How to Protect Your Investment Portfolio During Corona Pandemic?

Summary

• It is ideal to look for FTSE 100 businesses with lesser risks, higher market cap
• Investors can look for dividend-paying stocks in these unprecedented times
• Stocks with lesser volatility and good returns could help beat the recession
• Investors should review their portfolio performance periodically and if necessary, make necessary changes to achieve their goals

The investors are always fearful of a stock market crash. As the novel coronavirus washed up the shores of the United Kingdom, a lot of investors wealth has been eroded. The benchmark FTSE 100, which was hovering around 7,500 mark, just when the pandemic struck the UK market in the last week of February, soon lost its way and slipped below 5,000 mark in a month’s time.

There are certain indicators used by experts, which hints us towards a possibility of correction or recession period. Therefore, we need to fine-tune our portfolio and make it resilient to a stock market crash. However, nobody can really predict the future or guarantee returns.

On the same time, there are many experts who see these kinds of phases as an opportunity to invest, as the market has corrected a lot. Businesses are fairly priced, and a strong moat would surely attract investors looking to park their money in these uncertain times.

Investors usually rush to safe havens in tough market conditions. One of the things that they look for is reliable dividend payments. Investors can look forward to dividend-paying stocks while customising their portfolio. Resilient businesses with a strong balance sheet, less debt, less volatility, and stable cash flows are preferred by investors during challenging times.

In this article, we would discuss some stocks with resilient businesses, solid top-line, and market capitalisation along with other measures based on top-down investment approach. These methods do not guarantee to make a portfolio increase but will ensure the safety of investments and profitability in the long-term.

• Tesco Plc (LON:TSCO)

Tesco Plc is a Welwyn Garden City, the United Kingdom-headquartered retail company and is amongst the world's largest consumer goods’ retailer. The group mainly operates as a grocery retailer but also offers insurance and retail banking services. Tesco’s statutory revenue was up by 1.3 per cent to £64.8 billion in FY20. Tesco’s annual dividend stood at 9.15 pence per share in 2020.

The catastrophe caused by the novel coronavirus has led people to rush for their groceries, and they were seen stockpiling processed food products and other essentials as the prevalent conditions looked grim. This led to a surge in demand for food retailer offerings and for those who supply value-added products to the UK food retailers and food product services. Market experts are bullish on the UK’s packaged food distribution and food retailing businesses for FY21 and expect volume, sales, margin, and profitability to increase significantly in the near term.

The company paid 95.8 per cent of its earnings to shareholders in the form of dividends. The annual dividend yield of the company stood at 4 per cent. On 1st June 2020, while writing at 9:34 AM, before the market close, Tesco Plc shares were marginally up by 0.96 per cent against its previous day closing price; last traded at GBX 230.50. Stock's 52 weeks High and Low is GBX 258.90 /GBX 211.20. The beta of the company stood at 0.69, reflecting lesser volatility as compared to the benchmark index. Tesco Plc’s market capitalisation stood at £22,358.55 million.

During the meltdown caused by the pandemic, Tesco shares created a bottom of GBX 211.20 on 12^th March 2020. Since then, the stock has generated a price return of 8.10 per cent, which proves the resilience of the business model.

• Unilever Plc (LON:ULVR)

Unilever Plc is an FMCG company with an international presence. For the first quarter of 2020, Unilever’s turnover was marginally up by 0.2 per cent to €12.4 billion. The quarterly dividend of the company stood at € 0.4104 per share.

The company paid 75.1 per cent of its earnings to shareholders in the form of dividends. The annual dividend yield of the company stood at 3.3 per cent. On 1st June 2020, while writing at 9:48 AM, before the market close, Unilever Plc shares were marginally down by 0.46 per cent against its previous day closing price, at GBX 4,312. Stock's 52 weeks High and Low is GBX 5,324.00 /GBX 3,726.00. The beta of the company stood at 0.51, reflecting lesser volatility as compared to the benchmark index. Unilever Plc’s market capitalisation stood at £ 50,620.75 million.

During the meltdown caused by the pandemic, Unilever shares created a bottom of GBX 3,726.00 on 16^th March 2020. Since then, the stock has generated a price return of 16.26 per cent, which proves the resilience of the business model.

• GlaxoSmithKline Plc (LON:GSK)

GlaxoSmithKline Plc is a healthcare company, which focuses on the manufacturing, commercialisation, and development of consumer healthcare products. The company delivered strong sales in the first quarter of 2020, which were up by 19 per cent on a constant exchange rate to £9.1 billion. The quarterly dividend stood at 19 pence per share.

The company paid 85.3 per cent of its earnings to shareholders in the form of dividends. The annual dividend yield of the company stood at 4.8 per cent. On 1st June 2020, while writing at 10:24 AM, before the market close, GlaxoSmithKline Plc shares were marginally down by 0.42 per cent against its previous day closing price; at GBX 1,664.80. Stock's 52 weeks High and Low is GBX 1,846.00 /GBX 1,374.60. The beta of the company stood at 0.76, reflecting lesser volatility as compared to the benchmark index. GlaxoSmithKline Plc’s market capitalisation stood at £83,875.74 million.

During the meltdown caused by the pandemic, GlaxoSmithKline shares created a bottom of GBX 1,374.60 on 23rd March 2020. Since then, the stock has generated a price return of 21.62 per cent, which proves the resilience of the business model.

• BT Group Plc (LON: BT.A)

BT Group Plc is a telecommunication services company. The telecom sector has been one of the sectors which remained least impacted by the novel coronavirus.

The company paid 26.4 per cent of its earnings to shareholders in the form of dividends. The annual dividend yield of the company stood at 13.2 per cent. On 1st June 2020, while writing at 10:33 AM, before the market close, BT Group Plc shares were marginally up by 3.23 per cent against its previous day closing price; at GBX 120. Stock's 52 weeks High and Low is GBX 209.50 /GBX 101.40. The beta of the company stood at 0.86, reflecting lesser volatility as compared to the benchmark index. BT Group Plc’s market capitalisation stood at £11,488.07 million.

During the meltdown caused by the pandemic, BT Group shares created a bottom of GBX 101.40 on 13th May 2020. Since then, the stock has generated a price return of 14.64 per cent, which proves the resilience of the business model of the company.

Comparative Share price chart of TSCO, ULVR, GSK and BT.A

(Source: Thomson Reuters)