According to the Office for National Statistics, almost 9 in 10 adults reported that their cost of living rose last month. That’s not a surprise considering the rising cost of fuel, energy, and food in recent months. With a possible recession looming in the UK, I’m looking for the best FTSE 100 shares for this stark economic climate.
Buying resilience
I’d want to pick the most resilient and defensive shares for my new Stocks and Shares ISA.
One such company is utility provider SSE (LSE:SSE). I don’t often buy many utility shares but the current climate makes them appealing. In fact, SSE is among the FTSE 100’s top performing shares in the past month. And it’s a trend that I think could continue.
As one of the UK’s leading generators of renewable electricity, SSE operates in a field in focus. It’s one that I believe will continue to be an investor favourite over the coming years.
What I like about this business is its profitability and cash generation. Stable cash flow allows it to distribute a near-5% dividend yield. And having a reliable dividend provides a buffer that could protect my portfolio against any further economic crisis.
That being said, an economic recovery typically follows a downturn. When that happens, SSE might not perform as well as some higher-growth shares. That said, it should still provide some balance to my ISA and its one that I’d happily buy right now.
A FTSE 100 Top Pick
The next FTSE 100 share that I’d buy in May is Airtel Africa (LSE:AAF). This mobile network and payments operator only just entered the Footsie earlier this year. As the name suggests, it operates in African markets.
As the second-largest telecom operator in Africa, it offers an interesting prospect for me to invest in this region. Some of the countries in which it operates have the highest population growth rates in the world. That gives ample growth opportunity as ever greater numbers of people become connected to the internet and digital payments.
What I like about Airtel is that it’s a growing business in a sector filled with slow-growth telecom giants. It managed to increase its operating profit from $173m in 2017 to $1.1bn in 2021. That’s impressive.
Despite strong earnings growth, it trades on a price-to-earnings ratio of just 10 times. That’s remarkably cheap, in my opinion.
It appears to be a well-run company with a strong balance sheet too. That said, competition is rising. And Airtel Africa may need to keep spending to keep pace with technology. It also operates in many markets with different regulations and currencies.
Overall, I like what I see and would happily add this FTSE 100 telecoms share to my ISA today.
Buying them all
Lastly, I’d consider adding Vanguard FTSE 100 ETF to my ISA in May. The FTSE 100 has been one of the best performing global indexes year to date. And it’s a trend that I think will continue.
The reason for its outperformance is likely due to its composition. It includes many energy, mining, and consumer staple shares. And these three sectors have been particularly strong performers this year. I also like that it offers a dividend yield of 3.6% and a mix of established and global companies. All-in-all, I’m a buyer.