Interactive Investor

FTSE 100’s best and worst shares of 2023

Rolls-Royce delivered the stand-out performance in a year when some famous stock market names featured among the best and worst FTSE 100 shares of 2023.

20th December 2023 13:05

Graeme Evans from interactive investor

A lacklustre year for the FTSE 100 index masked some spectacular gains for investors who backed the recoveries of Rolls-Royce Holdings (LSE:RR.), Marks & Spencer Group (LSE:MKS) or British Gas owner Centrica (LSE:CNA).

Holders of Primark-to-Ovaltine owner Associated British Foods (LSE:ABF) and Newcastle-based accounting software firm Sage Group (The) (LSE:SGE) also enjoyed significant upsides as the top 10 performing stocks in the FTSE 100 rose by 45% or more in 2023.

Their progress was balanced by some surprise inclusions on the list of the worst performing FTSE 100 stocks, most notably Guinness and Smirnoff drinks giant Diageo (LSE:DGE).

With other heavyweights including Anglo American (LSE:AAL), British American Tobacco (LSE:BATS) and Prudential (LSE:PRU) among the top 10 fallers for the year, the FTSE 100 index trailed the performance of global peers with a rise of about 2% by 18 December.

Rolls-Royce provided the stand-out performance, having started the year near to 100p and with newly-appointed boss Tufan Erginbilgic likening the engines giant to a “burning platform”. He told staff: “Every investment we make, we destroy value.”

By November, however, Erginbilgic had set out “compelling and achievable” targets that would take Rolls significantly beyond any previous financial performance. These included a 2027 free cash flow target of £2.8 billion-£3.1 billion, some 30% above the City consensus. 

The shares rose 214% in 2023 to value Rolls at almost £25 billion, with interest fuelled by next year’s likely resumption of dividends and several City price targets of 400p and more.

Marks & Spencer will make its first dividend payment in four years on 12 January, with the distribution of 1p a share another landmark for the high street retailer after it returned to the FTSE 100 index during 2023.

A five-year strategy briefing alongside November’s half-year results gave the shares another lift, leaving them 112% higher in 2023 at 261.6p as the margin recovery in clothing and home is accompanied by resilient sales in the M&S food department.

Broker Peel Hunt recently described the stock as “chronically undervalued”, adding that management are “as impressive a unit as we have seen at the company in years, possibly ever”.

Another well-placed retailer is rival chain Primark, with its robust performance contributing to owner Associated British Foods declaring a 37% jump in total dividend to 60p a share.

At November’s annual results, chief executive George Weston reminded investors of the significant economic challenges faced by the group. He added: “Looking back on the year, it is clear to me that the group performed extremely well and is as a result now well positioned for the year ahead.”

Shares tracked the progress by reaching their highest level since early 2021, with much of 2023’s 50% improvement coming in the final weeks of the year.

Sage, the provider of finance, HR and payroll tools, surged 57.5% to a record high in a year when annual recurring revenues improved 11% to £2.2 billion and it benefited from investment in technology including AI-powered services.

The top 10 list also includes Centrica, which is among the FTSE 100’s best performers for a second year in a row. The shares were near 30p in the aftermath of the pandemic, but now stand above 140p amid resumed dividend payments and an improved operating environment.

FTSE 100s best-performing shares of 2023

Company

Price

Market cap (m)

Shares in 2023 (%)

Shares in 2022 (%)

One-year performance (%)

Current dividend yield (%)

Forward dividend yield (%)

Forward PE

Rolls-Royce Holdings (LSE:RR.)

