Beat The Election With National Grid plc, Severn Trent Plc And Pennon Group plc

These 3 stocks could help protect your portfolio against turbulence in the months ahead: National Grid plc (LON: NG), Severn Trent Plc (LON: SVT) and Pennon Group plc (LON: PNN)

| 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.

With the General Election less than a month away, many investors are understandably concerned about its possible impact on their portfolios. As such, defensive, low beta stocks could prove to be a great place to invest in the coming months. And, with that in mind, here are three stocks that fit the bill, but which also offer excellent long term potential, too.

National Grid

With a beta of just 0.8, National Grid (LSE: NG) (NYSE: NGG.US) should offer less volatility than the wider index moving forward. In fact, its share price should move by just 0.8% for every 1% change in the value of the FTSE 100 and, when you combine this with its highly defensive business model and robust earnings, it’s a great place to invest in the near term.

In addition, National Grid also offers a highly sustainable dividend yield of 5%. That’s because it has a comfortable payout ratio of 77% and, with its bottom line due to grow by 4% this year and 3% next year, it should be able to pay an increasing dividend in real terms over the medium term – even if inflation does rise from its present position of zero.

Severn Trent

A major attraction of buying a slice of Severn Trent (LSE: SVT) is the potential for a bid in future. That’s because the water services company has already been the subject of a failed bid attempt and, looking ahead, the stability and consistency that it offers looks set to appeal to an infrastructure or pension fund in future.

As well as the possibility of a bid, Severn Trent also offers superb defensive qualities. Like National Grid, it has a low beta of just 0.8 and this could prove to be a major advantage for its investors during the next few months. And, with a yield of 3.7%, it remains an appealing income stock, too.

Pennon

Fellow water services company, Pennon (LSE: PNN), also has bid potential and, like Severn Trent, also benefits from being out of the public and media spotlight. While fellow utilities that supply energy instead of water are seemingly under constant pressure to cut prices and offer better service to customers, Pennon and its water company peers are able to simply get on with generating a strong return for shareholders.

In this regard, Pennon has been a major success, with its shares rising by 55% in the last five years and also paying dividends equating to 26% of its share price from five years ago, too. And, looking ahead, a similar return is very achievable over the next five years, with Pennon currently yielding 4% and being forecast to grow its bottom line by 10% in the current year.

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.

Peter Stephens owns shares of National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

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

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »