Legendary investor Warren Buffett is still working hard in his 90s despite having ample means for a comfortable retirement. Many investors in his position would be happy to reap the rewards of their investments and settle down into comfortable retirement. I know I would. Fortunately, following Buffett’s advice, I think it can be easier for me to achieve that. Here are seven straightforward tips from Buffett that I reckon could help me retire earlier.

1. Staying inside one’s circle of competence

Buffett repeatedly emphasises the importance of staying inside one’s circle of competence. In other words, he thinks investors ought not to stray from fields they understand, no matter how attractive the potential returns may seem. Buffett also emphasises that this is true even if one’s circle of competence is small. He said, “Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital”.

Why is this so important, in Buffett’s view? As the old proverb goes, “a fool and his money are soon parted”. That is true not just of (lowercase) fools, but also of smart people who do not know what they are doing. To make an investment, it is important to be able to weigh the risks and opportunities well. That relies on having the right knowledge and understanding to do so in the first place.

2. Keeping things simple

A common management mantra is “Keep things simple”. Buffett applies this to his investment decisions. From the types of companies in which he invests to the way he structures his investments, Buffett’s approach eschews complex high finance. Much of what he does is what an ordinary private investor might do, albeit on a larger scale. For example, Buffett decided he liked the business model and profit potential at Apple, so he bought shares in the company. Admittedly, Buffett’s stake of over $100bn is massive. But the process he went through, from decision making to buying ordinary shares on the stock market, is the same as millions of retail investors who own a bit of Apple.

Why is keeping things simple important in Buffett’s worldview? Basically, he emphasises that the work of an investor is to buy a share of a great company at a good price. To do so typically requires being able to form a clear view of the company and its industry. That’s harder to do when things aren’t simple, for example if the company uses esoteric accounting methods.

3. Honest self-assessment

A rising tide lifts all boats. That old saw applies to the stock market too. But, as Buffett says, when the tide goes out we gets to see who has been swimming naked.

For years there has been a bull market overall, albeit 2020 saw a reversal for a while. A common mistake investors make in bull markets is thinking they are better than they are. They attribute strong performance to their own share picking prowess, rather than recognising the benefit they have received from being in an overall bull market.

That can lead to a skewed assessment of our capabilities or risk tolerance as investors. Over the long term, that can hurt, not help, our retirement planning. The stock market is cyclical, so after a bull market there will usually be a bear market, which continues until at some stage in the future things get bullish again. The clearer we are about the real reasons for our investment performance, the easier it is to change that performance in future. It is no coincidence that Buffett is so open about his failures as well as his successes.

4. Playing the long game

The difference between a good investment and a great one is often simply time.

A share that goes up massively in short order after buying it is what many investors dream about. But in some cases, such dramatic price swings are closer to speculation than investment. Buffett tries to pick companies that he thinks have good long-term business prospects, then sits back and lets those prospects bear fruit over time.

As well as hopefully improving long-term investment returns, sticking with a few great performers can also reduce trading costs. It also cuts the amount of time spent following ups and downs in the market.

5. Warren Buffett has an investment theory

A lot of investors buy or sell shares based on the shares’ individual prospects. But they don’t develop an overall investment theory. By contrast, Warren Buffett has a clear conceptual model for how he approaches investment. From sticking to things he knows to looking at how wide a company’s competitive advantage or ‘moat‘ is likely to be in the future, Buffett relies on a certain approach to investing. That informs his asset allocation decisions.

We don’t need to have the same theory about investing as Buffett to do as well as he has. But I think it’s helpful at least to have a theory. Starting with even a simple one is helpful. Based on our experience, it can be refined over time. That can provide discipline and force us to analyse what has worked best about our approach so far and why. Over the long term, such self-reflection will hopefully improve our investment performance.

6. Diversification

As shown by his Apple stake, when Buffett likes a company he is willing to go in on a large scale. So, why did Buffett scale back his Apple holding last year while still keeping most of it? Surely if he had turned negative, he could have sold the whole stake?

