Should National Grid plc, Unilever plc and Halma plc be on your Brexit buylist?

Can National Grid plc (LON:NG), Unilever plc (LON:ULVR) and Halma plc (LON:HLMA) steer your portfolio through these difficult times?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A couple of weeks ago, I discussed how private investors could learn to love market volatility by recognising the importance of building a diversified portfolio and buying shares in a number of large, resilient companies to sit alongside their more cyclical holdings.

Events over the last few days have perhaps underlined how essential this is. So, let’s consider three stalwarts and ask whether they should form a core part of your portfolio for the difficult period we’ve now entered.

Powering ahead

National Grid (LSE: NG) is commonly regarded as one of the most boring constituents of the FTSE 100. The beauty of owning shares in the £37bn cap is that its monopoly over electricity provision means its share price tends to suffer less than other companies (and the main index) during periods of market panic. Need proof? Just look at its performance since Britain’s voted to leave the EU. It’s increased in the two days of trading since the result was announced.   

While some investors may be more concerned with protecting their capital right now, it can’t be denied that the electricity network provider also offers one of the safest yields in the FTSE 100. At just under 4.5% and covered by earnings, National Grid is a company to raise income investors’ spirits.

Some may quibble that a price-to-earnings (P/E) ratio of just over 16 makes the shares a bit expensive, particularly as our banks, airlines and housebuilders are now even cheaper to buy. While this may be true, it’s also a fact that no one knows how low the latter will fall. Rather than attempt to “catch a falling knife“, risk-averse investors may prefer to pay a little more for greater security.

Defensive demon

Unilever (LSE: ULVR) is, of course, a multinational consumer goods giant and not dependent solely on Europe for its profits. While UK politicians fret, this £93bn cap carries on selling Lynx deodorant, jars of Marmite and packs of Persil to the two billion people that use its products every day. This will continue regardless of what negotiations now happen between Britain and the 27 remaining members of the EU.

Given this, the performance of Unilver’s share price since last Friday is unsurprising. They’re up from 3,175p on the eve of the result to 3,365p today as investors dump their more speculative holdings for the relative sanctuary offered by the company.

While its 2.8% dividend yield looks fairly average alongside the payouts offered by National Grid, it is arguably just as secure. And when world markets do settle down, Unilever has the global reach to benefit.

Dividend champion

The FTSE250 index slumped dramatically on Friday and Monda,y due to a number of its companies being heavily dependent on earnings from the UK or Europe. This is not to say, however, that the index is devoid of resilient companies with larger international exposure. Halma (LSE:ULVR) is an example. The £4bn company’s products detect hazards, look after the environment, protect life and improve health. Thanks to growing health and safety legislation, the company’s earnings are anything but cyclical.

Halma’s share price reacted to the recent period of panic with a slight stumble followed by a shrug of its shoulders. It’s now recovered to 941p. Before Friday’s result, it was at 965p. Investors may baulk at how expensive shares in the company are — a P/E of 35 — but I would argue that 37 consecutive years of dividend increases of 5% or more speaks for itself.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers owns shares in National Grid, Unilever and Halma. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »