As we move closer and closer towards the end of 2020, the chances of a no-deal Brexit are increasing. As such, I’ve bought two FTSE 100 stocks to protect myself from this undesirable outcome.
No-deal Brexit stocks
The FTSE 100 is the perfect place to look for domestic companies that may be able to navigate a no-deal Brexit. More than 70% of the index’s profits come from outside the UK. This gives it significant insulation from the domestic economy.
There are a couple of companies that are more international than most. Take Unilever (LSE: ULVR), for example. This FTSE 100 company is headquartered in the UK, but more than 50% of its sales take place in emerging markets. The UK business is relatively small in comparison.
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What’s more, as one of the world’s largest consumer goods companies, even in the most pessimistic no-deal scenario, I don’t think there’s going to be a substantial decrease in sales of the company’s products in the UK.
I reckon it’s highly unlikely consumers will stop buying items such as Marmite and Oxo stock cubes in a no-deal Brexit, or stop washing.
That’s why I’ve bought the stock to protect my portfolio from a messy divorce.
I believe that no matter what happens between the EU and the UK over the next few weeks, Unilever’s sales are unlikely to see significant disruption.
At the same time, the stock also supports an extremely desirable 3% dividend yield.
FTSE 100 growth champion
Another company I’ve been buying recently is Reckitt Benckiser Group (LSE: RB). I think this organisation exhibits similar qualities to its peer Unilever.
Reckitt’s product mix is focused on cleaning and health, whereas Unilever is probably better known for its food and personal grooming products.
Still, the thesis remains the same. The majority of Reckitt’s sales take place outside the UK.
Moreover, it’s unlikely consumers will stop buying its cleaning and healthcare products in the event of a no-deal Brexit. This is especially true in the middle of a pandemic.
And I’m optimistic about the medium-term outlook for the FTSE 100 business. A new CEO has recently started to make his mark on the group, unrolling initiatives such as cost-cutting and a multi-billion-pound investment plan. The goal of this plan is to reinforce the company’s product portfolio and pipeline.
In my opinion, investing for growth is always the best use of cash, as long as the money isn’t wasted. New products can lead to earnings growth, and that should translate into higher total returns for investors.
Therefore, I reckon Reckitt could be an attractive investment not just for the next few months, but for the next few years as well. Like its FTSE 100 peer Unilever, the stock also offers an attractive dividend yield. It currently sits around 2%. That’s more than double the rate offered by most savings accounts on the market right now.