I think the answer is that Buffett is too smart an investor to put all his eggs in one basket. He recognises that a simple but powerful form of risk management for an investor is to diversify across different companies and business sectors. No matter how great one company’s performance has been or promises to be in future, events can always get in the way unexpectedly. Like Buffett, I make sure to spread my investments across multiple shares and lines of business to help reduce my risk if any one company underperforms. In the short term, that can mean I miss out on benefitting more from some great opportunities. But building a richer retirement is a marathon, not a sprint.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple. 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.

Smurfit Kappa (LSE:SKG) is one FTSE 100 stock I would buy today and hold for a long time in my portfolio. Here’s why.

Market leader

Smurfit Kappa is Europe’s leading corrugated packaging company and one of the leading paper-based packaging firms on the planet. Packaging in all forms has been a staple for all industries for many years but in recent times there has been an e-commerce boom and the pandemic has exacerbated this too. Due to this, demand has increased. Firms like Smurfit are primed to benefit.

As I write, shares in Smurfit are trading for 4,025p whereas a year ago shares were trading for 3,374p. This represents a 19% return over a 12-month period. It is worth noting that shares have comfortably surpassed pre-pandemic levels too.

Why I like Smurfit Kappa

Smurfit’s profile, offering, and reach are excellent. It is a world leader in its market and has a vast reach. It has 36 factories producing its packaging materials in countries across the world. In fact, it recently announced a new plant in Mexico. The Latin market could be key for it to continue growing, which could lead to increased performance and better returns. At current levels it looks attractively priced too. It sports a price-to-earnings ratio of 19. The FTSE 100 average is 20.

Next, Smurfit has a good track record of performance too. I understand the past is not a guarantee of the future however I like to use it as a gauge nevertheless. I can see revenue and gross profit increased year on year for three years prior to 2020, when levels dropped slightly due to the pandemic. Coming up to date, a trading statement in November for the first nine months of the year made for good reading too. Revenue increased by 15% compared to the same period last year. Overall, forecast full-year results are on target to be met.

Finally, the rise in environmental, social, and corporate governance (ESG) investing has shone a light on firms like Smurfit. It looks to adopt ESG practices and keep its business socially and environmentally friendly. This is a bonus for me personally as ESG investing is not high on my list of priorities. However, it is good to see Smurfit adopting practices in its operations such as recycling old materials and being environmentally friendly.

FTSE 100 stocks have risks too

Smurfit could experience performance issues due to the current macroeconomic pressures. Rising inflation and costs could hurt performance and any investor returns too. Costs passed on to customers could lead towards its customer turning to competitors, although they face similar headwinds too. Furthermore, the packaging market is competitive. Other FTSE 100 players include DS Smith and Mondi.

Despite the risks noted, I like Smurfit Kappa and would add the shares to my holdings at current levels. I believe it is currently attractively priced and performance seems to be on the up. Furthermore, it pays a dividend, which would make me a passive income.

Jabran Khan 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.

The Tesco (LSE:TSCO) share price has been on an upward trajectory for the past six months. Should I buy Tesco shares for my portfolio at current levels? Let’s take a look.

Supermarket giant

Tesco is the UK’s biggest retailer and makes up one-quarter of the so-called big four supermarkets. The other three are Asda, Morrisons, and Sainsbury. Tesco’s position as the largest provides it with a competitive advantage in my opinion. It also added wholesale business Booker to its portfolio a few years ago.

Tesco shares have been on an upward trajectory since the summer. As I write, shares are trading for 284p. Shares are up 26% from 225p six months ago. Coincidentally, the Tesco share price is up 26% over the past 12 months too. So with this recent rise in share price, should I add the shares to my portfolio?

Should I buy Tesco shares?

To help me make a decision, I have compiled a for and against argument.

FOR: Tesco looks like a bargain at current levels. Based on its current share price, it sports a price-to-earnings growth ratio of just 0.1 The general consensus is that a ratio of under 1 represents a potential bargain. Furthermore, Tesco’s price-to-earnings ratio of just 14 backs up my view. Statista has some excellent information on Tesco and they believe sales growth could rise by over 40% by 2024. If this performance comes to fruition, buying the shares right now could be a master stroke.

