Forget gold! I think these 2 UK shares are a better store of value

I won’t be buying gold as a store of value in case of a second market crash. I think these two UK shares have solid fundamentals and pay a dividend.

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Gold, glorious gold is often used as a store of value. In layman’s terms, this means that the price of gold does not fluctuate a lot in a short time. I believe I have found two UK shares that I think are better than investing in gold.

Investors tend to use gold to their advantage during times of uncertainty, such as these, to store their wealth. The problem is that this causes a surge in demand and drives gold prices up. But when market conditions become stable, the price of gold drops.

Investors that switch from stocks to gold during bad times and vice versa during good times might inadvertently adopt a “buy high, sell low” investing strategy. If returns matter to you, and I am guessing they do, then I think UK shares are the way to go.

If you were to invest in a FTSE 100 index instead of gold in 2009, your return would have been 20% higher in 2019. This got me thinking: which assets have the potential to beat gold and are possibly a better store of value?

How to pick our UK share champions

These companies would need to be big, more than £1 billion market cap big, to make sure they can withstand any calamity. They should have solid fundamentals and a modest price-to-earnings ratio. Most importantly, they should pay a high, reliable dividend. These factors do not promise market-beating returns but indicate a company that is resilient to downturns in the economy.

Calling in the big guns

BAE Systems (LSE: BA) trades in the aerospace and defence market, and this UK share has a market cap of just under £16 billion. Historically its annual earnings growth rate has been 10%. The company’s primary customers are governments, which reduces the risk of defaulting clients. There is also a large backlog of orders, which should sustain its revenue going forward.

The combination of these facts tells me its future earnings are well protected. Right now, BA shares can be considered cheap, with a price-to-earnings ratio of 10. What also attracts me is its rock steady dividend yield of 4.7%.

Easy pill to swallow

At the beginning of the Covid-19 pandemic, a lot of eyes concentrated on the pharmaceutical industry for hope. Not only were people looking for hope of a vaccine but also a good investment in a UK share!

GlaxoSmithKline (LSE: GSK) is considered one of the most prominent players in the vaccine market. Its vaccine revenue for the first quarter was £1.9 billion, up 18% from the prior year. The company has a market cap of £82 billion and started operating in 1715. Clearly, it has the resources and experience to develop a world-saving vaccine.

I love GSK for two reasons: it has an excellent dividend yield of 4.8%, and its business is very relevant right now. GSK has a modest price-to-earnings ratio of 15, suggesting that this amazing UK share is reasonably priced. It also has total assets of £84 billion compared to total liabilities of £64 billion. I cannot think of a reason not to buy it.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Miles Williams has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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.

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