Stock market

I’m keen to buy BP’s strong shares in June but Aviva’s 6.96% yield looks attractive too.

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Now seems like a great time to buy. B.P (LSE: BP) shares but one thing is holding me back. A host of others FTSE 100 Stocks are also very attractive, especially insurers Aviva (LSE: AV). I don’t have money to buy both of them. Investing is about making choices. So what do I do?

The BP share price may fluctuate. Like any commodity stock, it rises and falls in cycles. So when Russia invaded Ukraine and energy prices rose, its shares followed suit.

I resisted the temptation to follow him upstairs. I prefer to buy before the shares drop, not after. It’s not always easy though. This involves defying the herd, which is a struggle for even the most contrarian investor.

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BP shares have fallen 4.17% over the past month. They are still over 12 months, but only 7.69 percent. I don’t think I’m buying at the top of the market.

They may slip further, but that’s a risk I’ll have to take. Buying right at the bottom of the market involves a huge chunk of luck. I am rarely so lucky.

But with shares trading at 7.1 times earnings, why wait? Looks like today is a real opportunity. Brent crude fell to a three-month low of $81 a barrel, down from more than $120 two years ago. It looks like a decent trigger.

The U.S., Brazil and Iran are pumping more oil, increasing supplies. Interest rate hikes have been delayed, slowing the global economy and dampening demand. The Red Sea tensions have increased freight costs, but the impact has been less than originally feared. Will these trends reverse? I have no idea. At some point, I just have to decide.

BP currently yields a solid 4.6%, covering 3.1 times earnings. It is forecast to reach 4.9 percent in 2024 with a coverage of 2.7 percent.

FTSE 100 earnings hero

Now seems like a good time to buy but I can say the same about Aviva. Unlike BP, its shares have been doing well recently, up 21.74% in the past year.

CEO Amanda Blanc is reaping the rewards of her efforts to build a leaner, leaner, more cash-generating Aviva. Full-year 2023 operating profit rose 9% to £1.47bn, beating forecasts.

Blanc also launched a £300m share buyback and increased the dividend by 8%. Aviva is forecast to grow by 7.2% next year, undermining BP. However, the dividend cover is very thin, at just 1.3 times earnings.

Also, Aviva’s £300m buyback fell short, compared with BP’s first quarter of $1.75bn. This is on top of a $7.91bn buyback in 2023. After their recent strong run, Aviva shares are more valuable than BP at 12.7 times earnings.

The share price could rise when interest rates finally start to fall, which should boost its asset management operations. Although BP will also benefit.

If money weren’t an issue, I’d buy both with the goal of keeping them for years and, with luck, decades. But investing is about choices, and I just made mine. I already have exposure through insurance sector. Legal and General GroupAnd I have no energy reserves. I will plan to buy BP in June. Later, I’ll be back for Aviva.


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