I’ve already got one eye on next year. Although it’s important to watch out closely on events happening in the next few weeks, I want to start thinking about the top FTSE 100 stocks I could buy that could offer me gains in 2022. Here are two that have caught my eye.
A bounce back in commodities
Rio Tinto (LSE:RIO) is one of the largest miners in the world. Although it does mine for precious metals such as gold, a large focus is on iron ore, given the links it has to Australia.
Over the past year, the Rio Tinto share price is actually down about 5%. The main driver behind this has been a tough second half to this year, with commodity prices falling. The share price is down 23% over six months, as the price of iron ore has more than halved during this time.
This is the main risk I see to this FTSE 100 stock heading into 2022. If iron ore prices stay low and China’s demand for commodities also slips, Rio Tinto could struggle.
However, I see other reasons to be positive that outweigh this risk. I can flip the argument and say that with iron ore price being low, now is a great time to buy shares in Rio Tinto for a potential rebound. Further, the fall in the share price has helped to move the dividend yield higher. It currently sits at 10.9%, making it one of the highest in the index.
So when I look into 2022, if I see the global economic recovery continue (China included), then Rio Tinto could be a good stock to buy to benefit from this momentum.
Momentum in the property sector
The second top FTSE 100 stock that I’m thinking about buying is Barratt Developments (LSE:BDEV). The UK homebuilder has seen the share price rally almost 6% over a one-year period.
The reason why I like the stock moving forward is that I think the property sector has momentum that will continue in 2022. Last month, a trading update showed good forward sales of 15,393 homes. At the same time in 2020, this was 15,135 homes and in 2019 it was 12,963 homes. This gives me confidence that the industry still has strong demand.
A risk here is that forward demand might slow due to external factors. For example, higher interest rates in 2022 will make it more expensive to get a mortgage. This might put off people from committing, and could keep many in the rental market.
In a similar way to Rio Tinto, this top FTSE 100 stock also offers me good income potential. The current dividend yield is 4.29%, above the index average of 3.49%.
Top FTSE 100 stock ideas
Overall, I’m considering buying shares in both companies mentioned above. If my calls on the sectors is correct, then 2022 could see a supportive environment for these companies, helping to push the share prices higher.
Jon Smith and The Motley Fool UK have 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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