Just over a month remains from Britain exiting the Brexit transition period. A frictionless (or as smooth as practically possible) separation from the EU had been hoped for. But instead, the possibility of an economically-painful no-deal Brexit looms large on the horizon. It’s a scenario that threatens the long-term profits outlooks of a large number of UK shares. And it could put paid to the healthy stock market rally that promising Covid-19 vaccine news recently prompted.
It’s clear than stock pickers need to be extremely careful before investing their hard-earned cash. Brexit has been a key consideration for me as I’ve built my Stocks and Shares ISA in recent years. But it hasn’t caused me to lose any sleep. There are still plenty of UK shares that should deliver enormous shareholder riches, whatever happens in the coming weeks.
3 top UK shares on my ISA radar
Here are three dividend-paying UK shares I’d buy to protect myself from a no-deal Brexit:
1) Severn Trent
Water supplier Severn Trent is one of the safest picks out there as Brexit clouds the economic outlook. Demand for its water isn’t going to drop in 2021 or beyond, even if UK and EU negotiators fail to seal a deal. It also doesn’t face the threat of potentially-cash-strapped customers switching supplier to find a better deal. The same can’t be said for other utilities providers such as power suppliers Centrica and Telecom Plus. Today, Severn Trent carries a mighty 4% forward dividend yield, making it a great buy for income investors.
2) 4Imprint Group
A no-deal Brexit would cause significant economic harm to the UK economy. And the damage would, in all likelihood, persist for years too. However, countries on the English Channel wouldn’t be immune to any harm either. So why not buy UK shares that have little or no exposure to Europe? One top share that fits in this category is 4Imprint Group. The promotional products supplier generates a whopping 97% of revenues from North America versus just 3% from Britain. Okay, its 0.5% dividend yield for 2020 isn’t the biggest. But I believe 4Imprint’s a great buy anyway as it grows its customer base at an astonishing pace.
3) Stock Spirits Group
Buying UK shares that don’t report in sterling is a great way to Brexit-proof a stocks portfolio too. This strategy doesn’t just allow investors to protect themselves from a falling pound. It allows them to capitalise on it as companies that report in foreign currencies receive a profits boost when sterling drops. I’d buy Stock Spirits Group to play this theme as it reports in euros. What’s more, it has terrific defensive qualities as alcoholic drinks demand remains strong, even when economic conditions worsen. And it generates just a fraction of revenues from these shores. Today, Stock Spirits sports a bulky 3.5% forward dividend yield.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended 4imprint 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.