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 index, the S&P 500, which posted gains of 16.65% across the year.

That momentum has continued into 2026. Its twelve-month performance through to April 2026 now stands at around 30%, with its highest closing value of 10,910.55 reached on 27 February 2026. As of today, the index trades around the 10,600 level, having pulled back somewhat from those all-time highs amid ongoing geopolitical uncertainty in the Middle East.

Several structural factors have underpinned the FTSE 100's stellar run, with a significant portion of the rise due to the nature of the index's constituents. For context, 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 in 2026, 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 the resulting shifts in commodity prices, oil costs and global trade conditions.

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 throughout the period.

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 perhaps increasingly attractive to value-focused investors. This valuation gap, combined with dividend yields above 4% across many constituents, has arguably been key to drawing capital back into British equities.

The Bank of England's monetary policy stance has also provided support. With UK inflation showing signs of resuming its downward trend (despite current pressures), policymakers have gained flexibility to continue cutting interest rates at a measured pace, a constructive backdrop for equities, particularly interest-rate-sensitive sectors such as housebuilders, utilities and banks.

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’s 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, a key attraction for pension funds, insurance companies and income-seeking retail investors.

Top FTSE 100 stocks to watch

These are the 10 largest companies on the FTSE 100 by market capitalisation at the start of 2026.

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.

AstraZeneca (LON: AZN)

AstraZeneca remains the UK's most valuable company, with a market capitalisation of approximately £234 billion as of April 2026. The global pharmaceutical giant specialises in the development of novel treatments across oncology, cardiovascular, renal and respiratory diseases.

AstraZeneca recently faced headwinds from the threat of pharmaceutical tariffs and US drug pricing reform from President Donald Trump, which temporarily weighed on its position at the top of the FTSE 100.

However, the company unveiled plans last year 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.

HSBC (LON: HSBA)

HSBC is Europe's biggest bank by assets and is the second largest company on the FTSE 100. The international banking titan 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.

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. The company engages in the exploration, production, refining and marketing of oil and natural gas, while also investing in renewable energy.

In 2026, the energy sector has been buffeted by sharp oil price volatility linked to the Middle East conflict, with Shell shares falling sharply in early April as ceasefire hopes sent crude lower, before partially recovering. The company continues to execute a disciplined programme of share buybacks, and its results released in April showed better-than-expected energy trading profits.

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 (comprising inelastic demand, because consumers continue purchasing household essentials even during downturns) combined with its emerging market exposure provide a balanced growth profile.

Unilever had an arguably shaky start to 2026, but the consumer goods heavyweight could be about to turn a corner, with organic sales growth potentially seeing it claw back lost ground. The company continues its strategic transformation, having previously announced the separation of its premium ice cream business to unlock shareholder value.

Rolls-Royce (LON: RR)

Rolls-Royce has been one of the FTSE 100's most dramatic success stories in recent years. 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, with its small modular nuclear reactors positioned to meet the massive energy demands of AI data centres.

British American Tobacco (LON: BATS)

British American Tobacco is a global leader in tobacco and next-generation nicotine products including vapes and oral pouches. The company controls 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 its core tobacco markets remain a key risk factor.

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. Its strong balance sheet and exposure to electrification megatrends make it a key FTSE 100 holding for investors seeking commodity exposure.

Copper miners including Rio Tinto benefited significantly in 2026, as lower energy prices and improved global economic sentiment following Middle East ceasefire hopes boosted the sector.

Growing global demand for copper, essential for electric vehicles, renewable energy infrastructure and grid expansion, continues to underpin the investment case for Rio Tinto, though ESG concerns and community relations challenges in key jurisdictions remain an ongoing problem for investors.

GSK (LON: GSK)

GSK (formerly GlaxoSmithKline) has established itself as a top-10 FTSE 100 constituent following its separation from consumer healthcare business Haleon. The pharmaceutical and vaccines giant recently 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.

O'Neill's early messaging to staff emphasised consistency while accelerating performance, as the company continues its pivot firmly back toward oil and gas following an ill-fated foray into renewables. BP's dividend programme and focus on leaner, more profitable operations may make it an ongoing income investment proposition.

BAE Systems (LON: BA)

BAE Systems has risen up the FTSE 100 ranks sharply over the past few months, reflecting an extraordinary re-rating of defence stocks over the past two years.

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 outlook remains supported by structural tailwinds.

FTSE 100 stocks summed up

• The FTSE 100 broke through 10,000 points for the first time in January 2026
• 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
• AstraZeneca has become the UK's most valuable company by market cap, reflecting the shift towards knowledge-intensive sectors