Interactive Investor

Most-bought FTSE 100 shares of 2020

22nd December 2020 09:15

Graeme Evans from interactive investor

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These are the blue-chip stocks your fellow investors have been buying in this most extraordinary year.

BP (LSE:BP.) shares at a 25-year low and further toil for Lloyds Banking Group (LSE:LLOY) presented buying opportunities that interactive investor clients were unable to resist in 2020.

The rush to capitalise on a series of bombed-out valuations following the March pandemic sell-off also drew investors to British Airways owner International Consolidated Airlines Group (LSE:IAG) and Rolls-Royce (LSE:RR.), even though their respective recovery paths look far from certain.

The buying of these and other household blue-chip stocks picked up dramatically in November after the vaccine breakthrough by Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) triggered the second-best monthly performance by the FTSE 100 index since records began.

Rolls and IAG were the most-bought stocks on the ii platform in November, with the latter's 60% share price rise over the month cutting the decline for the year to a mere 60%. A successful £2 billion rights issue also helped sustain a marked upturn in interest in Rolls shares.

Otherwise, a once-in-a-generation opportunity to stock up on established blue-chip names at lower-than-usual prices was the focus for customers in November and across the year.

This included reliable dividend-payers such as GlaxoSmithKline (LSE:GSK), whose 23% fall in value over February and March attracted bargain hunters interested in its solid-looking 80p a share annual pay-out. Glaxo was our sixth most-popular stock in November and third across the year, whereas its great rival AstraZeneca (LSE:AZN) was much less in demand.

Astra shares have re-rated to the point that its forward price/earnings ratio of over 25 times made it only the 13th biggest target for ii customers in 2020.

BP was the FTSE 100 stock most in demand after its valuation was shredded by the sudden reversal of Brent crude to an 18-year low of below $20 dollars a barrel in April. As well as the demand impact of global lockdowns, there was scepticism among analysts about CEO Bernard Looney's longer-term low-carbon strategy for the oil giant.

The dividend was halved in the summer, but the BP yield remains a chunky 6% and clearly a considerable draw for ii customers. Not that shares are anywhere close to returning to the 500p they were at the start of the year, with BP below 200p in October and only 271p in mid-December amid so much uncertainty about global oil demand at the start of 2021.

Investors also shunned the stock market adage to “never sell Shell”, after a year in which the oil giant cut its dividend for the first time since the Second World War. Royal Dutch Shell was the seventh most-sold stock on our platform in 2020, but there was still plenty of interest otherwise as high-yielding Shell was fourth on the list of most bought stocks.

Dividend income from banking stocks and most of the insurers was stopped altogether by regulators in 2020, while the prospect of soaring levels of bad debt also contributed to Lloyds (LSE:LLOY) being the most sold stock of the year with Barclays (LSE:BARC) and NatWest (LSE:NWG) not far behind.

Lloyds' army of long-suffering retail investors has grown weary waiting for a sustained recovery for the share price, which remains closely tied to the Brexit toils of the UK economy. There are still plenty of investors prepared to stake new money, however, as Lloyds was also the second most popular stock on our platform in 2020. With dividends back on the agenda, hopes for 2021 are improving.

The same is true for BT (LSE:BT.A), whose shares spent much of 2020 languishing at near to 100p after bosses axed the final dividend for the first time since privatisation in 1984. Uncertainty persists ahead of this spring's ruling concerning the level of return that Ofcom will allow BT to make on its investment rolling out fibre-optic broadband.

BT was the 12th most-bought stock and Vodafone the eighth as interactive investor customers continue to hold out for a recovery after several years in the doldrums for European telecoms.

This usually defensive sector was hit hard by the pandemic and still lags the wider stock market, despite working-from-home trends driving up data connectivity and analysts finally seeing the increased value of infrastructure assets.

Mobile phone giant Vodafone (LSE:VOD) loyal following of retail investors did receive an end-of-year boost, however, when Deutsche Bank upgraded its price target to 237p, which is almost double the current level.

Most-bought FTSE 100 stocks in 2020

Company Name

1    BP (LSE:BP.)
2    Lloyds Banking Group (LSE:LLOY)
   GlaxoSmithKline (LSE:GSK)
   Royal Dutch Shell (LSE:RDSB)
   International Consolidated Airlines (LSE:IAG)
6    Rolls-Royce (LSE:RR.)
7    Barclays (LSE:BARC)
8    Vodafone (LSE:VOD)
9    Legal & General (LSE:LGEN)
10  Aviva (LSE:AV.)

Data up to 15 December 2020.

The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this data may not be suitable for all investors and, if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website.

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