The 7 Best Dividend Stocks to Protect Your Portfolio From Global Chaos
Although the best dividend stocks for portfolio protection might come off as a rather boring endeavor, at the present juncture, there may be no more relevant idea for investors. Frankly, with the world seemingly poised for a massive conflict, market participants may want to seek the relative stability of dividend investing in proven enterprises.
First off, Russia’s unprovoked invasion of Ukraine shows zero sign of ending anytime soon. Sure, less-than-good-faith arguments exist about Western forces not fueling the conflict. However, the Russian government-backed itself into a corner because the free world cannot allow the normalization of brazen military conquests. And that’s because of China.
Let’s face reality. China has long claimed Taiwan as its rightful territory, issuing strong rhetoric to undergird its claims. For now, China and Western allies play diplomatic circus acts over the issue. However, the normalization of military conquests could give the Chinese government bad ideas. Cynically, such a framework only heightens the case for global chaos-resistant stocks.
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Atop of all this, you have a global food crisis along with brewing tensions over critical resources. Put another way, it’s time to consider the top dividend stocks for protection.
Best Dividend Stocks: Novartis (NVS)
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A Swiss multinational pharmaceutical firm, Novartis (NYSE:NVS) organically makes a strong case for top dividend stocks for portfolio protection. After all, when you need medical care, you just need it, irrespective of economic conditions. Therefore, it’s not terribly surprising that NVS gained almost 14% since the beginning of this year.
At the same time, Novartis benefits from its therapeutic specialty in addressing obesity. The company enjoys a strong acumen in the field. As well, the company’s MBL-949 is currently undergoing Phase II studies for the underlying obesity indication. Cynically, because the condition represents a growing health concern in the U.S. and other parts of the world, NVS ranks among the insulated ideas for global chaos-resistant stocks.
For passive income, Novartis commands a forward yield of 3.33%. That’s noticeably higher than the healthcare sector’s average yield of 1.58%. Moreover, the payout ratio sits at 46.49%, easing concerns about yield sustainability.
Best Dividend Stocks: Park Aerospace (PKE)
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An intriguing but risky idea for the best dividend stocks, Park Aerospace (NYSE:PKE) provides a solid balance between passive income and capital gains potential. A materials manufacturer, Park Aerospace provides solutions for various industries, including telecommunications, internet infrastructure, and high-end computing. Of course, it specializes in the aerospace field, presenting very attractive upside opportunities.
On a less-controversial note, Park Aerospace features strong implications for the burgeoning space economy given its advanced composite materials specialty. On a more controversial note, the company also plays into defense/military needs. As explained earlier, geopolitical tensions and outright flashpoints are worsening. And they may continue to worsen without strong moral resolve, which may benefit PKE as one of the best dividend stocks.
Speaking of which, Park Aerospace carries a forward yield of 3.44%, above the industrial sector’s average yield of 2.36%. Combined with the enterprise’s consistent profitability and strong balance sheet, PKE ranks among the top ideas for dividend investing.
Best Dividend Stocks: Tyson Foods (TSN)
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As a major operator in the food industry, Tyson Foods (NYSE:TSN) easily makes a case for the best dividend stocks for portfolio protection. No matter what happens in the economy or in global affairs, people must eat. And if we’re going to at least acknowledge the cynical realm of this subject, geopolitical flashpoints represent a powerful catalyst for TSN and its ilk.
Basically, the world is rushing toward a framework of limited resources for a rising global populace. Logically, such a condition engenders conflict and in turn will raise prices for critical goods. Fortuitously, then, the backdrop may cover up many ills for Tyson Foods. Yes, TSN is down 17% for the year. And in the past 365 days, it lost 37% of its equity value. Still, outside factors bolster its relevance.
As for passive income, Tyson carries a forward yield of 3.65%, above the consumer staple sector’s average yield of 1.89%. In addition, the company’s payout ratio is somewhat elevated but still reasonable at 56.64%. Lastly, it sports 11 years of consecutive annual dividend increases, making TSN worth consideration.
