3 resilient British stocks for weathering economic storms

Diversifying into British-listed stocks or sectors that are resilient during economic downturns can help spread risk across a portfolio.

| More on:
Snowing on Jubilee Gardens in London at dusk

Image source: Getty Images

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.

It can hardly be argued that the weather in Great Britain is infamous for its unpredictability. The same might be said for our economy, especially in recent years. So what UK-listed stocks might British investors want to seek out during volatility?


What it does: Diageo is one of the world’s leading suppliers of alcoholic drinks, with top brands in the gin, vodka, whisky and stout markets.

By Cliff D’Arcy. As I write, currently trading at 2,819.5p, Diageo (LSE:DGE) shares have dived 23.3% in the last year. Also, they are 12.5% lower over five years.

This has lowered the group’s market value to £62.6bn. However, these figures exclude cash dividends, which Diageo has grown consistently over decades.

Currently, Diageo’s trailing cash yield is 2.9% a year – below the FTSE 100’s 4% yearly dividend yield. But 2024’s interim dividend was 4% above 2023’s, plus analysts expect this growth to continue, as it has done for many years.

Few companies are immune to financial downturns, stock-market crashes and recessions. But history has shown me that financially strong FTSE 100 firms with powerful, established brands (such as Diageo) do better than most.

Finally, I view Diageo stock as undervalued today. Therefore, my wife and I will keep tight hold of our shares for their dividends and potential capital gains!

Cliff D’Arcy has an economic interest in Diageo shares.

National Grid

What it does: National Grid owns and operates the electricity transmission network in England and Wales.

By Charlie CarmanNational Grid (LSE:NG.) is a defensive stock worth considering for tricky times.

Electricity demand is fairly constant throughout the economic cycle and, as a regulated monopoly, the utility giant doesn’t face competition risks like most companies. That’s an attractive quality in a recession.

National Grid also has a marvellous dividend history. Distributions haven’t been cut since 1996 and the group’s progressive policy targets annual payout growth in line with CPIH inflation.

One cause for concern is the balance sheet. Net debt now stands at £43.9bn. This could spell trouble for the dividend, especially since cover is low at 1.2 times earnings.

However, National Grid has a high degree of regulatory protection. Accordingly, I don’t see its liabilities as an existential threat, even if the dividend comes under pressure.

Still, payouts weren’t cut in 2008 or during the pandemic, so I’m optimistic the company could take the next crisis in its stride.

Charlie Carman does not own shares in National Grid. 


What it does: Family-owned Nichols makes Vimto and a range of other soft drinks. This £350m business is listed on London’s AIM market.

By Roland Head. Branded soft drinks are usually regular repeat purchases. Nichols (LSE: NICL) delivered reliable results for many years prior to the pandemic, with operating profit rising from £17.8m in 2014 to £32.4m in 2019.

Sales slumped when Covid-19 lockdowns caused out-of-home sales to collapse. However, changes made to the business since then look smart to me. I think Nichols is building back stronger.

Long term, there’s a risk that Vimto could fall out of fashion. But there doesn’t seem to be any sign of this yet. Nichols’ first-quarter results showed rising sales volumes in the UK and highlighted growth opportunities in the Middle East – an important market for the firm.

A record net cash position of £73m provides further reassurance for me.

Nichols’ share price remains well below its historic highs. The shares do not look too expensive to me. I see this as a stock to tuck away for the future.

Roland Head does not own shares in Nichols.

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.

The Motley Fool UK has recommended Diageo Plc and Nichols Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Top Stocks

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

3 UK stocks Fools think could make a mockery of analyst earnings forecasts

Though we're long-term investors here at The Motley Fool UK, every shareholder likes to see a spike in their stock…

Read more »

Young black female footballer training on stadium pitch
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 »

photo of Union Jack flags bunting in local street party
Top Stocks

3 UK shares Fools would buy ahead of the Magnificent Seven

Sometimes it's hard for investors to see the forest for the trees. When much coverage is focused on the Mag…

Read more »

Investing Articles

4 AI stocks Fools love for game-changing potential

Four stocks operating in the artificial intelligence (AI) space -- and not one is Nvidia!

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

4 UK shares outperforming their US rivals

Two of our five Foolish contributors highlighted recent gains from shares of the same UK bank...

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

Best British growth stocks to buy in July

We asked our freelance writers to reveal the top growth stocks they’d buy in July, which included a recent IPO...

Read more »

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

Best AIM stocks to buy in July

We asked our writers to share their best AIM-listed stocks to buy in July, featuring two manufacturers.

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Best US stocks to buy in July

We asked our freelance writers to reveal the top US stocks they’d buy in July, which included two Share Advisor…

Read more »