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To the surprise of many, the FTSE 100 outperformed the S&P 500 in 2025. With huge attention paid to the Magnificent 7 and US stocks in general, it’s sometimes easy to overlook opportunities closer to home. Bearing this in mind, here are three things that I think will happen in 2026.
1. Healthy yields to continue
The FTSE 100 has established a reputation for being home to some amazing high-yielding dividend shares with excellent track records in increasing their payouts. And in my opinion, this will continue.
For example, Halma‘s raised its dividend for 46 consecutive years. Even better, each increase has been worth 5%, or more.
The top 10 have an average yield of 6.5%. At the moment (2 February), Legal & General’s is 8.1%. Others in the same industry – Phoenix Group Holdings and M&G – are offering 7%+.
Of course, there are no guarantees when it comes to dividends, but with the index heavily populated with energy companies, banks, and builders, there are plenty of income stocks to choose from.
2. Valuation gap to narrow
Although I remain a fan of UK shares, I know many stocks on the other side of the Atlantic are seen as more exciting. And with its lack of technology stocks, it means the FTSE 100 lags its peers when it comes to valuations.
However, this could be an opportunity for international investors to reduce their exposure to more expensive markets and buy British instead. Another boost to the stock market could come from the government’s attempts to encourage UK pension funds to invest more domestically.
One positive of being unfashionable is that when expectations are low, companies don’t need to be brilliant for their stock prices to rally, they just need to be seen to be doing a bit better. I reckon 2026 could be the year when more investors appreciate the quality of many of the companies on the FTSE 100.
3. A possible comeback
My final prediction is that the RELX (LSE:REL) share price is going to have a better year than it did in 2025, when it fell 17%. The company’s one of the founding members of the index although, in 1984, it was known as Reed International. Since then, it’s transitioned from an old-fashioned publisher into a data analytics company powered by artificial intelligence (AI).
It remains one of the most undervalued Footsie shares, according to analysts. Today, they have a consensus 12-month share price target that’s 59% higher than the current share price.
Concerns that AI could disrupt its business seem overblown to me. With an impressive blue-chip customer base, the price of its services isn’t such an issue. Yes, new technology could help competitors but RELX has such dominance in its markets that I think it will be difficult to knock it off its perch. Indeed, when it released its Q3 2025 results, it reported an “improving long-term growth trajectory”.
I do fear a cyberattack though.
A plus for income investors is that the recent pullback in its share price means the stock’s currently yielding a respectable 2.5%. Overall, I like what I see and I believe the stock’s too cheap to ignore. That’s why I bought it just before Christmas and others could consider doing the same.
