3 FTSE 100 shares I’d buy right now in this fallen market

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They say that stock markets tend to climb a wall of worry. In other words, bull markets rarely get motoring against a backdrop of positive political, economic and general news. The overall outlook is often foggy, unclear or just plain worrying, but still, shares and stock indices can rise.

And we British investors have plenty to fret about right now. News on the Brexit process has boiled the lid off the cooking pan in recent days, and we are all still contemplating whether or not the stock market in the US will crash further, potentially taking London-listed shares along for the plunge. Is a general economic downturn just around the corner? The list of concerns goes on.

But I’m focusing on the kind of defensive, dividend-paying stocks that I’d be happy to buy and hold for the long term. Here are three of my favourites:

Pharmaceuticals

GlaxoSmithKline (LSE: GSK) is recovering from a period of weaker earnings following the well-reported patent-cliff challenges big pharmaceutical firms faced over the past few years. At the end of October in the third-quarter report, CEO Emma Walmsley said the firm had made “further good progress” with constant currency sales growth in all three of its business divisions, along with improvements in the operating margin. Adjusted earnings per share grew 14% year-on-year.

City analysts following the firm expect earnings to nudge up in low single-digit percentages this year and next, which is a vast improvement on the falls in annual earnings we were seeing three years ago. I reckon the firm’s research and development pipeline will help to keep it growing over the years to come. Meanwhile, as I write, the forward dividend yield is just over 5%, which looks attractive to me.

Premium drinks

The strength of the Diageo (LSE: DGE) business model is found in the firm’s mighty brands such as Johnnie Walker, Crown Royal, JεB, Buchanan’s Windsor, Smirnoff, Cîroc Ketel One, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness. Investor returns have been impressive over many years and I think the situation looks set to continue.

People rarely forego their favourite tipple and that situation leads to steady cash inflows for the firm. City analysts expect a mid-single-digit advance in earnings during the current trading year and the directors said in September that trading is going well.

The dividend yield is close to 2.5%, which means the shares are not cheap. But they never are, and I think the firm is worth its valuation. I’d buy and hold for the long haul.

Consumer goods

Brand strength also drives fast-moving consumer goods giant Unilever (LSE: ULVR). The company operates in the beauty, personal care, home care, food and refreshments markets and owns brands such as Ponds, Dove, Cif, Surf, Magnum, Brooke Bond and Hellman’s.

In September’s third-quarter trading statement, chief executive Paul Polman said growth “accelerated” in the quarter across all the firm’s divisions. He explained that the company was “able to increase prices whilst still maintaining good volume growth,” which he thinks reflects the strength of the company’s brands.

City analysts expect earnings to increase around 4% this year and 8% next year. Meanwhile, the dividend yield runs close to 3.3%, which I think represents a fair valuation for the quality of the enterprise.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Diageo. 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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