Many believe that a recession could be on the cards. With that in mind, I am on the lookout for the best FTSE 100 stocks for my holdings.
I have identified two I believe could be great picks. Let’s take a closer look at them.
Healthcare
My first pick is GlaxoSmithKline (LSE:GSK). It is one of the world’s biggest healthcare businesses developing and selling medicines and vaccines with a global footprint.
Healthcare stocks are often seen as recession-proof due to their defensive and essential nature. No matter the state of the economy, people need healthcare and medicines. Furthermore, the pandemic shone a new light on the importance of health and well-being in the past couple of years.
So what’s happening with GlaxoSmithKline shares currently? They’re trading for 1,786p, as I write. At this time last year, the shares were trading for 1,419p, which is a 25% increase over a 12-month period.
Although arguably recession-proof, Glaxo stock does have risks. Current macroeconomic headwinds such as the rising cost of materials and the supply chain crisis could negatively impact operations, performance and returns. These issues are affecting many FTSE 100 stocks, however
As well as GlaxoSmithKline’s defensive capabilities, it has a good track record of performance in recent years. I do understand that past performance is not a guarantee of the future, however. Positive performance and profits leads to investor returns in the form of dividends that could boost my passive income stream. Glaxo’s current dividend yield is 4.3%, higher than the FTSE 100 average of 3%-4%.
I would add GlaxoSmithKline shares to my holdings heading into a recession. Its profile, presence, performance record, as well as the passive income opportunity are too good to miss. It also has an excellent pipeline of drugs, which should support future growth.
Utilities
My next pick is National Grid (LSE:NG). It is the UK’s electricity system operator providing the population with power. In addition to this, in the US it powers 20m customers across Massachusetts, New York and Rhode Island.
Like healthcare, utilities are also often seen as defensive stocks in times of economic uncertainty. Power is one of the modern-day essentials for our homes and businesses after all.
So what’s happening with the National Grid share price currently? Well, as I write, they are trading for 1,080p. At this time last year, the stock was trading for 920p, which is a 17% increase over a 12-month period.
National Grid shares have risks, too. I did notice that it has a significant amount of debt on its balance sheet. Due to rising interest rates, this debt could become costlier to service. In turn, this could affect investor returns and sentiment.
The firm also has a good record of performance. This performance underpins a healthy dividend yield of close to 5%. Utility stocks are often seen as passive income safe-havens. It is worth noting, though, dividends can be cancelled at the discretion of the business at any time. This tends to happen more so during difficult economic periods or extreme events such as a pandemic.
I would happily add National Grid shares to my holdings, and view them as a defensive option for my portfolio for any impending recession.