A number of FTSE 100 (^FTSE) stocks have delivered standout returns this year, buoyed by different factors, which has driven the wider UK market higher.
The UK's blue-chip index is up 5% year-to-date, reaching an all-time high close of 8,445.80 points in May.
However, certain macro economic events have also weighed on the UK market, including Labour's first budget in more than 14 years, with concern about the impact of tax rises on businesses.
The rise in the FTSE 100 is still well behind the 24% delivered by the S&P 500 (^GSPC), though there are a number of UK blue-chip stocks that have beaten that performance on an individual basis.
Dan Coatsworth, investment analyst at AJ Bell (AJB.L), highlighted that 18 stocks in the FTSE 100 had delivered a total return in excess of 30%, while some 48 stocks had produced a double-digit return.
"The UK stock market doesn’t deserve its unloved reputation," he said. "While it may lack the glitz and glamour of the US market, it’s still full of interesting companies offering steady earnings growth."
"Fundamentally, the FTSE 100 can help provide ballast to an ISA or pension portfolio, particularly as the index has a rich source of dividends and a good mix of cyclical and defensive companies," Coatsworth added.
Here are the top performing FTSE 100 stocks this year based on their total return, which includes share price performance and dividends, running to market close on 6 December, according to data from AJ Bell.
Bank NatWest has generated a total return of 99% year-to-date, following a strong run of results.
Most recently, NatWest reported a 25% jump in profits in the third quarter to £1.67bn ($2.09bn), beating expectations of this figure coming in less than £1.5bn.
NatWest also upgraded its income outlook for the year to £14.4bn, up from £14bn and raised its return on tangible equity target from 14% to 15%.
The surge in profits was driven by net interest income — the difference what banks earns on loans and pays out on customer deposits and a key profit driver for retail banks — which came in at a better-than-expected £2.9bn.
In November, NatWest also announced that it had bought back £1bn of its shares from the UK government, meaning that the Treasury's stake in the bank fell to around 11.4% from 14.2%. Following bailouts in the financial crisis, the government at one point had an 84% stake in the bank, which was previously known as the Royal Bank of Scotland.
Coatsworth said: "A major share overhang was lifted as the government accelerated the sale of what was a large stake in the business following a bailout in the global financial crisis."
"A decade ago, everyone was talking about challenger banks eating the legacy players’ lunch, yet NatWest is one of the big banks to have shaken off this competition," he said.
“For a sector that is often mired in mis-selling scandals and the ever-increasing weight of regulation, it feels as if NatWest has shown that banks are still capable of doing well."
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Modern Rolls Royce luxury car parked outside the Chanel store on Bond Street on 1st December 2024 in London, United Kingdom. Bond Street is one of the principal streets in the West End shopping district and is very upmarket. It has been a fashionable shopping street since the 18th century. The rich and wealthy shop here mostly for high end fashion and jewellery. (photo by Mike Kemp/In Pictures via Getty Images) ·Mike Kemp via Getty Images
Another top performer in the FTSE 100 this year was Rolls-Royce, which has delivered a total return of 96%.
Despite a challenging supply chain environment, Rolls-Royce CEO Tufan Erginbilgic said in a trading update in November that continued good performance provided further confidence that the company would deliver on its 2024 guidance.
The engineering company maintained full-year guidance of generating underlying operating profit of between £2.1bn and £2.3bn, as well as free cash flow of between £2.1bn and £2.2bn.
Susannah Streeter, head of money and markets at Hargreaves Lansdown (HL.L), said that Rolls-Royce was "benefitting from travellers refound desire for long-haul trips — as it produces and services aeroplane engines for bigger planes flying international routes."
"The number of hours those aircraft stay in the sky has been rising, back above 2019 levels."
Meanwhile, she said that Erginbilgic was "delivering on his promise to transform Rolls into a leaner, more focused company, and its already translating into lower debt levels and higher margins."
Rolls-Royce also announced in its half-year results in August that it was reinstating its dividend for its full-year results, starting with a 30% pay-out ratio of underlying profit after tax, which would be paid in 2025.
A driver of DS Smith's share price performance this year has been its merger with the US-based International Paper Company (IP). The stock has generated a total return of 88%.
"Although the paper and packaging market hasn’t recently been a very clement place to be with lower industry prices hitting profits, it posted a decent set of half year results," said Streeter.
While DS Smith's first-half adjusted operating profit of £221m was 39% lower year-on-year, it said this was in line with the company's expectations, "despite ongoing challenging market conditions". The firm also declared an interim dividend of 6.2p per share, which was 3% higher than in the previous year.
Streeter said that DS Smith had made "significantly higher cost-savings than investors expected, and there is further opportunity for efficiency gains."
"The group is a key supplier of cardboard boxes to the e-commerce and consumer goods sectors, and it has exposure to attractive end markets, especially with the shift away from plastic packaging," she added.
DS Smith said in its recent results that it expected to its merger with International Paper Company to complete in the first quarter of 2025.
British Airways-owner IAG is another company benefitting from the delayed recovery in the travel sector post-pandemic.
IAG logged a strong third quarter, with revenue climbing nearly 8% to €9.3bn (£7.7bn) and operating profits rising to €2.01bn, up 15% on the previous year.
The company also announced a €350 stock buyback, which is when firms repurchase their shares and distribute the funds back to investors.
Streeter said: "British Airways owner IAG has been gliding higher as the company carried more passengers on flights that have been increasingly full."
She said that the "upswing in capacity just as costs fall due efficiency savings and lower fuel prices has translated" into that surge in profits in the third quarter, which beat market estimates."
