Many of our great businesses won't even notice.
Okay, so all of Europe is alight, and there's panic over Greece perhaps leaving the euro, Spanish banks getting into trouble, and the great and good of the eurozone apparently not having much clue how to get out of the mess.
And it's all driving our stock markets downwards week by week. But what difference does it really make to the outlook for Britain's best companies?
Euro or drachma?
Look at Severn Trent (LSE: SVT), for example. It's a solid, dividend-paying, FTSE 100 cash cow, widely held by income investors. It's been offering a steady yield around the 4.5% mark for years. A falling share price caused the yield to rise to nearly 7% in 2009, and it was pared back to 4.5% in 2011.
But other than the 2011 cut, the dividend has been steadily rising in actual cash terms, and forecasts for the next three years have it resuming that steady growth.
How can it do this? It's got a captive audience and is providing the ultimate necessities that we cannot live without -- water and energy. And with no real growth or acquisition ambitions, the policy is to hand over as much profit as it can to shareholders. And the share price, currently at £16.90, has done well over the past five years.
Now, how is the currency that Stavros uses to pay for his humous going to affect any of that that?
Spanish banking crisis
A whole bunch of Spanish banks have had their credit ratings downgraded, and trading in Bankia shares was suspended last week after it emerged it was planning to tap the Spanish government for billions in bailout funds -- and as it turns out, it seems the struggling bank is seeking €19bn! Spain is in the grip of a banking crisis.
But that wasn't on my mind when I popped into Greggs (LSE: GRG) the other day to get some sandwiches and a loaf of bread. Greggs pays around 4% a year in dividends, and forecasts are pretty good for the next two years, too. Greggs, valued at £470m, hasn't got any debt and the 460p shares are on a modest price-to-earnings ratio of around 11.
Maybe Pedro is having trouble getting a mortgage, but how, exactly, will that affect people buying their lunch at Greggs?
Italian bonds
Halfords (LSE: HFD) is a company I've liked for a while. It's share price has struggled during the UK's credit squeeze, as discretionary spending for many has been put on hold, and it's lost around a third of its value over the past 12 months.
But Halfords Autocentres (formerly Nationwide Autocentres) are doing pretty well, and although profits for this year and next are expected to be down, there's a dividend of around 7.5% forecast. And net debt is modest and has been steadily falling. I reckon this is a strong business with great recovery potential over the next few years.
Now, are Halfords customers really going to be thinking: "Poor old Luigi's in a mess -- maybe I shouldn't get my exhaust replaced after all"?
ADVERTISEMENT
Get FREE instant access to our two latest
share recommendations and all our previous picks
If you’re ready to start investing but want someone else to do the hard work for you, Motley Fool Share Advisor can help.
Each month, our analyst team provides the names and details of two top shares for new investment. These aren’t crazy punts or poorly vetted ideas … no, these are thoughtfully researched shares to hold for years.
And we don’t stop at the recommendation.
We provide ongoing coverage for each share we recommend – telling you what to buy and when, but also when sell. To take the guesswork out of building your portfolio, come see how Share Advisor can help you.
Click here to start your 30-day free trial today
Lots of strong shares
And there's a whole host of companies that have been performing just fine. Look, for example, at SABMiller (LSE: SAB), which has beaten the FTSE for 11 straight years, and has announced a nice boost to its dividend.
And there's a whole bunch of companies whose share prices have been overall flat over the past five years, with a dip for the credit crunch followed by a recovery. But throughout the whole euro-turmoil years, they've been paying out steady dividends of 5% or more.
Royal Dutch Shell (LSE: RDSB), for example, has kept a very well-covered dividend going, and is now offering about 5%. Vodafone (LSE: VOD) is another -- though its share price is only just back to pre-panic levels, its dividend has been rising every year and forecasts suggest 7.4% for 2013.
Want a high flyer? Well, you could always go for the high risk that is something like ASOS (LSE: ASC), though there is a hefty premium already in the share price for those optimistic growth expectations. But look at boring old Booker (LSE: BOK), the food wholesaler, which has had a cracking five years and has seen its share price treble.
Not all rosy
There have been some pretty big fallers as well, with banks notably taking huge hits from the eurozone fallout. But that's their sector, and they really do have a lot riding on all the euro loans they have made. If you invest in a sector that really is doing badly, then yes, you will lose money.
But the real point is that there are plenty of great British businesses out there that are doing just fine, and the day-to-day panics that are sending stock markets on roller-coaster rides really don't affect them at all. It's business as usual, and every day they open their doors and carry on just like the previous day.
Right, I'm off to Greggs to get my lunch -- and I'm not going to check euro bond yields or the Portuguese deficit before I go.
Investing is by no means easy in today's uncertain economy. That's why we've published "Top Sectors Of 2012" -- our guide to three favourable industries. This free report will be dispatched immediately to your inbox.
Further investment opportunities:
> Alan does not own any shares mentioned in this article. Halfords is a Motley Fool recommendation.
