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A ‘Brexit-proof’ FTSE 100 dividend stock I want to buy for my ISA this year

Having a bit of exposure to stocks that are insulated from Brexit is a sensible idea, in my view. Of course, right now, we have no idea how Brexit will actually play out, or how it will affect the UK economy. But there certainly is a chance that it could have a negative impact on the economy, so hedging your portfolio is a smart move.

With that in mind, here’s a look at one Brexit-proof FTSE 100 dividend stock I’m interested in buying for my ISA this year and watching closely right now.

Global healthcare

Smith & Nephew (LSE: SN) is a leading healthcare company that specialises in joint replacement systems for knees, hips, and shoulders. It operates in 100 countries and generates a large proportion of its revenues from the US and emerging markets, meaning that it should be well insulated from any Brexit-related economic downturn.

There are a number of reasons I like the look of Smith & Nephew and I am keen to add it to my portfolio. For starters, the stock looks set to benefit from an extremely powerful trend – the world’s ageing population. According to data from United Nations, the number of people aged 60 or over across the world is set to double by 2050. This should provide significant tailwinds for the group in the years ahead as demand for joint replacements rises.

The group’s emerging markets exposure (17% of revenue) is another plus. When a country experiences a rise in wealth, one of the first things you often see is a corresponding rise in demand for healthcare. With wealth set to rise significantly in countries such as China and India over the coming decades, Smith & Nephew should benefit.

Technological advances

The FTSE 100 stock also looks quite exciting from a technological perspective, in my opinion. Just a few weeks ago, the group announced that it was “making a long-term commitment to bring together advanced technologies in robotics, digital surgery, and machine learning as well as augmented reality to empower surgeons and improve clinical outcomes.”

As I mentioned recently, robotics has come a long way in recent years and what robots can do these days is quite amazing. The fact that Smith and Nephew is currently working on a handheld robotic surgical system that is designed to “improve the surgeon experience” is certainly a positive development.

Dividend legend

Finally, Smith & Nephew is a legendary dividend stock, as the group has paid a dividend every year since 1937. Dividend coverage is high too, meaning the chances of a cut in the near term are low. Currently, the yield is around 2%.

The shares have had a good run over the last year and currently trade on a forward-looking P/E of 19.7. While I don’t think that’s outrageously expensive for a high-quality dividend stock with a lot of potential, I would prefer to pay a slightly lower price. So for now, patience is required. I’ll be looking to buy this stock during the next market pullback.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.