So far in 2020, broader markets and economies are hurting. And the shares of many firms are also suffering. Yet if history is any guide, most of the robust businesses listed on the London Stock Exchange (LSE) are likely to not only survive this difficult period, but to go on to thrive within the decade.
Therefore, today I would like to discuss several names that have survived many downturns over at least a century. I expect them to be around for many decades (if not centuries) to come. This article will be followed several others in which I conduct a detailed discussion of both FTSE 100 and FTSE 250 stocks with rich histories that would likely help them get through this difficult market period.
Every market crash is different
There have been a number of famous financial crises in the past too. They include the Dutch Tulip Mania of the 17th century, the South Sea Bubble of the 18th century, the British Railway Mania of the 19th century, and the Florida Real Estate Bubble of the 1920s. And let’s not forget the Wall Street Crash of 1929. Then there’s Black Monday in October 1987, the collapse of Barings Bank in 1995, the dotcom boom and bust in the late 1990s, and finally the financial crisis and the bear market between 2007 and 2009.
Yet all market downturns finally end. Most robust businesses get back on the path to growth. One thing I believe that sets successful firms apart is the experience they have, partly based on long history and agile management.
Highly capitalised blue-chip companies
London has always attracted robust companies to list there. The most famous index in the UK is the FTSE 100 which began in 1984. Most companies in the index are multinational conglomerates that were founded over a century ago. Their boards have in general aimed to reward long-term shareholders with reliable dividends.
For example, investors in oil companies have had some stomach-churning days in the past two months. In March, US crude oil prices fell below $20 a barrel. And so did the share prices of BP (founded in 1909) and Royal Dutch Shell (founded in 1907). In other words, they both have witnessed different levels of oil prices and experienced serious crises before. You may have concerns about the viability of their dividend levels in the short run. But markets believe management will work hard to avoid axing the payouts.
Many of our readers may be customers of British Gas which is a subsidiary of Centrica. But they may not necessarily know that its history goes back to 1812. Seasoned investors realise that they can rely on dividends of FTSE 100 member utility companies including Centrica, as well as National Grid, Pennon Group, Severn Trust and United Utilities Group.
Similarly the two tobacco giants British American Tobacco (founded in 1902) and Imperial Brands (founded in 1901), as well as publishing and education group Pearson (founded in 1844), have also had their fair shares of market ups and downs. Now investors are hopeful that their dividends will stay intact.
And recently, panic-buying has put supermarkets in the headlines. Customers may take comfort in the fact that Morrisons (founded in 1899), Sainsbury’s (founded in 1869) and Tesco (founded in 1919) have been part of the supply chain for over a century. And I expect their boards to navigate these choppy waters without suspending dividends.