FTSE 100 stocks are a core part of my investment strategy Generally, 50% of my capital is in low-risk stocks, 40% medium-risk, and 10% high-risk. Of course, risk assessment is subjective, and different investors will have differing opinions. I’m happier to have a slightly riskier portfolio, for the benefits of greater rewards.
However, there are plenty of scenarios where I might have a lower risk tolerance. If I were approaching retirement, I wouldn’t have the luxury of time to hold stocks through potential market dips. In a few years’ time, my eldest child will gain control of his Junior Stocks and Shares ISA, so I’m starting to divest it of riskier companies. Sometimes, a pot of money might be earmarked for a specific purpose. For example, savings for a wedding or car needs to be as low-risk as possible.
Of course, no investing is completely risk-free. However, I think these four FTSE 100 stocks to buy represent high stability.
Tesco is the largest grocery retailer in the UK with a market share of 27.4%. It has a market cap of £18.6bn, and is the third largest retailer in the world measured by gross revenue. At 241p, its share price is just below its five-year average of 270p. It has a dividend yield of 4.1%.
The company incurred pandemic costs, and is losing some market share to Aldi and Lidl. It’s also struggling for lorry drivers to deliver its goods. However, one in four UK consumers use its shops regularly. I think this makes Tesco a lower-risk stock.
Unilever is my second choice for lower-risk shares. It owns lines as varied as Dove and Cornetto. Its average share price over the past five years was 4,219p against a price today of 4,114p. Every day, over 2.5bn people use its 400 consumable brands.
It has a reliable 3% dividend yield. This can be beaten by many other stocks, but for the cautious investor, reliability is king. Yet it could suffer in an economic downturn, if people switch to cheaper products from branded goods. It’s also sensitive to increased global shipping and packaging costs.
FTSE 100 Medicine stock
GlaxoSmithKline is one of the world’s largest pharmaceutical companies. It has a share price of 1,493p against a five-year average of 1,525p, and delivers a reliable 80p dividend. Like Unilever, it has an enormous brand portfolio including Sensodyne and Panadol, making it the leader in consumer healthcare in the US, India and Germany.
The company sat out the coronavirus vaccines race, which means it could lose its crown as the world’s leading vaccine maker. GlaxoSmithKline is also due to split its consumer healthcare and drug development divisions. This could lead to share price volatility in this FTSE 100 stock.
National Grid‘s share price today is at 958p, against a five-year average of 913p. It’s often characterised as a defensive stock, based on its unshakeable position in the UK’s energy infrastructure. With a 5% dividend yield, and our constant need for power, I think this company’s share price should remain stable.
There’s the potential for regulator OFGEM to cap prices if there’s an economic downturn or at any other time, of course. However, it’s still a low-risk FTSE 100 stock I’d buy today.
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Charles Archer owns shares of Unilever. The Motley Fool UK has recommended GlaxoSmithKline, National Grid, Tesco, and Unilever. 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.