AGAINST: Competition in the supermarket sector has always been intense. Tesco has maintained a 25% or above market share against the other three big firms. In addition, German discounters Aldi and Lidl are now making real headway in the UK market. Furthermore, the spate of online-only firms such as Ocado are beginning to gain momentum as well. Growth in sales and increased performance will not be easy to come by.

FOR: Tesco’s market clout as well as size and footprint is one of its competitive advantages. The old adage ‘too big to fail’ springs to mind. Although this does not mean performance can’t suffer, Tesco has a global footprint and has taken steps to streamline operations such as selling its Asian business earlier this year. This will mean it can focus more energy on more lucrative markets such as the UK.

AGAINST: Current macroeconomic pressures such as rising inflation and costs will place pressure on performance and returns. If Tesco can pass rising costs on to customers, it may lose some customers to cheaper competitors. If it decides not to pass on this rising cost, margins will be squeezed. The supply chain crisis as well the shortage of HGV drivers will also affect operations. Right now, there’s no telling how long these problems will last.

My verdict

Right now I would avoid buying Tesco shares for my portfolio. As a savvy investor, uncertainty is a big red flag. The macroeconomic pressures are off-putting, especially as they could affect Tesco’s performance and any returns. In addition to this, competition is getting much more fierce in the supermarket sector with online disruptors as well.

There are aspects of Tesco I like, which I have mentioned above. However, right now I would probably avoid supermarket stocks like Tesco and buy other shares for my portfolio. I will keep a keen eye on developments, however.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Tesco. 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.

Warren Buffett famously said, “If you don’t find a way to make money while you sleep, you’ll work till you die”. We all want passive income, and building it is one of the best ways to achieve that financial independence. There are many forms of passive income, like owning rental properties or a business. But dividend investing is my personal favourite. 

Dividends

Dividends are a portion of a company’s profits allocated to its shareholders. These payments can be made once, twice, or even four times a year and are often reflective of how profitable that company has been. Dividend investing is a strategy by which investors build a portfolio of reliable companies that regularly pay a stable dividend, which can then be re-invested into that portfolio. This strategy is very popular in the UK and in recent years we have seen record high dividend yields. Some even going to 13% or 15% of the share’s value!

Average yield

But these high rates are usually unsustainable over the long term. For example, the mining company EVRAZ paid 53p per share in 2019, a whopping 13.39% of the share price. But EVRAZ only paid 42p in 2017 and didn’t pay anything in 2016 or 2015.

The vast majority of UK companies pay a dividend of around 4%. This year, companies like BAE systems and Unilever are expected to allocate 4.22% and 3.39% respectively. It’s worth remembering that no company is under any obligation to increase, maintain, or even pay a dividend. Consistency is everything.

Capital needed

To reach my goal of £300 per month, I will need a total pot of £90,000. Four percent of £90,000 is £3,600. That, divided over 12 months is £300.

While I don’t have anywhere near that money on hand, if I save £250 per month, I would reach that magic number in about 30 years. 

Admittedly 30 years is a long time, but if I start investing that money right away, then the compounding interest will bring that date forwards faster. Now I just need to choose some companies.

Companies

While the goal is to aim for safe companies I can rely on, I do think it’s worth taking a few risks to help speed up the clock. I have spoken at length about how much I like Imperial Brands. The tobacco company has paid a sizeable dividend to its shareholders at least twice a year since 2002. The average yield today is actually 8.9%.

Since my plan uses 4% over 30 years as its benchmark, I’m not worried if Imperial Brands decides to cut down its dividend payment. However, I do think its important I don’t rely on this process and balance out the portfolio with smaller yield companies which I can depend on more consistently.

Lloyds Bank makes a dividend payment of around 2.6% which is beneath my target, but would balance out the risk. Finally, I would choose Unilever as the company is large, profitable, and currently pays a 3.39% dividend.

None of this is a guarantee for the future. Any one of these companies may eventually collapse for some unforeseen reason. All investing bears risks. But without risks one cannot achieve a reward. The important thing is to build a diverse portfolio so that, when retirement comes, I will have a passive income stream I can rely on.

James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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.

