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We are officially in a recession! To say it's been in play for a while would be an understatement. However, I think that some FTSE stocks should cope well despite the economic uncertainty.
Two of my picks in that category are Central (LSE: CNA) and National Network (LSE: NG.).
Here's why I'd buy some of the stock next time I can.
Central
Centrica is the supply side of the former British Gas and its shares have been rising lately. They have risen 34% in a 12-month period, from 104p this time last year to current levels of 140p.
It is fair to say that Centrica has benefited from the energy shock caused by the Russian invasion of Ukraine. As energy prices increased, Centrica passed this on to its customers and has seen excellent results and increased its coffers.
Since these types of stocks are cyclical, this is the biggest risk going forward. The company published promising final results yesterday. However, he did mention that falling commodity prices and lower volatility could impact performance in the near future. This could potentially impact investor sentiment and profitability, something I will keep an eye on.
However, I think Centrica has some defensive capabilities. After all, everyone needs energy! Additionally, results over the past few years have helped Centrica improve its balance sheet and reward investors handsomely.
In 2023 alone, it returned £800m to investors through dividends and buybacks. A 3% dividend yield today is certainly attractive. However, I am aware that dividends are never guaranteed. Additionally, the stock appears to be good value for money with a forward P/E ratio of six.
Despite the cyclical nature of stocks like Centrica, I think it is a good choice for me with its attractive yield policy, defensive nature and attractive current valuation.
National Network
As the owner and operator of the gas and electric transmission system, National Grid has some excellent bullish traits that I find hard to ignore.
The shares are actually down 3% over a 12-month period, from 1,048p to current levels of 1,012p. However, this seems like a great entry point to buying stocks to me.
The first of these bullish aspects I refer to is the fact that National Grid has no competitors. This can help keep performance stable. Furthermore, like Centrica, it has defensive attributes, as it is essential to provide the country with stable energy production. Next, with consistent income and performance, it looks like it could be any passive income seeker's dream. A dividend yield greater than 5% is higher than the FTSE 100 average of 3.8%.
If we look at some risks, maintaining such a large and essential infrastructure could be costly, which would affect the rewards of investors. Additionally, the government could limit payments, which could hurt my passive income aspirations.
To me, the rewards far outweigh the risks and make National Grid stock look like a great buy for my portfolio, regardless of the economic outlook.
