Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Recession Proof FTSE Stocks Offering Income

By Investing.com (Tezcan Gecgil/Investing.com )Stock MarketsOct 30, 2020 08:40
uk.investing.com/analysis/recession-proof-ftse-stocks-offering-income-200449061
Recession Proof FTSE Stocks Offering Income
By Investing.com (Tezcan Gecgil/Investing.com )   |  Oct 30, 2020 08:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

In addition to health worries, worldwide economic uncertainty has been one of the pandemic's consequences so far in 2020. Many consumers have been cutting back on expenses. Yet, one expenditure that most of us cannot cut down on is utility bills.

Therefore, we will look at two FTSE 100 utility companies that investors may want to keep on their shopping list. They are United Utilities (LON:UU) (OTC:UUGRY) and SSE (LON:SSE) (OTC:SSEZY).

Investors Favour Utility Shares

Many market participants regard utility companies as recession-proof. Passive-income seekers also favor these businesses as they typically pay stable and juicy dividends. Rock-bottom interest rates mean dividend-paying shares are ever-more important for many long-term portfolios.

The second wave of the novel coronavirus continues to effect many countries, including the UK. According to a recent study by Imperial College London and Ipsos MORI:

"an estimated 128 people per 10,000 of England's population has the virus that causes COVID-19, compared to 60 as Oct. 5. This corresponds to 96,000 new infections each day."

Put another way, Britons, like billions of global citizens, could be getting ready for a long winter indoors. In that case, we can expect usage of electricity, gas and water to continue at high levels. With that information, let's take a look at 2 shares worth considering.

United Utilities 1-Year Chart.
United Utilities 1-Year Chart.

United Utilities

UK-based United Utilities supplies water and sewage services to the North West of England. Its customer base stands around 7 million people providing a relatively resilient business model.

In late September, the group released a trading update ahead of its half-year results, due on Nov. 25. Despite the pandemic, its overall operations are in line with the expectations for the full year 2020/21.

So far in the year, UU stock is down about 7%. On Oct. 29, it closed at 859.80p ($22.5 for U.S.-based shares). The current price supports a dividend yield of 4.92%. Forward P/E and P/S ratios are 19.80 and 3.20, respectively. We'd consider buying the dips in UU stock.

SSE

SSE's focus is on regulated electricity networks and renewables sources of electricity. In June 2019, the UK became the first major economy to legislate for "net zero" emissions by 2050.

SSE wants to lead the "green economic recovery," and bring all greenhouse gas emissions to net zero. For example, it is currently building the worlds' largest wind farm in Dogger Farm, off the east coast of Yorkshire.

SSE Monthly Chart.
SSE Monthly Chart.

On Sept. 30, the group released a trading statement ahead of its half-year results which will be released on Nov. 18. The group's profits from renewables account for more than a third of its current profits. The group plans to increase the percentage in the coming quarters. Management has also been working on ensuring net debt levels remain under control.

Year-to-date, the stock is down around 12%. On Oct. 29, SSE shares closed at 1,250p ($16.28 for U.S.-based shares). The current dividend yield stands at 6.27%. Forward P/E and P/S ratios are 18.55 and 1.94, respectively. We like the stock as SSE is a robust investment in the future of renewable energy in the UK.

Bottom Line

As we enter the last quarter of the year, investor risk appetite remains sluggish while volatility remains high in many markets. Investors who are interested in exchange-traded funds (ETFs) with a focus on utility shares may also want to research the following funds:

  • Utilities Select Sector SPDR® Fund (NYSE:XLU)
  • iShares Global Utilities ETF (NYSE:JXI)
  • John Hancock Multifactor Utilities ETF (NYSE:JHMU)
  • Vanguard Utilities Index Fund ETF Shares (NYSE:VPU)

Finally, those investors who are interested in alternative energy sources may find the following ETFs appealing:

  • Invesco Solar ETF (NYSE:TAN)
  • First Trust NASDAQ® Clean Edge® Green Energy Index Fund (NASDAQ:QCLN)
  • VanEck Vectors Low Carbon Energy ETF (NYSE:SMOG)

We plan to return to the topic in the coming weeks.

Recession Proof FTSE Stocks Offering Income
 

Related Articles

Edison Group
Sareum Holdings: SDC-1801’s Clinical Plan Modified By Edison Group - Nov 24, 2021

Sareum's (LON:SAR) lead asset SDC-1801 is inching closer to completing its preclinical toxicology studies, although the decision to pursue a capsule alternative to the original...

Recession Proof FTSE Stocks Offering Income

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Joseph Ashipala
Joseph Ashipala Aug 01, 2019 16:30
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sir what is a micro double? look like the USD will be equivalent to Euro sooner.
Joseph Ashipala
Joseph Ashipala Aug 01, 2019 16:29
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sir what is a micro double?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email