Yesterday was a good day for the FTSE 100 index. It rose above 7,300 for the first time in December, after fears of the Omicron virus led to a wobble in the stock markets recently. Clearly then, it appears that investor confidence is returning. And if the index continues to rally through the rest of the month, my earlier prediction that it could conceivably rise to 7,500 by year-end might just happen. 

As optimistic as I would like to be, however, I think it is also prudent to prepare for things to go wrong. There have been plenty of times this year when the stock markets looked like they were close to melting down. We have not seen a full-blown market crash, but there has been more than one day when my portfolio has been completely in the red, thanks to ongoing pandemic-driven challenges. So especially when the going is good, I like to remind myself what to buy if a stock market crash were to happen tomorrow. I do not want to be stuck not knowing what to do when the best stocks around become available at deep discounts. 

JD Sports Fashion: an unstoppable FTSE 100 stock

The first such stock I would buy is JD Sports Fashion (LSE: JD). The FTSE 100 athleisure retailer has shown stellar stock market performance for a while now. And there is a whole new reason to like the stock now. It just did a stock split, so every share of the company became five shares. This means that for the price of one share earlier, I can now buy five shares. As can be imagined, this has resulted in a massive price drop per share.

It is now available for a little over 200p. But the low absolute value should not fool me. It is a solid stock that has seen massive gains over the years. I expect that it would continue to see big gains in the future, which is why I just increased my holdings as well. 

Of course being a retailer, there is always the risk that it could face challenges again if we were to go back into lockdowns. And this would now be at a time that it has made some acquisitions. This could add greater complexity to its situation. But going by its long-term performance, I am fairly confident it could bounce back. 

Croda International: consistently performing

Croda International is another FTSE 100 stock for me to buy. The speciality chemicals’ manufacturer looks prohibitively expensive with a price-to-earnings (P/E) ratio of 55 times. But a look at its long-term share price chart tells me why. The stock has pretty much consistently been rising over the years, so clearly investors are ready to buy it at a premium. And its performance has been strong too. It goes without saying that past performance is no guarantee of future returns, but is nevertheless a strong indicator. 

A market crash could be just the right time for me to buy this high performing stock on dip. 

Manika Premsingh owns shares of JD Sports Fashion. The Motley Fool UK has recommended Croda International. 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.

Penny stocks often experience periods of downturn and volatility. The pandemic has not helped penny stock Hostelworld (HSW), but could it recover over the longer term? Let’s take a look to see if I should buy shares for my portfolio.

Travel stocks suffer

Founded in 1999 by a hostel owner and an IT executive, Hostelworld provides an online affordable distribution channel and property management system for hostels. People can book a hostel in over 179 countries using the platform.

When the pandemic struck, travel and travel-related stocks suffered massively. There was some respite in the summer when the vaccine rollout and easing of restrictions allowed travel and holidays to be booked once more. Since then, the threat of new variants and vaccine issues have caused further woes. Some stocks have not recovered at all and are experiencing a pandemic-related hangover.

As I write, Hostelworld shares are trading for 70p whereas a year ago shares were 14% higher at 82p. In the summer, shares surpassed the penny stock threshold of £1 to trade for 114p. Since that high, shares have been on a downward trajectory. 

For and against investing

FOR: Any bullish stance I have towards Hostelworld stems from pent up demand first and foremost. As an avid traveller myself, I am looking forward to being able to book holidays and travel once more. I am confident many others feel the same. If this does happen, Hostelworld could see performance bounce back from its recent woes and reported losses.

AGAINST: New variants of Covid-19, such as Omicron, travel restrictions, and constantly changing travel rules could hinder any recovery and growth. There is the notion that travel and the market as a whole may not return to normal ever again and that this is the new normal, with peaks and troughs of travel and booking of holidays. As a potential investor, uncertainty is a red flag for me.

FOR: Hostelworld’s half-year report released in August, signified to me that it is in a decent position to keep the lights on for the foreseeable future. A cash position of €33.7m and administrative expenses for the period were €13.5m. This tells me there is enough in the kitty to weather current stormy waters. In addition to this, Hostelworld does not have many assets it needs to continue to pay for and maintain. With few assets, profit margins will be high if revenue does begin to come in once more.

