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2 high-quality businesses to consider buying from the FTSE 100 in June

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gave FTSE 100Growing in 2024. With 6.2 percent growth so far this year, including a 1 percent increase in May, I’m optimistic for June and the months ahead.

Thus, I am checking the index for potential stocks. Here are two high-quality businesses that have caught my attention. I think investors should consider buying them today.

Tesco

My first choice is Tesco (LSE: TSCO). Like Footsie, he has had a strong start to the year. Its share price has increased by 7.2%. Over the past 12 months, it has grown by an impressive 19.8%.

But I think Tesco stock has a lot more to offer. There are a few reasons why I like it as a long-term play today.

First, it is a defensive stock. Rain or shine, the products it sells will always be in demand. After all, people need to eat and drink, regardless of issues like the cutthroat economic conditions. We saw the benefit in its latest annual earnings release, where group sales, excluding VAT and fuel, rose 7.2% in the 52 weeks to February 24.

Of course, it’s not as simple as that. And despite the continued demand for its products, it has faced competition in recent times. It mostly comes from budget supermarkets such as Aldi and Lidl. In the last few years, especially given the precious life crisis, they have become more popular than ever.

But Tesco is still the biggest player in the space with a 27.4 percent market share. It is the closest. Sainsbury’s with 15.3 percent. Its dominant position gives it an edge over its competitors, such as being able to take advantage of economies of scale.

To go along with that, there’s also the opportunity to make some passive income with its 3.9% dividend yield. This is well above the footsie average. For 2023, its dividend rose 11% year-on-year to 12.1p.

GSK

I have another choice. GSK (LSE: GSK). It also benefited from the footsie rally, which is up 19.3% year to date. That’s up 28.7 percent over the past 12 months.

Like Tesco, I am happy with GSK given its defensive nature. The company delivers more than 1.5 million doses of its vaccine every single day. Just like with food and drink, people need medicine and treatment regardless of how the economy is doing.

On top of that, stocks also offer passive income. It yields slightly lower than Tesco, at 3.3%. However, looking ahead, its production growth is expected to continue to grow.

There are some risks I see. First, pharmaceutical companies have to invest hundreds of millions in R&D to bring drugs and treatments to market, with the risk that it won’t pay off. In recent times, there have also been concerns over the depth of GSK’s drug pipeline.

But with the firm recently announcing that it has about 90 products in its R&D pipeline, I’m sure sales will start to pick up again in the coming years. What’s more, the stock looks like good value for money, trading at around 15 times earnings. I think now may be the time to consider buying.


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