It stands to reason the coronavirus is dominating media attention right now. A surge in the infection rate has caused the FTSE 100 to reverse in Monday trading following a bubbly start earlier in the day.
I recently explained why buying shares in defensive sectors like real estate is a good idea today. There are plenty of other flight-to-safety stocks on the Footsie that can help protect your stocks portfolio in turbulent times like these too.
Take BAE Systems, for example. This is a share that’s lost 4% in value during February’s financial markets bloodbath. Compare this with the 10% decline that the broader FTSE 100 suffered last month.
A safe-haven star
Just as a high tide lifts all boats, the sort of investor panic we’ve seen of late can drag even safe-haven stocks through the floorboards. But this is a share which is too good to pass up at current prices. It trades on a forward P/E ratio of around 12.5 times and boasts a bulky 4% dividend yield for 2020.
Companies of all shapes are warning on profits right now. From tech giant Apple to sportswear manufacturer Nike, to drinks maker Diageo and banking colossus HSBC to travel titan International Consolidated Airlines, the global coronavirus spread is whacking countless industries.
Defence plays like BAE Systems are more resilient in tough times like these though. Without trying to sound cynical, humankind’s desire to wage war is eternal and can be relied upon to deliver broad long-term profits growth for armsbuilders.
The tragic COVID-19 outbreak isn’t likely to adversely affect bulky defence budgets from key Western customers. There’s far too much fear about global terrorism, and increasingly-aggressive foreign and economic policy from major nations to derail weapons spending. A 7% improvement in BAE Systems’ revenues in 2019, to £20.1bn, is evidence of this.
If you don’t fancy BAE Systems though, United Utilities Group or National Grid are other great safe-haven shares for today. Even if coronavirus infection rates keep increasing in Britain. And even if the Brexit process damages the domestic economy in the long term, or broader global growth problems hit these shores. Electricity and water are two of those things that we simply cannot choose to do without.
Water supplier United Utilities and power grid operator National Grid remain in good shape to keep growing earnings. They also have sole concession in the areas in which they operate, the former in the North West of England, and the latter on a nationwide basis, providing even more robustness to their earnings outlooks.
Like BAE Systems, these firms’ share prices are up in otherwise difficult trading conditions on Monday. I expect them to keep outperforming broader share markets should current volatility persist. And what’s more, these utilities giants offer bulky yields of between 4.5% and 5% too.
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Royston Wild owns shares of Diageo. The Motley Fool UK owns shares of and has recommended Apple and Nike. The Motley Fool UK has recommended Diageo and HSBC Holdings. 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.