292.4p

£24,610

214

-24.2

235

 

0.06

30.4

Marks & Spencer Group (LSE:MKS)

261.6p

£5,160

112

-46.7

120

 

1.3

12.2

3i Group Ord (LSE:III)

2378p

£23,146

77.3

-7.4

86.3

2.2

2.5

6

Sage Group (The) (LSE:SGE)

1174p

£11,941

57.5

-12.5

52.3

1.6

1.7

32.5

Associated British Foods (LSE:ABF) 

2359p

£17,972

49.7

-21.5

51.9

0.6

2.5

13.5

InterContinental Hotels Group (LSE:IHG)

7072p

£11,651

49.1

-0.8

47.1

2.6

1.8

24.4

Intermediate Capital Group (LSE:ICP)

1692.5p

£4,918

47.4

-47.7

48

4.6

4.7

13.1

Centrica (LSE:CNA)

142.05p

£7,706

47.2

35.0

56.3

2.1

2.8

4.8

Dechra Pharmaceuticals (LSE:DPH)

3846p

£4,380

46.9

-50.8

40.8

0.3

1.2

29.8

Howden Joinery Group (LSE:HWDN) 

815p

£4,471

45.1

-37.7

45.2

2.5

2.4

17.5

Source: Sharepad, 18 December 2023. 

Anglo American ended the year as the worst performing blue-chip stock after its spending and production guidance failed to impress investors at a presentation a few weeks ago.

Chief executive Duncan Wanblad surprised the City by forecasting lower output in the next two years before a return to growth in 2026.

The company, which owns copper, platinum and iron ore assets as well as the Woodsmith polyhalite fertiliser project in North Yorkshire, lost a fifth of its value after the presentation and ended the year down 44% at its lowest level in three years.

It was also a disappointing end to the year for British American Tobacco after the Lucky Strike owner revealed a £25 billion writedown on the value of some of its US brands in readiness for a “smokeless world”. The company, whose dividend yield has risen above 10%, fell 29% to end 2023 near to a multi-year low.

FTSE 100s worst-performing shares of 2023

Company

Price

Market cap (m)

Shares in 2023 (%)

Shares in 2022 (%)

One-year performance (%)

Current dividend yield (%)

Forward dividend yield (%)

Forward PE

Anglo American (LSE:AAL)

1821.4p

£24,362

-43.7

7.31

-41.2

9.2

4.4

9.2

Fresnillo (LSE:FRES)

555p

£4,089

-38.5

1.01

-35.0

2.4

1.4

33.7

St James's Place (LSE:STJ)

680.8p

£3,734

-37.8

-35.0

-37.8

7.8

7.7

9.4

British American Tobacco (LSE:BATS)

2324p

£51,974

-29.2

20.0

-29.4

9.4

10.3

6.2

Entain (LSE:ENT)

977.2p

£6,242

-26.1

-21.5

-26.2

1.7

1.8

22.9

Burberry Group (LSE:BRBY)

1514.5p

£5,430

-25.4

11.7

-25.8

6.4

3.8

14.3

Croda International (LSE:CRDA)

5000p

£6,981

-24.3

-34.7

-25.5

2.2

2.2

29.4

Prudential (LSE:PRU)

864p

£23,790

-23.4

-11.5

-18.2

1.8

1.8

11.4

Diageo (LSE:DGE)

2847.5p

£63,728

-22.0

-9.56

-21.4

2.8

2.8

18.2

Beazley (LSE:BEZ)

533p

£3,584

-21.6

45.7

-16.1

2.5

3.2

6.2

Source: Sharepad, 18 December 2023. 

Other high-profile fallers included Burberry Group (LSE:BRBY), which shed a quarter of its value after warning that revenue guidance for 2023-24 is unlikely to be met in the current trading climate.

The tougher conditions have heaped pressure on chief executive Jonathan Akeroyd’s Modern British Luxury strategy revamp, which is in its early stages following September’s launch of the first collection under creative director Daniel Lee.

The reputation of Diageo as a quality stock for the long term also took a hit during the year after November’s shock disclosure of lower consumption and downtrading by consumers in Latin America and the Caribbean.

The warning came in the year that Diageo received an endorsement from the Sage of Omaha, with Warren Buffett’s Berkshire Hathaway disclosing an investment worth $41.3 million (£33 million). The shares ended the year 22% lower, cutting the stock market value to £63 billion.

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