AGAINST: Despite what looks like a decent balance sheet, sustained losses and a lack of consistent performance across the past couple of years puts me off. Any firm that is loss-making does raise a red flag for me. This is the case with Hostelworld.

Penny stock to avoid

Overall I am sitting on the fence with Hostelworld shares for my portfolio. I can see long-term recovery potential with pent up demand to play a part and a decent balance sheet to help, but the current issues it faces are too big to ignore.

If I had to make a decision right now? I would avoid buying shares for my portfolio. If the travel and tourism sector picked up based on Covid-19 issues easing, I would revisit investing if shares were trading at similar levels.

Jabran Khan 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.

The Rolls-Royce (LSE: RR) share price currently rests at 128p, a 10% decrease from the 142p it sat at in early November. This is due to the rising investor fears of the emerging Omicron variant. However, the company’s FY21’s half-year results highlight a focus on financial restoration, evidenced by a large cash flow generation. This explains the 32% rise in share price in September alone.

A look at Rolls-Royce’s considerable increase in liquidity and research development suggests further potential for this stock. I am now encouraged to consider this past month’s price decrease as a buying opportunity. But with a trading update due December 9, how high can the Rolls-Royce share price go?

Operational risk 

The company has been continuously challenged by the pandemic’s headwinds on operational construction and cut back on product demand. Rolls-Royce’s annual report for FY20 highlights the company’s struggles with the pandemic, reporting a decrease in underlying revenue from £16,875m to £11,824m across the year. This resulted from the negative impacts on airline demand from coronavirus restrictions.

The Omicron variant suggests further problems ahead. Yet such problems are market-wide, with the FTSE 100 index dropping 4% in late November. This explains the similar price drop in the Rolls-Royce share price. But a focus on its long-term development shows this company to be very well equipped to tackle this new coronavirus variant.

Managerial development

Extensive financial development is a promising feature for this aerospace company. Despite revenue losses, recent targeting of research and other revenue streams has met managerial aims for financial restoration.

A look at the half-year report shows underlying revenue to have only decreased from £5,410m in H1-2020 to £5,227m in H1-2021. Indeed, the company has significantly dropped the revenue decrease suffered during 2019-20. Rolls-Royce has also shifted its focus onto more stable and prospective areas. For example, an increase of £43m in research and development costs suggests the company is adjusting aims toward future expanse. A 4% rise in Defence revenue highlights the ongoing restructuring designed to counteract the impacts of the virus on the aerospace market. 

Would I buy Rolls-Royce shares?

A commitment to operational reduction and equity increase has certainly contributed to the value of  Rolls-Royce stock. As seen in the half-year report, an 8,000 (of a target 9,000) role reduction has been achieved. This has contributed to the £0.9bn decrease in net debt. Additionally, the £1.7bn increase in free cash outflow has placed the company’s overall liquidity in a strong position. Rolls-Royce’s price-to-earnings ratio is now around 15. This suggests the company may be undervalued, particularly if profits continue to recover.

Rolls-Royce’s revenue and operation has suffered throughout the past year. However, the success of recent financial management has established a concise direction out of this prolonged pandemic. This leads me to have high hopes for the trading update due December 9. Overall, I consider this past month’s dip in share price a great buying opportunity for my investment portfolio.

Hamish Cassidy 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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In early trading today, the FTSE 100 index touched 7,400 before falling slightly. This is an encouraging sign that today’s trading has carried forward yesterday’s momentum. It is particularly heartening after seeing the investor nervousness caused by the Omicron variant over the past few days. Despite the recent dips though, the index and the stock markets have made progress over the year. 

Not too weak or too strong

If I were to start investing today, this would be a good place for me to begin. The stock markets are not so weak as to be completely demoralising for me just when I start investing. And they have not moved up so high that there is little upside left. In fact, I think the FTSE 100 index could do quite well even next year as long as the recovery gets stronger. 

Investing for capital gains…

This environment could be quite good for growth stocks, which can earn me big capital gains over time. I would particularly look at buying cyclical stocks like FTSE 100 banks and oil giants. These stocks have made a lot of progress in the past year, but they are still trading below their pre-pandemic levels. I reckon that they could stand to gain the most in 2022. 