"There might have been continued pressure on consumers’ incomes, but it appears people are ringfencing available budgets to spend on short trips and holidays abroad, with pent-up demand for travel showing little sign of abating just yet," she added. "Squeezing more passengers onto each flight increases profitability and has been part of recipe for success."
As a result, the stock has delivered a total return of 85% this year.
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NEW YORK - NEW YORK - JUNE 6 : General view of the Barclays Headquarters on June 6, 2023 in New York City. Barclays bank has started the sales process for a portfolio of loans to individuals, also including non-performing mortgages and high risk loans in Swiss francs. (Photo by Eduardo Munoz Alvarez/VIEWpress/Getty Images) ·VIEW press via Getty Images
Another bank on the list is Barclays, with a total return of 79% this year and shares trading at their highest point since 2015.
Shares soared in October after the bank reported a 23% increase in attributable profits — which are owed to shareholders — to nearly £1.6bn in the third quarter. This beat consensus forecasts of nearly £1.3bn, according to figures provided by the bank.
In addition, the bank announced a share buyback of up to £750m and a half-year dividend of 2.9p per share.
Deutsche Bank (DBK.DE) recently highlighted Barclays as one of its top stock picks in the European banking sector going into 2025. Analysts said sizeable revenues outside of its net interest income including from asset and wealth management, as well as investment banking.
In its third quarter results, Barclays said that total income across the business was up 5% year-on-year to £6.5bn, with the most growth seen in its investment banking division, where income had increased 6% to nearly £2.9bn.
Deutsche Bank's analysts highlighted Barclays as a bank benefitting from merger and acquisitions activity in the sector, alluding to its recently completed purchase of Tesco's (TSCO.L) retail banking business.
Shares in insurance firm Beazley hit an all-time high earlier in December of 840p per share, with the company having continued to deliver strong performance.
In a recent trading update, Beazley said it was on track to achieve its full-year guidance. The insurer said insurance written premiums had risen 7% year-on-year in the third quarter to $4.6bn (£3.7bn).
Adrian Cox, CEO of Beazley, said the business had continued to navigate a "volatile claims environment" this year.
"Our commitment to disciplined underwriting and our risk selection expertise mean that, despite an active hurricane season and a global cyber event, we expect to deliver an undiscounted combined ratio of around 80% for the full year, consistent with our guidance at our interim results in August," he said.
Shares rallied in February after the insurer announced that in addition to an ordinary dividend for 2023, shareholders would receive a further $300m in returned capital.
Beazley has generated a total return of nearly 61% year-to-date.
A takeover deal sent shares in the UK's largest investment platform Hargreaves Lansdown higher this year, with a total return of 56%.
The stock jumped in May when the company shared that it rejected an initial bid from a consortium made up of private equity investors, including CVC Capital Partners and Abu Dhabi's sovereign wealth fund.
Hargreaves then agreed to £5.4bn offer from the consortium in August, with shareholders having voted in favour of the acquisition in October. The platform said it expects the takeover to complete in the first quarter of 2025.
In terms of company performance, Hargreaves said in a trading update at the end of October that it had seen net new client growth of 18,000 in its fiscal first quarter, versus 8,000 in the same period last year.
Assets under administration had also grown to £157.3bn, with net new business contributing £500m.
Private equity investment trust 3i Group, which invests in a wide range of sectors, has delivered a total return of 56% year-to-date.
Companies in its portfolio include Audley Travel, which specialises in tailor-made holidays, and the European Bakery Group, which makes home bake-off bread and snack products.
A major contributor to 3i's performance in the first half was Action, which is a non-food discounter founded in the Netherlands with more than 2,750 stores across Europe.
Simon Borrows, CEO of 3i, said: "With a strong business and financial model and significant white space to expand into, we believe [Action] will continue to do so for many years to come.
"In addition, the leading companies in our portfolio are performing strongly and a number of the portfolio companies that were adversely impacted by challenges in 2023 are beginning to turn the corner and see improved trading."
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Pedestrians walk past the British multinational banking and financial services company Standard Chartered branch in Hong Kong. ·SOPA Images, SOPA Images Limited
Shares in the Asia-focused bank have continued to rise since then, with the stock trading at a nine-year high and generating a total return of 50% this year.
Operating income was up 11% in the third quarter to $4.9bn, with the net interest income rising 9% to $3.6bn.
Despite increasing push back on the sector, tobacco giant Imperial Brands has continued to be a top performer in the FTSE 100 this year, with a total return of nearly 50%.
The company's annual profits came in ahead of expectations, with the company seeing strong revenue growth from next generation products, such as vapes
Imperial Brands logged adjusted net revenue of nearly £8.2bn across tobacco and next generation products, with 26% sales growth in the latter business segment.
Imperial Brands reported that adjusted operating profits had risen nearly 5% on a constant currency basis to £3.9bn for the year ended 30 September, while adjusted earnings per share were up 11% to £2.97.
In a Deutsche Bank note published on 21 November, a couple of days after Imperial's results were released, analyst Damian McNeela kept a buy rating on the stock.
"The company has set a March 2025 date for a CMD (capital markets day) to unveil its next five-year plan," he said. "We think the business has been well served by the focus on consumers, data and shareholder returns and expect these priorities to form the basis of the strategy for the next five years."
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Overall, Hargreaves Lansdown's Streeter said that as "conditions for UK banks look more promising, investors have reacted by snapping up shares in big lenders."
Pent-up demand for travel has also buoyed the performance of certain stocks. Meanwhile, takeover news has been another key theme among the top performers.
