Rising Covid-19 infection rates, uncertainty over coronavirus vaccine effectiveness, and the threat of a no-deal Brexit. These are all issues UK share buyers need to seriously consider when investing for 2021.
But these problems are no reason why share investors should stop buying equities altogether. Here are three FTSE 100 stocks I think should thrive next year, regardless of the broader economic landscape.
#1: Safe as houses
An uncertain economic outlook makes Reckitt Benckiser Group (LSE: RB) an ideal pick for UK share investors. It can expect demand for its goods to pick up should shopper spending power bounce back. However, sales here should remain robust irrespective of any recovery. Products such as Dettol disinfectant, Harpic bleach and Vanish stain-removers are must-haves, irrespective of whatever social, economic or political chaos is raging outside our windows.
In fact, companies with popular brands like Reckitt Benckiser stand to gain in a post-Covid-19 landscape. Studies have shown customers have flocked to familiar and trusted labels in 2020 as the world’s been turned upside down. A rising awareness of personal hygiene has also turbocharged demand for the FTSE 100 firm’s germ-killing and laundry-cleaning goods during this calendar year. These changing consumer habits are here to stay too.
#2: A FTSE 100 medical marvel
Healthcare stocks are, of course, reliable investments for uncertain times like these. We don’t stop buying drugs en masse when economic conditions become tough, right? This is why I’d buy GlaxoSmithKline (LSE: GSK) for my Stocks and Shares ISA today.
There are many UK pharmaceutical shares for investors to choose from today. But I rate this one for a variety of reasons. I like its terrific geographic exposure, a quality that should underpin strong profits growth in the 2020s as healthcare investment in emerging markets soar. Glaxo’s market-leading products in a variety of therapy areas is also quite appealing.
Finally, I think Glaxo shares look pretty undervalued today. The FTSE 100 giant trades on a price-to-earnings (P/E) ratio of 12 times for 2021. It carries a 5.7% dividend yield too. These figures make the drugs manufacturer one of the best-valued stock on the Footsie.
#3: Another reassuring UK share
Power operator National Grid (LSE: NG) is also one of the safest UK shares for a tough economic climate. Okay, the business isn’t totally immune to downturns as bad debts can rise. But, largely speaking, the essential nature of its operations means it remains a reliable profits generator. This is what makes the business such a great pick for dividend investors.
As the experts at Hargreaves Lansdown comment: “Heavily regulated monopolies have tended to be relatively predictable, and this means they should be able to afford to pay reasonable dividends.”
And the broker reckons National Grid’s dividend should be “sustainable”, despite the obvious regulatory uncertainty that firms like these face.
At current prices, this FTSE 100 share also sports a gigantic forward dividend yield of 5.7%. This makes it a perfect buy for income investors who’re nervous about a lumpy economic recovery in 2021.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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.