The start of a new year is usually a time when investors look for stocks to buy for their portfolios. The enthusiasm is often driven by a ‘new year, new me’ narrative. Known as the ‘January effect’, it can be an advantageous time to invest.
The combination of tax-loss harvesting, bonus-driven cash flows and small-cap optimism typically make for a bumper month. But somehow, 2026’s already sent ripples of volatility through global markets — and it isn’t even February yet.
From US tariffs and Middle East tensions to the China slowdown and spiking energy prices, it’s hard to know what’s what. Even the most experienced analysts are at their wits end trying to forecast this market.
So how should British investors navigate this maelstrom of unexpected turbulence?
Stop the ride, I wanna get off!
As a stock market investor, it might seem like a good time to throw in the towel, take profits, and stash all your cash in a pillow. But before you run for the hills, consider this: not all shares are created equal, and some benefit from cast-iron resilience.
So when things get rocky, it’s a good time to look at the sectors that have staying power — and one I really like is utilities. These aren’t flashy tech plays. They’re the boring-but-brilliant builders of Britain’s future, from power grids to water pipes.
With falling interest rates and a net-zero push, they offer reliable dividends and growth that could compound nicely over the next 10-20 years.
Let’s unpack why they’re worth a look
While US tariffs on steel and aluminium impact manufacturers, UK infrastructure looks well protected. This is largely thanks to domestic supply chains and favourable regulations supporting stable revenues.
With £38bn being fast-tracked into nuclear and grid upgrades, the utilities sector promises a compelling defensive mix of above-average yields and real growth from Britain’s infrastructure push.
National Grid‘s the most likely to benefit from this headwind, but investors seeking growth with defensive characteristics should also consider SSE (LSE: SSE). Its yield is currently low, at only 2.7%, but it targets dividend increases of 5%-10% annually through 2026-27. Plus, it’s well-positioned as a ‘golden age’ renewable play with moderate-to-high earnings growth forecast through the decade.
Deutsche Bank expects earnings to almost double by the early 2030s, noting how recent strong performance is supported by well-regulated, inflation-linked UK assets. The shares are up 31% in the past six months alone.
But all this renewable expansion, net-zero focus and grid modernisation isn’t cheap. Much like National Grid, SEE’s balance sheet looks strained, with debt outweighing equity by 1.35 times. For now, interest coverage is sufficient — but increasing costs or regulatory price changes pose a risk.
If debt becomes a priority, dividend growth might slow.
Final thoughts…
Utilities present a strong case for being the most resilient stocks in 2026. Healthcare and consumer staples are also strong contenders, but for stable, regulated cash flow, utilities are hard to beat.
SSE’s defensive model and dividend trajectory make it appealing, and the valuation looks attractive at 9.4 times forecast earnings. Although political uncertainty around post-2029 net-zero policy could temper growth, it’s well-shielded from tariff threats and global unrest
For long-term investors hoping to reduce risk without exiting the market, defensive stocks like SSE are worth a closer look.
