Should you go for these blue chip stocks now?
Share buybacks by major London-listed companies are expected to hit a record high this year. According to recent analysis by award-winning investment platform AJ Bell, London’s blue chip companies are preparing to buy their own shares worth £37billion this year. This figure is well above the peak of £34.9 billion reached four years ago.
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The number of shares to be repurchased this year will be more than three times what was repurchased in 2020, when there was huge uncertainty in the market and companies faced huge financial damage. Due to the impact of the pandemic, several companies could not afford to carry out share buybacks, and some of them delayed their buyback plans.
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Energy giants BP and Shell are expected to opt for a share buyback worth around £9.5billion this year. Both of these companies have experienced substantial growth over the past year, primarily due to soaring oil and gas prices. Both companies recently reported record quarterly profits and therefore face the threat of a windfall tax. The UK government is considering levying the windfall tax on these oil giants to ease the burden on UK households struggling with skyrocketing energy bills.
Other blue chip companies like British American Tobacco, Diageo, Unilever, Lloyds etc. also plan to carry out share buybacks this year. Let’s look at the share price performance of 3 of these blue chip stocks.
Shell plc (LON: SHEL)
Shares of prominent British oil company Shell plc rose 2.73% at 2:43 p.m. (GMT+1) on May 11, 2022, to 2,294.50 GBX. The FTSE 100 index constituent has provided its shareholders with a return of 61.73% over the past year to 11 May 2022. The company’s current market capitalization is £167,464.96 million .
BP plc (LON: BP.)
Shares of oil and gas supermajor BP plc were up 3.37% at 2:45 p.m. (GMT+1) on May 11, 2022, at GBX 418.60. The FTSE 100 index constituent has provided its shareholders with a return of 32.67% over the past year to 11 May 2022. The company’s current market capitalization is £79,032.31 million .
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British American Tobacco plc (LON: BATS)
Shares of major cigarette maker British American Tobacco plc were up 1.09% at 2:48 p.m. (GMT+1) on May 11, 2022, to 3,343.50 GBX. The FTSE 100 index constituent has provided its shareholders with a return of 18.42% over the past year to 11 May 2022. The company’s current market capitalization is £75,198.25 million .