It’s too easy to be cautious when it comes to investing during times of economic turbulence. However, two FTSE 100 stocks I reckon could be great for investors to consider purchasing now as well as the longer term are Taylor Wimpey (LSE: TW.) and Unite Group (LSE: UTG). Here’s why!
Taylor Wimpey is one of the largest housebuilders in the UK. Soaring inflation, rising interest rates and a volatile housing market may seem like a cocktail for disaster right now. These issues are impacting many Footsie stocks. However, I reckon in the longer term, Taylor Wimpey could perform well and provide growth and consistent returns.
Taylor’s shares have meandered up and down, akin to an exciting roller coaster recently. Over a 12-month period, they’re up 15% from 103p at this time last year, to 119p as I write.
At present, Taylor Wimpey shares look great value for money on a price-to-earnings ratio of seven. Plus, the business could boost passive income with a juicy dividend yield of 8% that looks covered by a decent balance sheet. This yield is higher than the FTSE 100 average of 3.8%. However, it’s worth remembering that dividends are never guaranteed.
It’s important to understand there are shorter-term challenges for Taylor Wimpey to navigate. Rising interest rates have made mortgages harder to obtain, so sales figures could fall. Furthermore, rising costs have caused house builders to slow output as they’re spending more to build houses that may not sell straight away.
However, Taylor Wimpey is in a good position for long-term growth, if you ask me. This is because the demand for homes in the UK is outstripping supply. With that in mind, once market volatility cools and costs come down and mortgages are easier to get later down the line, the business could see its performance, payouts, and investor sentiment boosted. Plus, when I take into account Taylor Wimpey’s wide geographic coverage and market position, there’s lots to like, in my opinion.
Real estate investment trust (REIT) Unite Group looks like a top stock to consider buying for passive income and growth, in my opinion.
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Over a 12-month period. Unite shares have remained pretty constant. Trading for 957p as I write, they were trading for 948p, at this time last year, a less than 1% increase. However, since volatility began to impact markets, they’ve fallen 10% from 1,053p in February, to current levels.
Starting with the bear case, Unite could experience demand issues if government reforms around foreign student visas come into place. A recent investigation found student visa fraud on a large scale. Any reforms could restrict overseas student numbers, in turn, hurting Unite’s performance and any potential payouts.
There are a few reasons I reckon Unite shares look good. Firstly, REITs must return 90% of profits to shareholders, therefore, the passive income opportunity is enticing. A dividend yield of 3.5% is decent. Next, there looks to be a severe shortage of student beds compared to rising demand, which means Unite can capitalise here. This could boost performance and potential payouts. Finally, Unite is a name synonymous with student accommodation. Its dominant market position and wide footprint could help returns, performance, and shares rise.
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Sumayya Mansoor has no position in any of the shares mentioned. 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.
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