£5k to spend on your ISA? A FTSE 100 dividend stock I think could protect you from Brexit
Another week down in the British political cauldron yet the destiny of the UK and its withdrawal from the European Union remains as clear as mud.
What is undisputed, however, is that we’re less than a week away from a planned departure from the continental trading club but Brussels lawmakers are still to sign off an extension. This leaves the possibility of a no-deal Brexit on Thursday the 31st very much in play.
Right now, an economically-disastrous disorderly exit, or prime minister Boris Johnson’s withdrawal agreement — a deal which official estimates show would damage GDP growth by around 7% over the next 15 years — are the only realistic games in town. It’s clear investors need to tread carefully right now given the colossal threats to the UK economy in the near term and beyond.
That said, there are an abundance of great FTSE 100 shares that should thrive whichever way Brexit resolves itself. Take National Grid (LSE: NG), for example. It’s quite obvious why earnings visibility here is so robust — we will continue to use electricity in increasing amounts thanks to our ever-growing population, whether or not we are in the European Union.
And, as the UK’s sole power network operator, National Grid is well placed to capitalise on this. Sure, doubts over the future of the blue-chip’s monopoly have grown over the past couple of years as Labour has ramped up plans to renationalise the county’s utilities and transport providers.
But let’s face facts. Jeremy Corbyn’s plans to usher the likes of National Grid back under the cloak of the state are a thing of fantasy. Latest polling data from Britain Elects shows Labour polling at 25%, several furlongs behind the Conservatives’s 35%. And this makes the prospect of the left-wing party securing the needed Commons majority to pass such legislation looking slimmer than a stick insect.
Making it big in America
It’s worth remembering too, that the Footsie firm’s tentacles stretch far beyond these shores. It has a significant footprint on the Eastern Seaboard of the US where it currently serves around 3.4m electricity and 3.6m gas customers. National Grid has big plans here with an intention to build its asset base by around 8% over the medium term, built on the back of modernising America’s creaking power infrastructure, and its steady move towards ‘green’ energy sources.
It’s no surprise, in this environment of rising Brexit-related tension, to see National Grid’s share price surge to its highest in nearly two years, above 907p, this week. And I would argue that the company’s undemanding forward P/E ratio of 15.4 times gives it much more scope to rise in the weeks and months ahead.
Throw a bulging corresponding dividend yield of 5.4% into the bargain and I think the power play is a brilliant share to buy right now.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
Motley Fool UK 2019