We were repeatedly told that Putin was on the rampage but, even so, when the news broke on Thursday that Russia had invaded Ukraine, financial markets went into panic mode.
Stocks tumbled, oil prices soared and big investment institutions took refuge in traditional safe havens, such as gilts, the dollar and gold.
Shares rebounded on Friday, but the landscape is still a frightening one for individual investors and tempestuous times almost certainly lie ahead.
Surefire: Defence, supermarkets and healthcare are all sectors that will continue to see demand in the crisis
Fortunately, even in this climate, certain companies are more likely to weather the storm than others. They include those involved in essential services, with strong management at the top and a decent track record of growth.
With an almost uncanny sense of timing, the defence giant unveiled its 2021 results just as Russian tanks were rolling into Ukraine.
The figures were good. Sales rose to more than £21billion, profits were 24 per cent higher than last time at £2.4billion and the dividend rose 6 per cent to 25.1p.
Critically, analysts expect this growth to continue. BAE Systems is not just the UK’s largest defence company, it is the biggest in Western Europe and ranks seventh on the world stage, with a massive business in America.
Admittedly, there have been times when it has been hit with allegations of bribery, corruption and basic inefficiency.
But that seems to have changed under chairman Sir Roger Carr, a veteran of the business world, and his chief executive Charles Woodburn.
Today, BAE is well regarded not just for making world-class tanks, submarines, planes and ships, but also for making the sophisticated stuff of modern warfare, including complex electronic equipment and technology to enhance intelligence and repel cyber attacks.
The group has longstanding relationships across the Ministry of Defence over here and its counterpart in the US.
Contracts tend to be long term and once business deals are signed, there is plenty of adjacent repair and maintenance work as well.
Midas verdict: Some investors shy away from defence stocks but, as the current situation proves, they provide an essential service in an unstable world.
Defence budgets may also expand, if Russian aggression persists. At £6.53, BAE Systems should deliver long-term growth – and the dividend yield of around 4 per cent is attractive too.
Traded on: Main market Ticker: BA. Contact: baesystems.com or 01252 373232
Supermarket Income Reit
Whatever happens to the world order, people need to eat. Supermarket Income Reit provides one of the safest ways to access the grocery sector, while gaining a consistent stream of attractive dividends.
The company, known as Supr, acquires freehold sites occupied by all the major grocery groups and rents them out to those chains over long periods.
The average lease is 15 years. Some stretch out to nearly three decades and most of the rents are inflation-linked.
These long-term agreements mean that Supr is better placed than most to withstand Putin’s posturing, particularly as bosses Ben Green and Steve Windsor choose their properties with the utmost care, picking only those likely to outperform the wider food retail market over many years.
Tenants include Tesco, Sainsbury’s, Waitrose, Asda, Morrisons and Aldi, and the portfolio is growing steadily.
The business moved to the Premium segment of the Stock Exchange last week and is expected to join the FTSE250 index in the summer.
Half-year figures this Wednesday should be strong and a 5.94p dividend is forecast for the year to June, putting the stock on a near 5 per cent yield.
Volatile economic conditions may even spur growth, helping the firm to pick up some bargain sites from freeholders in search of cash.
Midas verdict: Supermarket Income Reit was founded with the idea that boring was beautiful. So it has proved.
The company has delivered capital and income growth and should continue to do so. Green and Windsor are keen to take Supr to a £2billion stock market valuation, while retaining their commitment to dividend growth. The shares, at £1.23, are a strong, defensive buy.
Traded on: Main market Ticker: SUPR Contact: supermarketincomereit.com or 020 3790 8087
A major investor recently said to NWF chief executive Richard Whiting: ‘Holding shares in your business is like watching paint dry – and I like the colour.’
The company delivers oil and diesel to more than 125,000 customers across the country, from schools to builders’ merchants to rural households.
The price of fuel can fluctuate wildly, but businesses still need to transport their goods around the country and people still need to heat their homes.
NWF makes sure that fuel is there, when customers need it. Any price increases are passed directly on to the end-user and demand tends to rise during periods of crisis, with phones ringing constantly last week as Putin made his move.
Fuel delivery is the largest part of NWF’s business and further growth is assured, as Whiting acquires smaller operators and brings them into the fold. The firm is even trialling carbon-free fuels made from liquid hydrogen.
