Market crash fears are on the rise, with headlines citing overvaluation, geopolitics, and the next big shock. But rather than doomscroll and panic, I’m thinking about rebalancing my passive income portfolio.
For the past few weeks, I’ve been building a ‘market crash buy list’. I’m not hunting for the next 10-bagger — I’m looking for income I can trust when everything else wobbles.
If things really tip over, the first income stock I’m moving money into isn’t a flashy tech name — it’s National Grid (LSE:NG.).
Why crashes change the rules for income investors
In bull markets, it’s easy to chase growth and story stocks. Multiples expand, and everyone talks about disruption and the ‘next big thing’. But when that hype bubble bursts, cash flow becomes king – it’s no longer about chasing promises, it’s about pricing in survival.
The risk is that many high-yield names look attractive until dividends get cut in a downturn. A 7% yield means little if the payout disappears. So my focus shifts to sustainability, not income at any cost.
I want businesses selling products that customers can’t easily cut from their budget, even in a recession. Think consumer staples, essentials, and utilities – not luxuries or risky tech.
That’s where National Grid fits.
The boring business that pays reliably
National Grid runs regulated electricity and gas transmission networks in the UK and parts of the US. It doesn’t generate power or sell energy to households. It owns the wires and pipes that move energy from producers to local distributors.
People and businesses still need power and gas in downturns, so demand is relatively inelastic. Revenues are largely set by regulators, making cash flows more predictable than most cyclicals. Boring, yes – but that’s exactly the point.
The dividend policy’s built for an environment of economic uncertainty, targeting dividend growth in line with UK CPIH inflation. For example, its FY26 dividend rose 3.8% to 48.49p per share, broadly tracking inflation.
Admittedly, the yield isn’t mindblowing, currently sitting around 4.2%. But it’s still well above the FTSE 100 average, and it’s coming from a much safer cash-flow base than many higher-yielders.
Looking ahead
Aside from the income appeal, National Grid also boasts a long-term investment plan of around £70bn to upgrade and expand its networks, signalling policy-backed relevance rather than a speculative bet.
Of course, that also brings risk — most notably, interest rate sensitivity and the threat of a regulated profits cap. All the heavy spending has ramped up debt, so now it’s particularly susceptiple to execution risk.
But these are known, manageable risks compared with the danger of dividend cuts in more cyclical businesses. In a downturn, I’d rather own a slightly lower yield that’s likely to keep growing than a fat payout that vanishes when earnings roll over.
How I’d use it in a crash
I’m not saying a crash is certain, nor am I trying to catch the bottom if it happens. Instead, I’ll scale in with staggered buys as the market falls, building a long-term, inflation-linked income position.
The goal isn’t to trade the bounce. It’s to lock in predictable, real-terms income when fear is highest.
Crashes destroy wealth for the unprepared. For income investors with a solid strategy, they’re just a chance to lock in passive income at a lower price.
With that in mind, we’ve identified another dividend stock that might be even more appealing to income investors right now..
What income stock do we like better than National Grid Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Mark Hartley owns shares in National Grid.
This story originally appeared on Motley Fool
