I think these two FTSE 100 companies could be immune from Brexit

Rupert Hargreaves highlights two FTSE 100 (INDEXFTSE: UKX) companies with what he sees as Brexit-proof business models.

| 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.

Brexit is by far the most significant risk UK investors face over the next six months, but you don’t need to let this keep you awake at night.

Today, I’m looking at two FTSE 100 stocks that could be immune from any Brexit fallout. As a result, I believe they’re the perfect buys to protect your portfolio against uncertainty.

Data is king

Firstly, I think information services business Experian (LSE: EXPN) can help you weather the Brexit storm.

This company is one of the three major credit rating agencies in the world, making it the go-to credit rating agency for banks and financial services firms who want to check the credit ratings of potential customers. The group provides credit services for more than 230m people in the United States alone which, in my opinion, means it is ideally positioned to ride out Brexit.

Experian’s position in the data services market would be difficult for any potential competitors to replicate because the company has spent decades building its place in the market and data advantage. These traits just can’t be reproduced overnight.

With this being the case, I think the company is worth its current valuation of 24 times forward earnings. I would usually consider this expensive, although considering Experian’s competitive advantage and international diversification, I think it’s a price worth paying. 

Shares in the company also support a dividend yield of 2%, which is covered twice by earnings per share (EPS).

Critically important

My next Brexit-proof pick is National Grid (LSE: NG). As the owner and operator of the majority of the UK’s electricity infrastructure, National Grid is a highly defensive investment. The company’s earnings are extremely predictable because the majority of its contracts are fixed for several years. 

And not only does the company have a stable business in the UK, but it’s also expanding in the US, where there’s scope for significant growth. For the past few years, National Grid has been spending more in the US building out its electricity network than it has in the UK. This part of the group is rapidly becoming the group’s main profit centre.

On top of the international diversification, National Grid’s dividend yield is highly appealing. Management has declared that the company will grow its payout at a pace that at least matches inflation over the medium term, which should help maintain its status as one of the most reliable income investments in the FTSE 100. Shares in this international utility enterprise currently support a dividend yield of 5.8%, significantly above the broader market average. 

As my colleague, Peter Stephens recently pointed out, this level of income, coupled with National Grid defensive nature and international exposure, should protect investors’ portfolio at a time when prospects for the UK and world economies remain uncertain.

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 no share mentioned. The Motley Fool UK has recommended Experian. 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.

More on Investing Articles

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »

Investing Articles

2 FTSE dividend shares yielding more than 6% with P/Es of less than 9!

Harvey Jones picks out two brilliant FTSE 100 dividend shares that yield more than 6% but are selling at strangely…

Read more »