Investors need to be prepared for any stock market crash. Steep falls in the market are an inevitable part of the economic cycle and it’s certain there will be another one at some point. With this in mind, I think it’s prudent for at least part of an investor’s portfolio to be based on dividend-paying stocks that provide dependable income through thick and thin.
An ideal share to hold through any future stock market crash
Severn Trent (LSE: SVT) is a company I’ve long admired and watched. As a utility company, it’s a steady FTSE 100 dividend share. Investors can expect income in all economic conditions, even in the steepest stock market crash.
On top of that, the company has good visibility of earnings as these are regulated by Ofwat. This means it can forecast earnings accurately and plan expenditure. The lack of surprises makes it a share that I think is worth owning.
The pandemic is costing Severn Trent money, up to £85m worth of revenue this financial year. However, the utility company will be allowed to recoup this in 2022–23. The group is also confident of its ability to earn outperformance targets set by the regulator, which will be a boost.
Providing a dividend yield of just over 4% – based on its current share price at the time of writing – I think Severn Trent makes for an ideal FTSE 100 dividend share.
A company that is beefing up through the pandemic
RELX (LSE: REL) is a lower-yielding FTSE 100 dividend share. It’s a data, subscriptions, and events business all rolled into one and it’s the latter that has hit its share price this year as large gatherings are cancelled. However, events are only 16% of group revenue, so I think the share price fall is overdone. The shares have fallen by 10% so far this year.
The company has been on a buying spree over the last 12 months. It has spent nearly £1bn on a range of acquisitions. The pandemic has created opportunities for it to buy struggling smaller companies at reduced prices, while also giving it more data and analytics power. These are likely to be growth markets both in the near term and for a long time into the future.
It’s a share the veteran buy-and-hold investor, Nick Train, holds in his UK Equity fund. It’s dependable and steady, and I think in uncertain times this is a very welcome characteristic. Especially if there’s a stock market crash.
RELX isn’t a high-yielding stock, at 2.7%. What there is though, is the potential for share price growth, as well as dividend growth. This makes it a great FTSE 100 dividend share in my view. It’s a stock I’d be happy to buy and hold and to own through any future stock market crash.
