5 Shares To Protect Your Portfolio From A Market Meltdown: National Grid plc, United Utilities Group PLC, GlaxoSmithKline plc, British Sky Broadcasting Group plc And AstraZeneca plc

National Grid plc (LON: NG), United Utilities Group PLC (LON: UU), GlaxoSmithKline plc (LON: GSK), British Sky Broadcasting Group plc (LON: BSY) and AstraZeneca plc (LON: AZN) are five shares you can rely on to protect your portfolio.

| More on:

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 getting stormy out there in the markets. The Eurozone crisis is beginning to rear its ugly head once again and with markets at all-time highs, many investors are looking for a reason to sell. 

So, now could be the perfect time to shift your portfolio on to a more defensive stance. 

The best way to build a defensive portfolio is look to look for companies with shares that support a high-dividend yield and have a low beta. Simply put, beta is a measure of risk, comparing the share in question to the wider market.

Should you invest £1,000 in AstraZeneca right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if AstraZeneca made the list?

See the 6 stocks

Specifically, a beta of one indicates that the company’s share price will move with the market. A beta of less than one means that the shares will be less volatile than the market, and a beta greater than one indicates that the company’s shares will be more volatile than the market. 

Low risk gsk

GlaxoSmithKline (LSE: GSK) has one of the lowest betas and highest dividend yields in the FTSE 100. At present, the company supports a dividend yield of 5% and the shares have a beta of 0.4, implying that for every 1% the market moves, Glaxo’s shares will only move 0.4%.

What’s more, Glaxo’s shares are now trading at one of the lowest valuations in the biotechnology sector. The company trades at a historic P/E of 14 compared to the sector average of 18.

AstraZenecaTakeover chatter 

Glaxo’s peer, AstraZeneca (LSE: AZN) is another low-risk company, although after Pfizer’s recent offer for the company, Astra’s shares are trading at a high valuation multiple and the dividend yield is nothing to get excited about. 

At present, Astra offers a dividend yield of 3.8%, attractive in this low interest rate environment but low compared to that of Glaxo and other companies mentioned within this piece. Still, the company’s shares have a beta of 0.2 indicating that for every 1% the market moves, Astra’s shares will only move 0.2%. 

Slow and steadynational grid

Due to its defensive nature, National Grid (LSE: NG) is a stable investment to own. Indeed, with a beta of 0.4 and a dividend yield of 5%, the company’s shares would suit any risk-averse portfolio. Additionally, due to the nature of National Grid’s business, the company’s profits are stable and predictable, which has allowed the company’s management to state that the dividend payout will rise in line with inflation for the foreseeable future. 

With a hefty dividend yield and low risk, it’s no surprise that investors are willing to pay a premium for National Grid’s shares. The company currently trades at a forward P/E of 15.6, which may put some investors off. 

United UtilitiesThe lowest of the low

As a utility company, United Utilities (LSE: UU), by its very nature is defensive, so it comes as no surprise to learn that the company’s shares are some of the most defensive in the FTSE 100. For example, United’s shares have a beta of 0.15, implying that for every 1% the index moves, United’s shares will only move by 0.15%. 

With this being the case, it is likely that in the event of a market downturn, United’s shares will hardly budge. Couple this with the company’s 4.1% dividend yield and you have a perfect defensive stock. 

Media giantsky

The last company on my portfolio protection list is British Sky Broadcasting (LSE: BSY). Known for its free cash flow, BSkyB’s management has made it its mission to put shareholders first. During 2013 the company returned £1.1bn to investors though both share buybacks and dividend payouts — that’s around 8% of the company’s market capitalization. 

And the company would make a great fit for any defensive portfolio, as at present, BSkyB offers a dividend yield of 3.5% and the shares have a beta of 0.5.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Rupert Hargreaves owns shares in GlaxoSmithKline. The Motley Fool recommends British Sky Broadcasting and GlaxoSmithKline.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

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

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »