Best FTSE 100 stocks to watch in 2026

FTSE 100 in brief

The FTSE 100 breached the psychologically significant 10,000 point threshold for the first time at the start of 2026, capping an extraordinary 2025 during which the index delivered gains of more than 20%, its strongest annual performance in years, beating the US flagship S&P 500, which posted gains of 16.65%. Its highest closing value of 10,910.55 was reached on 27 February 2026. As of early July 2026, the index trades around the 10,650-10,680 level, having pulled back from those all-time highs. Over the past 12 months, the FTSE 100 has gained approximately 21%.

Several structural factors have underpinned the FTSE 100's stellar run. Mining companies, precious metals producers, defence stocks and banking shares have been the primary drivers of the rally. Gold prices ended 2025 with a 64% rise, the strongest annual performance since 1979, creating highly favourable conditions for the miners that make up a substantial portion of the index. Defence remained one of the most structurally supported areas of the FTSE 100, propelled by increased European defence spending commitments and geopolitical tensions.

Geopolitics has also played a decisive role. The US-Iran military conflict, which began at the end of February, weighed on the index for several weeks before a partial ceasefire announcement in early April triggered a sharp rally. The FTSE 100's composition — heavily weighted toward miners, banks, retailers and industrials — means it is acutely sensitive to resulting shifts in commodity prices, oil costs and global trade conditions. As of July 2026, fresh attacks on shipping vessels in the Strait of Hormuz continue to support oil prices and energy sector stocks.

The currency backdrop continues to support the index. With approximately 75% of FTSE 100 corporate income derived from overseas, weakness in the US dollar has provided a meaningful tailwind for reported earnings. 

From a valuation perspective, the UK market continues to trade at a significant discount to US equities. The FTSE 100 trades at a price-to-earnings ratio of approximately 14, compared to the S&P 500's 25, making UK equities increasingly attractive to value-focused investors. This valuation gap, combined with dividend yields above 4% across many constituents, has been key to drawing capital back into British equities.

The Bank of England's monetary policy stance has also provided support, with policymakers having cut the base rate to 3.75% in April 2026. With UK inflation showing signs of resuming its downward trend, policymakers retain flexibility to continue cutting at a measured pace — a constructive backdrop for equities, particularly interest-rate-sensitive sectors.

It's also worth noting that the FTSE 100 has very low exposure to technology stocks (just 3.5% compared to approximately one third of the S&P 500), making it a popular complement to US indices for investors seeking diversified exposure. While this has historically been viewed as a disadvantage during periods of technology outperformance, it has proved an asset as investors rotated into value stocks, commodities and defensive sectors.

FTSE 100 companies are typically well-established businesses with strong brand recognition, large economies of scale and proven business models. They also tend to be reliable dividend payers, with many maintaining or increasing their dividends even during challenging economic conditions. For more on the FTSE 100 as an income vehicle, see our guides on FTSE 100 dividend stocks and highest yielding UK dividend stocks. 

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Top FTSE 100 stocks to watch

These are the ten largest companies on the FTSE 100 by market capitalisation as of late June 2026. Note that HSBC has overtaken AstraZeneca as the largest constituent, following its 48% rise in 2025 driven by Asian wealth management growth, and Rolls-Royce has risen sharply in the rankings after a third consecutive year of strong performance.

We also offer many FTSE 100 ETFs, including the popular iShares Core FTSE 100 UCITS ETF, which seeks to track the index with minimal expense fees.

HSBC (LON: HSBA)

HSBC is now the largest company on the FTSE 100 by market capitalisation, overtaking AstraZeneca as of the June 2026 index review. Europe's biggest bank by assets offers a wide range of financial services including retail banking, wealth management and global banking. HSBC shares surged in 2025 as its dominant position in Asia wealth management benefited from a 30% increase in Hong Kong's Hang Seng index. HSBC Group Chairman Brendan Nelson joined Prime Minister Keir Starmer on his 2026 state visit to China, underscoring the bank's strategic importance to UK-China trade ties and its continued focus on Asian growth markets. The bank is also the single largest dividend contributor to the FTSE 100, forecast to pay £10.7 billion to shareholders in 2026.

AstraZeneca (LON: AZN)

AstraZeneca remains one of the UK's two most valuable companies, with a market capitalisation of approximately £220 billion as of late June 2026 — having been overtaken by HSBC in the June quarterly review. The global pharmaceutical giant specialises in the development of novel treatments across oncology, cardiovascular, renal and respiratory diseases. AstraZeneca faced headwinds from the threat of pharmaceutical tariffs and US drug pricing reform, which temporarily weighed on its valuation. However, the company unveiled plans to invest $50 billion in the US by the end of the decade, securing a reprieve from tariffs on its US-made medicines. AstraZeneca's strong pipeline and consistent revenue growth make it a cornerstone holding for investors seeking healthcare exposure. For further context, see our guide on how to invest in shares.

Shell (LON: SHEL)

Shell is one of the world's leading energy companies and the larger of the two oil majors on the FTSE 100, engaging in the exploration, production, refining and marketing of oil and natural gas. In July 2026, Shell shares have surged over 2% in a single session following an announcement that second quarter gas trading profits would be significantly higher than the prior quarter — a reflection of ongoing oil price support from Strait of Hormuz security concerns. The energy sector has been buffeted by sharp oil price volatility linked to Middle East conflict, with Shell shares showing significant swings around each major geopolitical development. The company continues to execute a disciplined programme of share buybacks alongside its dividend. Shell is the second largest dividend contributor to the FTSE 100, forecast to pay £6.3 billion in 2026.

