Brexit — deal or no deal — my guess is that we’re likely to experience something akin to driving over a minor pothole in the road when it arrives and little else. And I certainly won’t let it stop me from buying shares in big FTSE 100 companies, many of which have overseas large operations.
However, if share prices are being held back by Brexit uncertainty it makes sense to buy now because when Brexit has happened the uncertainty will ease and shares may go up.
Here are two dividend-payers I like in the FTSE 100.
Energy transmission and distribution
With its operations in America, National Grid (LSE: NG) describes itself as an electricity and natural gas delivery company that supplies energy to more than 20m people in the North-Eastern US.
In the UK, the company is known for its electricity and gas transmission systems. Think huge pylons and pipes moving energy up, down and across the country and forming the national grid (naturally), rather than the smaller poles, cables and pipes crisscrossing counties, regions, cities and towns and bringing the stuff to the end-user. These are generally operated by others.
So, National Grid also functions as the electricity system operator in the UK, balancing electricity supply and demand, calling up wind farms and power stations or switching them off. And opening great deluges of water to instantly power up some of Scotland’s hydro-electric power stations when we all rush at once to put the kettle on in the adverts.
The importance of the firm’s operations and role in Britain’s infrastructure is undeniable, which is why it’s such a target for those who’d venture back to the days of nationalised industries. However, my guess, by reading the political tea leaves, is that the ‘threat’ of nationalisation is receding in the sector.
That’s why I see the firm’s 5.7% dividend yield as attractive right now, and at the current share price close to 851p, I’d buy some of the shares for my long-term portfolio.
Fast-moving products for smokers
Tobacco and next-generation products company British American Tobacco (LSE: BATS) has an even larger dividend yield running just over 7% with the share price at 2,961p. It’s clear that the stock has fallen out of favour with the stock market, which is made up of private and institutional investors.
And that’s not surprising. The US has been making noises about banning menthol cigarettes, and I read a news story recently about intentions to ban the flavouring in vaping products. But smokers are a resilient lot and will likely switch products to whatever’s available. And tobacco firms like BATS are resourceful too, which means they’ll probably find ways to serve any demand that exists in the market.
I also think it unlikely that any government in the developed world would kill any industry employing thousands of people stone dead with regulation and laws. Meanwhile, BATS keeps generating buckets full of cash and the dividends keep on coming, despite a decades-long trend of declining cigarette volumes. I’ve added that stream of dividends to my portfolio by buying some of the firm’s shares.