…and for dividends

Another reason I like banks and oil stocks is their potential for dividends. They have all started paying dividends again, but their dividend yields are still much lower than many other FTSE 100 stocks. I am hopeful that these can increase over the next year, though. Oil companies are expected to continue turning in strong results as crude oil prices remain elevated. This could lead to higher dividends. 

Similarly, banks are now free to set their own dividends. Until recently, they were required by regulators to limited their dividends, to ensure stability in the financial system and the economy. So, they too, could pay bigger dividends in the future. 

Good passive investing buys for me

I would, however, also look at other dividend stocks that could earn me a steady stream of passive income over the years. Stocks like utilities are a good place to start, because they have paid dividends consistently over the years. And their dividend yields right now are higher than the FTSE 100 average, which is 3.6%. 

But I would also consider stocks that might have low dividend yields at present, but that have managed to grow their dividends fast over the years. These could turn out to be the best dividend stocks for me to buy over a long enough holding period. This is because the yield on my initial investment can become quite big over time. 

The risks and takeaway

There is always a chance though, that 2022 might not turn out to be a good year for the stock markets. The Omicron variant could derail the recovery and even send us back into lockdowns. But I am quite optimistic that it can be brought under control. The cases are limited in both numbers and severity so far. I think the opportunities for me to make gains from stock market investing are far bigger than the risks right now. 

Manika Premsingh 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.

I believe FTSE 100 incumbent B&M European Value Retail (LSE:BME) is one of the best stocks to buy now. Should I add shares to my portfolio at current levels?

Retail giant

Best known as B&M, the discount retailer has become a household name in recent years. It serves over four million customers each week through its 685+ locations supported by 35,000 staff.

I must admit there aren’t many retail stocks on my best stocks to buy now list. Retail stocks have not had the best time in recent years due to changing habits of consumers and competition in the marketplace. But B&M has bucked the trend to go from strength to strength. Discount retailers have risen in popularity as people look to make their hard-earned cash go further. I believe the pandemic exacerbated this. 

As I write, B&M shares are trading at 641p, whereas a year ago, the shares were trading for 479p, which is a 33% return over 12 months. The shares have easily beaten pre-pandemic levels and are trading at all-time highs.

Why I like B&M

B&M has performed consistently in the past and more recently. I understand past performance isn’t a guarantee of future performance, however I use it as a gauge. I can see that revenue and gross profit has increased year-on-year for four years. Coming up to date, interim results released in November for the 26 weeks to 25 September were promising. Group revenue increased 1.2% compared to the same period last year. And group profit before tax increased by 2.4%. An interim dividend of 5p per share was declared. This was up 16.3% from last year’s interim dividend. Net debt also decreased. 

The stocks I see at the best picks to buy now are attractively priced and would provide me with a passive income. B&M ticks both these boxes. At current levels, it has a price-to-earnings ratio of just 14. And the dividend yield stands at just over 2%, which lags the FTSE 100 average of 3%. But if I bought now and the share price growth continued, that would improve.

And I hope it would continue to grow with B&M currently growing at a fast rate. This is primarily through opening new stores throughout the UK and through its other brand Heron Foods, as well as its French subsidiary. This was highlighted by 14 new B&M stores opening in the UK alone in the interim period mentioned. B&M has set itself a target of having 950 store locations in the UK ,although no specific time frame has been put on this target.

Strong stocks have risks too

B&M is facing current macroeconomic issues including rising inflation and rising costs. These costs could be passed on to customers, but this could affect customer numbers and performance. If the costs aren’t passed on to customers, profit margins will be squeezed. Both of these aspects could affect investor returns and sentiment. In addition to this, supply chain issues and a shortage of HGV drivers in the UK could affect store operations and, in turn, performance overall.

Right now I think B&M is one of the best FTSE 100 stocks on the index. It has a good track record of performance, pays a dividend to make me a passive income and continues to grow. When looking for the best stocks to buy now for my portfolio, I look for all these traits. I would happily add B&M shares to my holdings right now.

Jabran Khan has no position in any 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.