With a recession, I expect the outlook to get worse for many companies. Customers may spend less and borrowing costs are rising. Although right now my portfolio is weighted towards the FTSE 100, I do own some FTSE 250 shares. Here are three more I would buy today for my portfolio if I had spare cash to invest.
Tritax
Even if consumer spending slows, I expect demand for warehousing to be fairly buoyant. That could be good news for warehouse specialist Tritax Big Box REIT (LSE: BBOX).
The shares have lost 36% of their value over the past year, meaning they now offer a dividend yield of 5.1%. A recession could lead to customers cutting budgets, which might be bad for Tritax. But the business seems to be in good health. In the first half, the contracted annual rent roll rose by 11% and the interim dividend grew 5%.
Tritax has a strong position in a sector I expect to see long-term structural growth. I would buy it for my portfolio today and hold it for the long term.
Games Workshop
One of the economic consequences of a recession can be that people spend less time and money on entertainment away from home, preferring the cheaper option of a night in.
That could be good news for Games Workshop (LSE: GAW). This FTSE 250 business makes money from roleplay games, both physically and online.
I think Games Workshop has a strong competitive advantage that could help it do well. It owns the Warhammer franchise, giving it pricing power and the benefit of a sizeable installed customer base.
I do see risks, such as the company’s concentration of manufacturing. If its main factory has a problem, that could hurt sales and profits.
But with its competitive advantage, 4.5% yield, and the prospect of robust demand, I would buy Games Workshop shares for my portfolio today and hold them during the recession.
City of London Investment Trust
Another of the FTSE 250 shares I would consider adding to my portfolio in a recession is the City of London Investment Trust (LSE: CTY).
Does it seem like a long time since England won the football World Cup? The year that happened (1966) saw the start of a run of annual dividend increases by the investment trust that remains unbroken.
At the moment, City of London has a dividend yield of 5.3%. Past performance is no guarantee of what will happen in future. But I like the trust’s focus on generating income for shareholders by investing mostly in UK companies, particularly large multinationals.
I think that makes sense, especially in a recession when large companies often have stronger experience and resources to ride out the storm than small ones. There is a currency risk to earnings due to a weaker pound hurting the sales prospects of many British exporters. That could reduce the value of some of the trust’s investments.
But I would tuck these shares in my portfolio and hold them through a recession and beyond.
