each year since 2011, and City analysts expect them to increase again this year.
As a result, the dividend yield’s an enormous 8%. This is supported by the company’s huge Solvency II capital ratio of 217%.
With capital gains combined, the company’s delivered a total average yearly return of 7% over the last decade. That’s good rather than spectacular, admittedly. But I’m optimistic that rapidly changing demographics and rising interest in financial planning will supercharge this figure during the next 10 years.
The post These are my 3 biggest FTSE 100 SIPP holdings. Here’s why! appeared first on The Motley Fool UK.
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Royston Wild has positions in Ashtead Group Plc, Games Workshop Group Plc, and Legal & General Group Plc. The Motley Fool UK has recommended Ashtead Group Plc and Games Workshop Group Plc. 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.