Chevron (CVX)
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A hydrocarbon energy giant, Chevron (NYSE:CVX) might not seem like one of the best dividend stocks for portfolio protection based on the intense focus on green energy solutions. With political and ideological forces stressing the importance of building renewable infrastructures, Chevron seems rather anachronistic. The market seemingly agrees, sending CVX down nearly 9% since the January opener.
Still, on a fundamental note, Chevron deserves consideration from those interested in dividend investing. Given the high energy density of fossil fuels, it’s unlikely that the hydrocarbon sector will simply go away. Also, renewable energy sources like wind and solar are intermittent. Therefore, oil and gas plays will likely be relevant for years to come as they offer diversification among other attributes.
For passive income, Chevron sports a forward yield of 3.81%. In fairness, this stat rates a bit lower than the energy sector’s average yield of 4.24.%. However, CVX’s payout ratio sits at 43.74%, offering confidence regarding yield sustainability. Plus, it enjoys 37 years of consecutive dividend increases.
AbbVie (ABBV)
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Another pharmaceutical idea for best dividend stocks, AbbVie (NYSE:ABBV) benefits from reliable relevance. Again, if patients find themselves in need of medical help, they’ll seek it irrespective of economic or market conditions. Further, I appreciate AbbVie specifically because of its Allergan acquisition, which subsequently brought Botox under the acquirer’s control.
First, social normalization trends suggest that people will be interacting with each other in person. Naturally, this framework should bolster Botox sales. Second, as millennials and eventually members of Generation Z become older, their vanity offers a viable backdrop for enhanced sales. As a bonus, ABBV trades at forward earnings multiple of 12.48, lower than 68.5% of the competition.
Moving onto passive income, AbbVie commands a forward yield of 4.12%, well above the healthcare sector’s average yield of 4.12%. With a payout ratio of 53.41%, investors seeking dividend stocks for portfolio protection have reasonable sustainability assurances. Lastly, the company enjoys 51 years of consecutive dividend increases.
B2Gold (BTG)
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While I could have gone with a more conservative idea for best dividend stocks in the precious metals arena, B2Gold (NYSEAMERICAN:BTG) offers a tantalizing mix of upside return potential and passive income. Fundamentally, gold-related ideas offer a hedge against market uncertainty, making them an idea against global chaos.
Interestingly, though, BTG hasn’t performed that well in the chart. Since the beginning of this year, BTG slipped almost 2%. However, in the trailing 365 days, shares gained nearly 12% of equity value. With their value steadily printing a series of higher lows, investors may be looking at a burgeoning opportunity.
Also, it’s worth pointing out that BTG trades at a price/earnings-to-growth (PEG) ratio of 0.48x. In contrast, the sector median stat comes in at 0.84X. Therefore, market participants seeking dividend investing ideas can pick up an attractive discount. Finally, B2Gold carries a forward yield of 4.43%, well above the material sector’s average yield of 2.82%. Also, its payout ratio is reasonable at 53%.
IBM (IBM)
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While technology firms might not rank among the best dividend stocks amid global chaos, IBM (NYSE:IBM) may be the exception. As a legacy tech provider, “Big Blue” carries a reputation for being boring. I can see why that is but in recent years, the company has ramped up its relevance, particularly with its hybrid cloud solutions.
Moving forward, IBM also offers viable solutions in the field of enterprise-level cybersecurity. If we’re going to talk about global chaos resistant stocks, we can’t ignore rising cybercrimes and online network vulnerabilities. State-sponsored nefarious actors can easily wreak havoc, which is why cybersecurity has never been more important.
To be sure, banking on IBM stock may not be the path to meme-like riches. However, for the patient investor, it can be a worthwhile asset. Featuring a forward yield of 4.78%, IBM soars above the tech sector’s average yield of only 1.37%. Also, Big Blue enjoys 30 years of consecutive dividend increases.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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