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Since June 2021, the FTSE 100 has delivered an average annual return of 8%. But there are plenty of shares on the index that have done better than this. And by picking a handful that continue to deliver above-average returns, I reckon it’s possible to build a very valuable portfolio of shares.
Let’s crunch some numbers to illustrate my point.
What do they show?
To reflect the fact that it’s highly unlikely an investor would always pick the best performers, I’ve chosen the third-ranked bank, miner, energy company, retailer, and insurer on the index since June 2021. The average annual return of these has been 13%.
| Stock | Sector | 5-year average annual share price return (%) |
|---|---|---|
| NatWest Group (LSE:NWG) | Banking | 21 |
| Glencore | Mining | 12 |
| BP | Energy | 11 |
| Next | Retail | 11 |
| Aviva | Insurance | 9 |
| Average | 13 |
Incidentally, if someone picked the number one in each category, the return would have been an amazing 28%!
What does this mean in terms of hard cash? Well, if someone invested £20,000 in these five shares (£4,000 in each) and they continued to grow at 13% a year for 25 years, it would result in an investment portfolio of £424,611. That’s more than 21 times the initial stake. After 30 years, the shares would be worth £782,318. Keeping going for another five, and the pot would grow to £1.44m.
These are powerful examples of how the stock market can help deliver significant long-term gains. And remember, my numbers exclude the impact of any dividends that might be paid.
Of course, it has to be pointed out that there’s no guarantee that past performance will be repeated. Although, I think it’s worth noting that 84 companies (16%) on the FTSE All-Share index have performed better since June 2021.
Top of the shop
Number one in the table is NatWest Group. Since the pandemic, it’s benefitted from higher interest rates and expanded through some high-profile acquisitions.
Of the 18 analysts covering the stock, 11 consider it a Buy and none are advising their clients to Sell. Their consensus 12-month target is around 20% higher than today’s (12 June) share price.
The bank’s dividend is particularly attractive. In 2025, it paid 32.5p a share implying a yield of 5%. This is predicted to increase over the next three years:
- 2026 – 36.5p
- 2027 – 41.2p
- 2028 – 45.5p
If accurate, the stock’s forward (2028) yield’s a chunky 7.6%. Having said that, dividends are never guaranteed.
One concern I have is the bank’s exposure to the UK economy. At 31 December 2025, 89% of its loans were to domestic customers. In my opinion, it’s difficult to know what to make of the British economy at the moment. But with inflation and unemployment rising, there could be some difficult times ahead.
Also, every now and again – usually when a Budget is coming — the idea of a windfall tax on Britain’s banks is raised. For now, at least, this doesn’t seem to be on the cards.
My view
At the moment, the bank’s stock appears to offer good value helped, in part, by a 14% reduction in its share price since the start of February. Significantly, it has the lowest price-to-earnings ratio of the FTSE 100’s five banks and the highest yield.
On balance, I think the stock’s one to consider. However, I already have exposure to the UK banking sector through a shareholding in Barclays. But if I wanted another, NatWest would be next on my list.
Should you invest £5,000 in NatWest Group Plc right now?
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James Beard owns shares in Barclays plc.
