Worried about a crash? 3 rock-solid FTSE 100 dividend stocks to consider
From trade tariffs and rising inflation to increasing geopolitical uncertainty, there are serious risks that could damage the dividends from UK stocks. In this climate, buying shares with qualities such as strong balance sheets, defensive operations, and/or multiple revenue streams may be more important than ever.
With this in mind, here are three FTSE 100 dividend shares to consider as dangers to the global economy grow.
SSE
Utilities are among the most secure passive income payers in tough times. Take SSE (LSE:SSE) as an example.
People and businesses don’t suddenly stop using electricity when economic crises come along. Kettles still need boiling, lights turning on and electric cars charging. So these companies’ revenues and cash flows remain broadly stable from year to year, providing the lifeblood for steady dividends.
SSE does have notable debt that investors should consider. But with its net debt to EBITDA (earnings before interest, tax, depreciation, and amortisation) ratio of four times, my view is that its balance sheet is in decent shape.
There is some risk here, in that SSE prioritises wind power above other sources. This creates the danger of poor power generation in calm conditions. But on balance, I think it’s an attractive lifeboat in turbulent times.
The forward dividend yield is a healthy 3.8%.
Alliance Witan
Investment trust Alliance Witan (LSE:ALW) has the strongest dividend growth record on the FTSE 100 index. Shareholder payouts have grown for 58 straight years, through financial system crashes, pandemics, and wars.
This reflects the trust’s diversified portfolio, which spans different regions and industries, including defence sectors like utilities, healthcare, and consumer staples. It’s a quality that reduces risk across the portfolio and helps smooth out dividend volatility.
Alliance Witan’s brilliant dividend stability also reflects its ability to retain earnings during good years. As an investment trust, it’s permitted to hold back up to 15% a year, which it can draw upon for dividends in tougher times.
Its large weighting of global shares leaves it vulnerable to currency risk. But I still believe the trust (which yields 2.3%) is worth serious attention.
Segro
Real estate investment trusts (REITs) can also be rock-solid dividend stocks during market crashes.
Whatever the weather, they must pay 90% of annual earnings from their rental operations to shareholders. That’s in exchange for juicy tax advantages.
Rent collection and occupancy issues can still spring up, though, to impact profits and by extension dividends. But Segro‘s (LSE:SGRO) large and diversified portfolio spanning several European countries and almost 1,400 tenants helps spread the risk.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
What’s more, Segro has its tenants locked down on long, multi-year contracts, providing excellent earnings visibility across the economic cycle. It has a weighted average unexpired lease term (WAULT) of 7.1 years to break, and 8.2 years to expiry.
The REIT has raised dividends for the last 11 years on the spin. Its forward dividend yield is 4.7%.
The post Worried about a crash? 3 rock-solid FTSE 100 dividend stocks to consider appeared first on The Motley Fool UK.
Should you invest £1,000 in Alliance Witan right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Alliance Witan made the list?
More reading
- 5 no-brainer income stocks with 25+ years of dividend growth to buy with £5,000?
- 3 great growth, dividend, and value shares from the FTSE 100 index!
- 3 simple steps to grow your wealth with ISAs
- These 3 high-yield dividend shares could benefit from falling UK interest rates
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Segro Plc. 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.
