In times of economic uncertainty, market volatility, or if you’re simply building a more defensive investment portfolio, low-risk stocks can offer much-needed stability and dependable returns. While no investment is entirely risk-free, certain companies have proven track records of weathering downturns, maintaining dividends, and growing steadily — even in tough times.
This article explores what defines a low-risk stock, why they matter, and provides a detailed look at some of the best low-risk shares available in the UK stock market right now.
What Makes a Stock “Low-Risk”?
Low-risk stocks, often referred to as defensive shares, tend to be found in industries that provide essential goods or services. Think electricity, food, healthcare, or household products. Regardless of what’s happening in the wider economy, people still turn on the lights, buy groceries, and take their prescribed medications — meaning companies in these sectors generally experience less volatility in revenue.
Key Characteristics of Low-Risk Stocks:
- Stable earnings and cash flow
- Strong dividend history
- Lower price volatility
- Large market capitalisation
- Resilience during economic downturns
These companies are not always the most exciting — they’re unlikely to double overnight — but they can be the cornerstone of a balanced and reliable investment portfolio.
10 Best Low-Risk Stocks to Consider in the UK (2025 Edition)
Here’s a curated list of some of the best low-risk stocks on the UK market right now, based on business fundamentals, dividend performance, and long-term stability.
1. Unilever plc (LSE: ULVR)
Sector: Consumer Goods
Market Cap: ~£100 billion
Dividend Yield: ~3.5%
Unilever owns dozens of household brands including Dove, Persil, Hellmann’s, and Magnum. With a presence in more than 190 countries, Unilever’s revenues are diversified across geographies and product types.
Why it’s low-risk:
- Demand for soap, cleaning supplies, and food items is consistent.
- Operates in defensive consumer staples sector.
- Long history of paying and growing dividends.
2. GlaxoSmithKline (GSK) plc (LSE: GSK)
Sector: Pharmaceuticals
Market Cap: ~£65 billion
Dividend Yield: ~4%
As one of the UK’s largest pharmaceutical firms, GSK develops and manufactures essential medicines and vaccines. It has been streamlining operations and refocusing on core strengths since its consumer health spin-off (Haleon) in 2022.
Why it’s low-risk:
- Healthcare demand is inelastic — people need medicine regardless of market conditions.
- Robust pipeline of products.
- Strong dividend history.
3. National Grid plc (LSE: NG.)
Sector: Utilities
Market Cap: ~£40 billion
Dividend Yield: ~5%
National Grid manages the electricity and gas infrastructure for much of the UK and the northeastern United States. As a regulated utility, its earnings are protected and predictable.
Why it’s low-risk:
- Defensive utility sector.
- Regulated pricing structure provides revenue stability.
- Historically consistent dividend payer.
4. Diageo plc (LSE: DGE)
Sector: Beverages
Market Cap: ~£70 billion
Dividend Yield: ~2.5%
Diageo is the company behind global beverage brands such as Johnnie Walker, Guinness, and Smirnoff. Its broad geographic footprint and premium product positioning help support steady revenues.
Why it’s low-risk:
- Brands have global recognition and loyalty.
- Alcohol sales remain steady even in recessions.
- Profitable and conservatively managed.
5. Sage Group plc (LSE: SGE)
Sector: Software/Technology
Market Cap: ~£11 billion
Dividend Yield: ~2%
Sage is a UK-based software company specialising in accounting and business solutions for small to medium-sized enterprises (SMEs). With many firms turning to automation and cloud-based accounting, Sage’s services are increasingly seen as essential.
Why it’s low-risk:
- Recurring revenue model (subscription-based).
- High customer retention rates.
- Low debt and strong cash flow.
6. Tesco plc (LSE: TSCO)
Sector: Retail (Supermarkets)
Market Cap: ~£20 billion
Dividend Yield: ~4.5%
Tesco is the UK’s largest supermarket chain, with over 27% market share. The grocery sector is resilient by nature — people still shop for food during downturns.
Why it’s low-risk:
- High brand trust and market dominance.
- Essential service provider.
- Stable margins and cash flow.
7. Vodafone Group plc (LSE: VOD)
Sector: Telecommunications
Market Cap: ~£23 billion
Dividend Yield: ~6.5%
Vodafone offers mobile and broadband services across Europe and Africa. Telecoms are considered essential services, especially in an increasingly connected world.
Why it’s low-risk:
- Regular, subscription-based income from mobile customers.
- Huge infrastructure and global footprint.
- Currently undervalued and restructuring for efficiency.
8. British American Tobacco (LSE: BATS)
Sector: Tobacco
Market Cap: ~£60 billion
Dividend Yield: ~9%
While controversial, tobacco companies are often considered defensive investments. BATS has a strong dividend history and continues to generate vast cash flows.
Why it’s low-risk:
- Loyal customer base.
- High margins and pricing power.
- Expanding into reduced-risk products like vaping and heated tobacco.
9. Severn Trent plc (LSE: SVT)
Sector: Utilities (Water)
Market Cap: ~£8 billion
Dividend Yield: ~4%
Severn Trent supplies water and sewage services to millions in the UK. It operates in a tightly regulated environment that provides predictable income and limited competition.
Why it’s low-risk:
- Water is a necessity.
- Income regulated by Ofwat.
- Sustainable dividend policy.
10. Relx plc (LSE: REL)
Sector: Information & Analytics
Market Cap: ~£60 billion
Dividend Yield: ~2.2%
Relx provides scientific, legal, and business information and analytics through online subscriptions — a high-margin, high-retention business model.
Why it’s low-risk:
- Recurring revenue and digital scalability.
- Strong market position in a niche, non-cyclical industry.
- Excellent long-term track record.
Tips for Building a Low-Risk Investment Portfolio
Even low-risk stocks carry some degree of uncertainty. To protect your capital and reduce exposure, follow these practical tips:
✔ Diversify Your Holdings
Don’t rely on one or two shares, even if they seem safe. Hold a mix of sectors: utilities, healthcare, consumer goods, and tech.
✔ Consider Using a Stocks & Shares ISA
Invest through a Stocks and Shares ISA to shield your dividends and capital gains from tax — especially useful if you’re focused on income.
✔ Reinvest Dividends
If you don’t need the income immediately, reinvesting dividends can supercharge your long-term returns through compounding.
✔ Avoid Chasing High Yields
An extremely high dividend can be a red flag. Check payout ratios and whether the business can sustain such payments.
✔ Monitor Financial Health
Even safe companies can run into trouble. Review balance sheets, profit margins, debt levels, and sector trends annually.
How to Invest in These Stocks
You can buy low-risk UK shares through platforms like:
- Hargreaves Lansdown
- AJ Bell
- Interactive Investor
- Freetrade
- Vanguard UK
Most allow investments via ISAs, pensions (SIPPs), or standard brokerage accounts. You can buy:
- Individual shares, or
- ETFs or index funds that focus on large-cap or defensive sectors.
Final Thoughts
Low-risk UK stocks offer a reliable foundation for investors seeking consistent income, steady capital appreciation, and peace of mind. While they might not skyrocket overnight, they offer long-term durability — especially important for retirees, conservative investors, or anyone seeking stability in their portfolio.
By focusing on businesses with essential services, strong balance sheets, and proven track records, you can build a defensive strategy that weathers storms and delivers in all market climates.