Not every companystock collapsed in the aftermath of the shock Brexit referendum result, canny investors spotted opportunities as well as threats to their portfolio. As the pound collapsed, income seekers realised that companies with strong overseas earnings shouldprove more rewarding. Here are three stocks that are likely to be Brexit dividend winners.
Astra shines
Pharmaceuticals giant AstraZeneca (LSE: AZN) ended Friday 3.41% higher and is up 10.36% acrossthe last turbulent week. Over the same period, sterling has fallen from around $1.46 to $1.33, a drop of around 9%. That is far from a coincidence. AstraZeneca generate more than 90% of its profits overseasbuthas a large cost base in the UK, which will beless of a burden as itsoverseas earnings rise relative to the pound.
AstraZeneca converts its dividends intopence on the day results are announced twice a yearin March and September and although we dont know whether the dollarwill remain strong against sterling over the longer term, thats certainly the way to bet right now. The company suffered duringrecent sterling strength, with Q1results showing revenue up5% to $6,115m, but just 1% at actual exchange rates.That now looks set to reverse. Trading at 13.3 times earnings it isnt overpriced, while the yield is healthy at 4.9%. The big question is whether chief executive Pascal Soriot can replenish AstraZenecasdrugs pipeline, but for nowthe dollarpipeline will be flowing.
Brexit petroleum
Fridays result mayhave divided the nation but it united investors in pursuit of oil major BP (LSE: BP), whose share price rose 1.73% on the day and now stands nearly 6% higher than it dida week ago. In January, chief executive Bob Dudley warnedthat investment in the UK energy sector could fallif Britain votedto leave the EU. But the company put on a brave face after the result, publicly stating that we do not currently expect it to have a significant impact on BPs business or investments in the UK and continental Europe, nor on the location of our headquarters or our staff. Investors are taking that at face value today.
The uncertainty has set backthe oil price recovery, with Brent crude falling from over $50 to around $47 a barrel,but markets are calculating that this is only temporary. Sterling weakness is likely to last much longerand with oilpriced in dollars BPs revenues will be the beneficiary. As will incomeseekers, given thatBP declares its dividend in dollars, and its current yield of 7.1% has just got even juicier.
Uni winner
Household goods giant Unilever (LSE: ULVR) isanother instant Brexit winner rising 3.11% on the day and trading 6.72% higher over theweek. Almost 60% of its revenues come from emerging markets, with dollar and euro earnings on top, which is good newswhen sterling is plunging against a basket of global currencies.
Unilever reportsin euros and UK investors have already benefitted from pre-referendum uncertainty: Unilever recentlyraised its Q1dividend by 6% to EUR0.3201 per share, which equated to 17% in sterling terms. We can expect more of that, unless the euro comes under greater pressure asBrexit contagion spreads.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended AstraZeneca and BP. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
