Every investor should have a degree of international diversification in their portfolio although trying to figure out the best way of adding this diversification can be confusing. Indeed, there are hundreds of different international funds out there all targeting different markets, sectors and themes. 

However, there are two British companies, both traded in London with a broad international exposure, which will enable you to achieve international diversification without putting in all the extra research legwork. 

BP (LSE: BP) and Unilever (LSE: ULVR) are possibly the UK’s two most globalised companies. Unilever has a presence all over the world, and it’s estimated that the majority of the world’s population will use at least one of the company’s products once a day. Meanwhile, BP’s global network of oil infrastructure and trading arm brings the company into contact with customers all over the world. 

Essential holdings

Unilever and BP’s global presence makes these two companies essential holdings for most investors’ portfolios. By owning the two stocks, investors can diversify away from the UK economy, reducing their portfolio’s dependence on the performance of economic growth at home. Both Unilever and BP are exposed to fast-growing emerging markets, which will not only protect these companies’ revenue rises when times are hard, but the exposure will also accelerate those rises when developed market economic growth is picking up. 

Aside from the international diversification aspect of Unilever and BP, both companies will complement each other if held in a portfolio. 

Complementary holdings 

The very nature of BP’s business means that the company’s earnings are erratic. When oil prices are high the company prints money, but when prices fall management has to hunker down to conserve cash. On the other hand, Unilever’s business is defensive. There’s always a consistent demand for the company’s products, which translates into steady earnings and sales growth for the group. Because of the company’s defensive nature, investors are willing to pay a premium to get their hands on shares in Unilever. 

Unilever’s shares currently trade at a forward P/E of 22.7 and yield 2.9%. Meanwhile, shares in BP currently support a dividend yield of 7.2%. What the company lags in steady, predictable growth, it more than makes up for in income. Management has staked its reputation on the dividend payout so even though BP’s yield may look high, it’s unlikely to be cut in the near term.

The bottom line 

So overall, BP and Unilever are two British giants with international exposure that would fit well into any investors’ portfolio. Unilever is well-known for its slow and steady, predictable growth while BP is an income champion. As the two companies have operations around the world, their fortunes aren’t tied to those of the UK economy, and they should continue to profit no matter what the fallout from Brexit.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.