Rolls-Royce (LON: RR)

Rolls-Royce has been one of the FTSE 100's most dramatic success stories of the past three years and has risen sharply in the market cap rankings. The aerospace and defence company designs, manufactures and services power systems for aviation, marine and land applications. In its 2025 full year results, Rolls-Royce announced a multi-billion-pound share buyback programme for 2026 to 2028 and reinstated regular shareholder dividends for the first time in more than five years. CEO Tufan 'Turbo' Erginbilgic has stated his ambition for the company to become the UK's highest-valued business. Its small modular nuclear reactors are positioned to meet the massive energy demands of AI data centres — a theme that continues to attract investor interest. Shares rose approximately 95% in 2025 alone.

Unilever (LON: ULVR)

Unilever is a multinational consumer goods powerhouse with a portfolio of well-known brands including Dove, Magnum and Persil. Its defensive characteristics — inelastic demand means consumers continue purchasing household essentials even during downturns — combined with its emerging market exposure provide a balanced growth profile. Unilever products are used by over 3 billion people every day. The company continues its strategic transformation, having previously announced the separation of its premium ice cream business to unlock shareholder value, with the demerger of The Magnum Ice Cream Co NV completed in 2025.

British American Tobacco (LON: BATS)

British American Tobacco is a global leader in tobacco and next-generation nicotine products including vapes and oral pouches, controlling brands including Dunhill, Kent, Lucky Strike and Vuse. BAT projects global cigarette volumes to decline by about 2% in 2026, while revenue is expected to grow between 3% and 5%, with low double-digit growth in new categories. The company has been supported by resilient fundamentals and its defensive appeal in uncertain markets. BAT's high dividend yield continues to attract income-focused investors, though regulatory risks in core tobacco markets remain a key risk factor. For income investors, BAT is typically featured in our highest yielding dividend stocks analysis.

Rio Tinto (LON: RIO)

Rio Tinto is a leading global mining group focused on the extraction and processing of metals including iron ore, aluminium and copper. Copper miners including Rio Tinto have been among the more volatile performers in July 2026, with the stock declining sharply on fresh concerns about global growth and the impact of US tariff policy on commodity demand, even as energy stocks rallied. Growing global demand for copper — essential for electric vehicles, renewable energy infrastructure and grid expansion — continues to underpin the long-term investment case, though ESG concerns and community relations challenges in key jurisdictions remain ongoing considerations. Rio Tinto's innovative Nuton technology, which uses microorganisms to recover copper from waste rock, produced its first copper in Arizona in December 2025.

GSK (LON: GSK)

GSK has established itself as a top-ten FTSE 100 constituent following its separation from consumer healthcare business Haleon. The pharmaceutical and vaccines giant has reported strong results, with growth driven by specialty medicines across respiratory, HIV treatments and oncology. GSK Chair Sir Jonathan Symonds joined Prime Minister Starmer's 2026 China trade delegation, reflecting the company's ambitions in Asian markets. New CEO Luke Miels, who took over from Emma Walmsley at the start of 2026, has reaffirmed the company's growth outlook, with continued investment in its pipeline through strategic acquisitions and partnerships.

BP (LON: BP)

BP is the second FTSE 100 oil major, involved in the exploration, production and marketing of oil and natural gas alongside investments in energy transition initiatives. Meg O'Neill officially became BP's new CEO on 1 April 2026, becoming the first woman to lead a top-five oil major and BP's first external hire for the role in more than a century. In July 2026, BP shares have advanced approximately 1.4% in a session as oil prices rose on fresh Strait of Hormuz security concerns. O'Neill's early messaging has emphasised consistency while accelerating performance as the company continues its pivot firmly back toward oil and gas. BP's dividend programme and focus on leaner, more profitable operations make it an ongoing income investment proposition.

BAE Systems (LON: BA)

BAE Systems has risen sharply up the FTSE 100 rankings over the past two years, reflecting an extraordinary re-rating of defence stocks. BAE reported record sales of £30.7 billion in 2025 and guided for sales growth of 7% to 9% in 2026, with earnings per share expected to rise 9% to 11%. Europe's largest defence contractor by revenue, BAE continues to win significant contracts globally, including multiple US Army awards and a new strategic relationship with Scale AI in early 2026, positioning it at the intersection of traditional defence and artificial intelligence. With European governments accelerating defence spending, BAE's structural tailwinds remain firmly in place. For context on how to analyse companies like BAE, see our fundamental analysis guide.

FTSE 100 stocks summed up

The FTSE 100 broke through 10,000 points for the first time in January 2026 and currently trades around 10,650-10,680, approximately 21% higher than a year ago. FTSE 100 companies are well-established with strong brand recognition, economies of scale and proven business models. The index is dominated by dividend-paying miners, oil companies, banks, defence stocks and pharmaceutical companies. HSBC has overtaken AstraZeneca as the UK's largest listed company by market capitalisation as of the June 2026 quarterly review, reflecting the bank's extraordinary run driven by Asian wealth management growth.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invest.

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