I’m sure everyone has different ideas as to the best shares to buy for their ideal pot of holdings.
For me personally, B&M European Value (LSE: BME) and National Grid (LSE: NG.) are two picks I reckon could help me build wealth.
Here’s why I’d love to buy them when I next have some free funds.
Discount consumer goods
The retail value segment has exploded in recent years, and B&M has been at the forefront of this. The FTSE 100 incumbent has experienced exceptional growth across performance, earnings, and presence. For context, sales have increased by nearly 170% over the past eight years!
In recent times, a cost-of-living crisis brought on by increasing inflation and higher interest rates has helped the business soar to new heights. This is because consumers are looking for more bang for their buck. B&M has taken advantage by boosting its presence, with the acquisition of the now defunct Wilko sites, to provide an example of how the business has capitalised.
Interestingly, B&M shares dropped recently, due to what I believe is an overreaction. June’s full-year report confirmed operating profit rose by 10.9% compared to the previous year. Plus, like-for-like revenues across its UK core business rose by nearly 4%. However, the business didn’t divulge much information regarding next year’s guidance.
B&M continues to aggressively expand, and is targeting 1,200 stores, compared to its current estate of 755 stores. However, the threat of competition from supermarkets working hard to maximise their own essential ranges to target the wallet-conscious consumer could have an impact on earnings and returns.
Diving into fundamentals, B&M shares dropping have offered a good entry point at present, with the shares trading on a price-to-earnings ratio of just 12. Plus, a dividend yield of 3.2% could grow in the future. However, I do understand that dividends are never guaranteed.
Keeping the lights on
National Grid is in charge of making sure we all have the power that we need.
The draw of buying National Grid shares is that it’s the only game in town, as there are no competitors. This ensures earnings remain pretty stable. Plus, the stock possesses defensive traits as everyone needs power despite the economic outlook.
It’s worth noting that National Grid has long been a Dividend Aristocrat. Its current dividend yield stands at just under 6%. However, a recent example of dividends never being guaranteed hurt the shares. The firm said it needed to cut the dividend to balance the books, as well as invest in infrastructure. Plus, it needs to prepare for green energy alternatives. This is a risk moving forward too. However, I reckon once the business has invested the necessary funds, the rewards will outweigh the blip of cutting dividends.
The good news is National Grid shares dropping means they’re cheaper to buy for me. They trade on a price-to-earnings ratio of just 10.
As with all investments, there are ups and downs. I reckon the dividend being slashed is a temporary, short-term measure. In the longer term, I think the rewards yielded from this strategy could help build wealth.
The post These are 2 of my best shares to buy for a winning portfolio! appeared first on The Motley Fool UK.
Passive income stocks: our picks
Do you like the idea of dividend income?
The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?
If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…
Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.
What’s more, today we’re giving away one of these stock picks, absolutely free!
Get your free passive income stock pick
More reading
I’m more tempted now than ever before by the National Grid share price
2 dividend shares I’m running a mile from
Down 10%+ in 6 months, I expect these FTSE 100 shares to rebound sharply!
3 reasons why I love National Grid shares!
2 growth stocks on my list to buy in August
Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value. 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.
