35% of investors have abandoned UK assets! Will these FTSE 100 dividend stocks sink or surge as Brexit drags on?

Brexit continues to smash demand for UK assets. So how should you protect yourself? Royston Wild talks about how investors can get richer from the FTSE 100 (INDEXFTSE: UKX).

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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’s no surprise investors are getting cold feet over buying (or even holding) UK assets right now. The threat of a no-deal Brexit and the possibility of a subsequent economic meltdown is worrying enough for the investment community.

But with Parliament prorogued, the main political parties splitting, and British courts even suggesting the prime minister has been lying to the queen, Britain’s reputation as a safe and sensible place to invest in is being shot to pieces.

And this is prompting a mass exodus of investors from UK assets, as recent data from deVere Group shows.

Hitting the exits

The financial consultancy firm, which has more than $12bn under management, advises it has seen a 35% spike in the number of homegrown and international investors who are cutting their exposure to UK assets since Boris Johnson became PM in July.

As if this wasn’t bad enough, deVere CEO Nigel Green suggested things could get even worse: “There is no end in sight to the unprecedented political chaos in the UK… indeed, it looks set to continue to spiral downward and the uncertainty to intensify.”

He added that “unless the toxicity surrounding Brexit stops… investor confidence will continue to decline and even more British domestic and international investors with exposure to UK assets will continue to move assets away from the UK.”

Banks in bother

This bearishness is already having a devastating impact on scores of British stocks, both large and small. Take Britain’s biggest high street banks Lloyds, Barclays and RBS, for instance.

These FTSE 100 shares began to sink again around mid-April, the point at which British and EU lawmakers agreed to prolong the Brexit uncertainty by extending the withdrawal deadline to October 31. Since the referendum of June 2016 these three banks have lost between 20-30% of their value, and it’s quite probable investors will keep sprinting towards the exits as the tough political and economic environment pushes revenues down and bad loans up.

Better dividend buys

Not even the attraction of huge forward dividend yields at the banks (which all sit north of 6% for the trio mentioned) is enough to tempt buyers in right now. No shock here, then. Why take a chance with such high-risk, UK-focussed stocks like these when there’s plenty of other Footsie income shares benefitting from the current turmoil in Britain?

deVere’s Green notes “a growing number of those who are serious about building and safeguarding their wealth are exploring legitimate overseas options.” And this is evident from the climbing share prices of dividend growth favourites such as Ashtead and Smurfit Kappa in recent months, not to mention of big-yielders including Vodafone (forward yield: 5.1%) and GlaxoSmithKline (4.8% forward yield).

There’s a variety of other tactics investors can employ to protect themselves from — or actually get rich from — the current Brexit malaise. That includes buying stocks that report in foreign currencies and so benefit from a decline in the pound, or purchasing classic safe-havens like precious metals producers (Fresnillo) or defence plays (BAE Systems).

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Barclays, Fresnillo, and Lloyds Banking Group. 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 Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

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

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

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

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »