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Many investors are looking for safer dividend stocks to buy right now. And that’s understandable as global markets are well and truly in meltdown mode as a result of tariff uncertainty.
The good news is that on the London Stock Exchange, there are plenty of dividend stocks on the safer side. Here’s a look at two I think are worth considering today.
Identifying safe stocks
There are many ways to identify safer stocks. One is to look for companies that operate in defensive industries like Consumer Staples and Utilities. Another way is to look for companies that have recurring revenues, strong cash flows, and robust balance sheets.
But there’s a shortcut we can take to find the safest stocks in the market right now. And that’s simply looking at which stocks are close to their 52-week highs. This can give us an indication of where money is flowing in this market volatility. In other words, it can highlight the ‘safe-haven’ stocks.
Moving upwards
Looking at the FTSE 100 today, there are currently seven stocks that are within 1% of their 52-weeks highs. And there are 16 within 5%. Now, I wouldn’t classify all of these stocks as safe. But a lot of them do have the potential to offer protection in the current market.
One that looks interesting to me at present is electricity company National Grid (LSE: NG.). It’s currently only about 1% off its 52-week high.
Utilities are classic safe-haven stocks because demand for electricity and gas tends to remain quite stable throughout the economic cycle. Whereas consumers might decide not to buy a new pair of trainers in a recession, they’re not going to cancel their electricity or gas contract.
The numbers here look quite appealing, in my view. Currently, the stock trades on a forward-looking price-to-earnings (P/E) ratio of 14.6, which isn’t high. The dividend yield‘s about 4.4% and dividend coverage (the ratio of earnings to dividends) is about 1.6 times. So there’s potential for a decent level of income.
I’ll point out that there’s some uncertainty in relation to tariffs. For example, the company may end up paying higher prices for renewable energy technology, resulting in lower profits.
Overall though, I think this dividend stock is on the safer side and is worth considering in the current environment.
Immune to tariffs?
Another stock that looks interesting to me right now is Rightmove (LSE: RMV). It’s less than 1% off its 52-week high.
This is not your typical safe-haven stock – it’s an internet company (these can be volatile at times). However, I can see why investors are gravitating towards it right now.
Rightmove is a British company that offers property search services in the UK. So it shouldn’t be affected by Trump’s tariffs, in theory. Moreover, it’s relatively immune to the ups and downs of the property cycle. Even during downturns, it tends to experience growth and high levels of profitability (it’s one of the most profitable companies in the FTSE 100).
Of course, it’s not perfect. Today, Rightmove is facing more competition than ever. However, with the stock trading on a low-20s P/E ratio and offering a yield of 1.5%, I like the set-up. I think it has the potential to deliver solid returns in the years ahead.
