During periods of uncertainty, dividend shares can provide some shelter. Even though the share prices might be choppy, getting paid income can be a great compensation until the storm is over. Naturally, some firms will cut dividends when the going gets tough. That’s why I’m focused on ideas that have a long track record of reliable payments. Here are two I’ve found that I think are worth considering.
An old stalwart
British American Tobacco (LSE:BATS) maybe isn’t a name some would think would be classified as a safe dividend. After all, the changes to the tobacco industry over the past decade have been large. The pivot away from traditional smoking to vaping and other alternatives has forced the company to adapt.
Despite these changes, the firm has remained very profitable. Even during the pandemic, revenue barely decreased at all. This speaks to the nature of the product. Although it shouldn’t be glamorised, nicotine is addictive and so consumers will demand it even during a crisis.
That means the dividend was paid not only during 2020-22 but also over the past two decades. The yield has fluctuated over time, but is currently at a very attractive 9.1%. This has been helped by the fact that the share price has fallen close to 52-week lows, down 23% over the past year.
An incredible statistic to think about is that the business has over two decades of consecutive dividend per share payment growth.
Changes to the laws and regulations around smoking are a risk to the dividend over coming years. However, it has managed to survive in a competitive space for many decades, so I believe this won’t derail the business going forward.
Consistent over a long period
The second stock is DCC (LSE:DCC). The business provides sales, marketing and business support to firms in energy, healthcare and technology.
It was founded back in 1976 and has grown to be a FTSE 100 constituent. Over the past year the share price has risen by 1%, with the current dividend yield at 4.01%.
Granted, this yield is only marginally above the FTSE 100 average of 3.76%. But it’s important to remember that this is what I’d call a truly safe dividend. History shows that it has been continually paying a dividend for more than two decades. So even though it might not have the allure of a high-yield option, it also doesn’t come with high risk.
DCC could be included in a diversified income portfolio. By adding this in, I could afford to invest in some higher-risk options, with DCC balancing things out due to the stable nature of the income.
Going forward, of course things could change. The main risk I see is that 70% of profits come from the Energy division. This is quite concentrated and so if this area underperforms it could have a material overall impact on the group.