But the group has two other strings to its bow – food and feed. The food division stores ambient goods, from Typhoo tea to Bart spices, and distributes them to supermarkets from a million square foot warehouse in Nantwich, Cheshire.
More than 200 food manufacturers and importers use NWF and more customers are coming on board at a steady pace.
The feed division provides nutrition for dairy cattle, with trained advisers helping farmers to keep their herds healthy and productive. Working with more than 4,500 farmers, the group feeds one in six of the UK’s dairy cows.
Today, there are about 50 advisers, but numbers are growing as NWF runs its own training academy and demand for advice is rising.
The group delivered record half-year figures earlier this month and brokers expect consistent growth for the next several years.
Midas verdict: NWF has delivered a 5 per cent increase in the dividend for the past decade and is expected to continue in that vein. At £1.97, this is a stalwart stock for troubled times.
Traded on: AIM Ticker: NWF Contact: nwf.co.uk or 01829 260260
Primary Health Properties
The life expectancy of a man living in Blackpool is 68. In London’s Kensington & Chelsea, it is 95.
That jaw-dropping, 27-year gap is attributed to poverty, poor diet and smoking – and the cost to families, communities and the NHS is enormous.
Understandably, therefore, doctors and decision-makers are determined to reduce it – in part through the levelling-up agenda but also by providing better healthcare in deprived areas.
Primary Health Properties is helping to make that happen. The company owns and develops modern, top-quality health centres that are worlds away from those traditional surgeries in converted homes.
Bright, well located and designed to make access easy for the elderly and infirm, these centres offer a range of services beyond general medical help, including physiotherapy, dermatology and even minor operations.
As such, they reduce pressure on hospitals, allowing more patients to be seen more quickly.
Founder and chief executive Harry Hyman has built a portfolio of more than 520 sites, mostly in the UK, but also in Ireland.
About 90 per cent of rents are government-backed and many are inflation linked as well, allowing Primary Health to deliver 25 years of consecutive dividend growth.
This year should be no exception, with a 6.5p dividend scheduled and more to come thereafter.
Midas verdict: Illness and poor health are sad facts of life, but Primary Health Properties is designed to improve patients’ access to care.
At £1.34, the group offers long-term growth and an attractive yield of nearly 5 per cent.
Traded on: Main market Ticker: PHP Contact: phpgroup.co.uk or 020 3824 1841
Energy markets were already turbulent before last week but Putin’s actions have made them considerably more so.
That may have serious consequences for the firms that produce gas and electricity, the businesses that use them and all of us, as consumers.
National Grid is in a slightly different position. The group distributes electricity and gas here and in America and its role is to make sure that energy reaches businesses and homes safely and reliably.
Highly regulated on both sides of the Atlantic, the company is also tasked with ensuring the electricity grid can do its job as we move to a renewable energy future.
That involves major expenditure, much of which is already taking place. In the six months to September 2021 alone, investment rose 22 per cent to £2.8billion and that pace is likely to persist.
Big institutions will only support this type of spending if National Grid rewards them with steady profits growth and dividends.
The company paid a 49.1p dividend last year and a 51p payout is expected for the 12 months to March 31, 2022, rising to nearly 53p in 2023.
Midas verdict: At £11.01, National Grid should deliver steady, predictable growth and the 4.6 per cent yield is an added attraction.
Traded on: Main market Ticker: NG Contact: nationalgrid.com or 020 7004 3000
…and the shares you should avoid
The reaction to Putin’s invasion of Ukraine was swift and comprehensive. Virtually every share in the market lost ground on Thursday and indices ended the week on a low note.
Over the longer term, however, some stocks and sectors are much more likely to lose out as a result of Russian aggression than others.
More than 20 companies incorporated in Russia are currently listed on the London Stock Exchange.
These include the gas giant Gazprom, the massive oil company Rosneft and Sberbank, which is one of the country’s largest financial institutions.
There are several businesses with large Russian interests too, such as Evraz, the steel group backed by Roman Abramovich, Petropavlovsk, the gold miner which operates out of Russia, and Polymetal, which mines gold and silver.
Only an exceptionally brave investor would touch these types of stock today, but many others are likely to come under pressure if Russian aggression persists.
Banks may lose out if economies slow down; travel stocks could suffer if tensions continue to rise and highly rated tech stocks could fall back too.
Smaller companies tend to be hardest hit during geopolitical crises, but investors should hold their nerve. Some of the best bargains on the stock market can be had when times are tough – so don’t head for the exit just yet.
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