With the FTSE 100 having experienced a significant fall in recent months, I’m considering whether shares in SSE PLC (LON:SSE) (SSE.L), AstraZeneca plc (LON:AZN) (AZN.L), Royal Dutch Shell Plc (LON:RDSB) (RDSB.L) and National Grid plc (LON:NG) (NG.L) could offer superior investment potential over the long run.
SSE’s near-term prospects could be challenging in my view. Political risk may increase over the next few months, with the Brexit process remaining highly uncertain. Regulatory risk could also increase if there are changes made to the variable rate price cap.
SSE’s dividend yield of over 7% suggests to me that the company could offer a margin of safety. However, with strategy changes being made, it may be a volatile period for the company’s share price in the first part of 2019 in my opinion.
AstraZeneca’s future outlook appears to be improving after a challenging number of years. Investment in its pipeline is due to lead to a rising EPS growth rate in the current year, which could be the start of a more prosperous period for the pharma stock.
Since AstraZeneca has a PEG ratio of around 1.6, I feel that it may offer good value for money at the moment. Defensive characteristics may also increase its appeal during a volatile period for the wider FTSE 100.
Shell’s strategy appears to be sound in my view. It is making asset disposals in order to reduce leverage, while also seeking to invest in the core areas of its business.
Free cash flow is expected to improve over the medium term, which could bode well for the company’s dividend. Although the oil price may fall further in the near term, I believe that Shell’s 6% dividend yield could mean that it offers good value for money at the moment.
National Grid’s income appeal remains relatively high in my opinion. The company has a 5%+ yield, as well as a track record of dividend growth and relative stability from a business perspective when compared to a number of its FTSE 100 peers.
While political and regulatory risks may remain elevated during the course of 2019, I believe that National Grid may continue to offer a degree of defensive appeal over the long run. Alongside its income appeal, this makes me relatively upbeat about its total return potential.