Recent weeks have seen decent share price gains for a number of companies most investors would regard as dependable, core holdings. As we pause for breath following a tumultuous period in the markets, its makes sense to ask whether some of these are now starting to look expensive.

Big but dependable?

Shares in Royal Dutch Shell  (LSE: RDSB) are up almost 14% to 2,148p since 23 June as investors rush to the perceived safety offered by the biggest company in the FTSE 100. However, this performance is nothing compared to that achieved since January thanks to the oil price finally showing signs of stabilising. Back at the start of the year, shares exchanged hands for as little as 1,277p.

While I expect this form to continue over the long term, it’s questionable quite how Shell will do over the next few months. If oil prices continue to rise, the company will benefit. A cut in interest rates on 4 August will also mean even more investors become interested in the firm’s increasingly secure quarterly payouts, even if the shares already trade on a fairly expensive forward price-to-earnings (P/E) ratio of almost 17.

However, if Shell’s recent share price rise reflects investors’ desire for yield and/or safety rather than their confidence about the price of black gold, there could be some volatility ahead if the latter starts to dip again. Pressure on gas prices could also affect the company’s bottom line.

Shell announces its interim results this Thursday.

Industry consolidator

There are defensive companies and there’s Dignity (LSE: DTY). As suggested back in May, the funeral provider has performed well since most of us went to the polls. Up by around 8% since 23 June, they now trade at 2,718p despite dipping down to 2,276p following the result, much of which was due to investors retreating from UK-focused stocks across the board. A month on, the combination of reliable earnings and excellent future prospects seems to be pulling investors back.

Aside from its high valuation of 23 times earnings, one other downside to owning shares in the £1.35bn cap is its low yield. Following the recent rise in the share price, this is even less attractive than it was pre-referendum (sub 1%) and may force income investors to look elsewhere. Nevertheless, as it continues to consolidate a fragmented industry, I can see these payouts rising at a rapid rate along with the possibility of special dividends.

Dignity reports half-year earnings this Wednesday. Although a slight decline in profits is expected (following abnormally high death rates last year), the company will remain a core holding in my portfolio.


Bunzl (LSE: BNZL) has a reputation for being deadly dull but highly successful – just the sort of company Fools might want to research further. Shares in the £8bn cap have done well following the referendum, up 14% to 2,352p, probably down to investors assuming that the company’s global operations will cushion any blows from Brexit.

Another compelling reason for investing in Bunzl is its status as a dividend champion. Despite only yielding 1.76%, these payouts have been rising consistently for many years and appear very secure, two signs of a company in rude health. Even so, a forward P/E of 23 suggests that investors are already more than aware of Bunzl’s defensive characteristics. Should markets dip once more, this is one company worth considering.

Stay the course

Did you see Brexit coming? Many professional investors didn't, hence the massive levels of volatility we've seen in the market lately. While this is likely to continue for some time, private investors need not panic. Indeed, panicking is one of the biggest mistakes you can make. The beauty of investing for the long term is that you can ride out these inevitable periods of doubt like a zen master, confident in the knowledge that you hold shares in a bunch of large, resilient companies with consistent earnings and excellent future prospects.

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Paul Summers has shares in Royal Dutch Shell B, Dignity and Bunzl. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.