Now appears to be like like a terrific time to purchase BP (LSE: BP) shares however there’s one factor stopping me. A variety of different FTSE 100 shares are super-tempting too, notably insurer Aviva (LSE: AV). I don’t have the money to purchase them each. Investing is about making selections. So what do I do?

The BP share price could be risky. As with all commodity inventory, it tends to rise and fall in cycles. So when Russia invaded Ukraine and power costs rocketed, its shares adopted swimsuit.

I resisted the temptation to chase it upwards. I desire to purchase shares earlier than they take off, reasonably than afterwards. It’s not at all times straightforward although. It entails defying the herd, which is a wrestle even for probably the most contrarian investor.

High dividend inventory

BP shares have dropped 4.17% during the last month. They’re nonetheless up over 12 months, however solely by 7.69%. I don’t suppose I’m shopping for on the high of the market.

They might slide additional, however that’s a danger I’ve to take. Shopping for on the precise backside of the market entails an enormous slice of luck. I’m hardly ever that fortunate.

However with the shares buying and selling at 7.1 instances earnings, why wait? There appears to be an actual alternative right this moment. Brent crude has fallen to a three-month low of $81 a barrel, down from greater than $120 two years in the past. That appears like a good set off.

The US, Brazil and Iran have been pumping out extra oil, including to produce. Rate of interest hikes have been delayed, slowing the worldwide financial system and hitting demand. Crimson Sea tensions have added to freight prices, however the impression has been lower than initially feared. Will these tendencies reverse? I do not know. In some unspecified time in the future, I simply must make the leap. 

BP at the moment yields a stable 4.6%, coated 3.1 instances by earnings. That’s forecast to hit 4.9% in 2024, with cowl of two.7.

FTSE 100 revenue hero

Now appears to be like like a superb time to purchase however I may say the identical about Aviva. In distinction to BP, its shares have been on a superb run recently, up 21.74% within the final yr. 

CEO Amanda Blanc is reaping the rewards from her efforts to construct a leaner, meaner, extra cash-generative Aviva. Full-year 2023 working earnings jumped 9% to £1.47bn, beating forecasts.

Blanc additionally launched a £300m share buyback and elevated the dividend by 8%. Aviva is forecast to yield a walloping 7.2% subsequent yr, smashing BP. Nonetheless, dividend cowl is rather a lot thinner, at simply 1.3 instances earnings.

Additionally, Aviva’s £300m buyback pales in comparison with BP’s first-quarter $1.75bn. That’s on high 2023’s insane $7.91bn buyback. After their latest sturdy run, Aviva shares are pricier than BP’s at 12.7 instances earnings.

The share price may climb greater when rates of interest lastly begin to fall, which ought to enhance its asset administration operations. Though BP would additionally profit.

If cash wasn’t a problem, I’d purchase each with the purpose of holding them for years and with luck, a long time. However investing is about selections, and I’ve simply made mine. I have already got publicity to the insurance coverage sector by way of Authorized & Basic Group, and I don’t maintain any power shares. I’ll purpose to purchase BP in June. Later, I’ll return for Aviva.