The economic uncertainty of the global pandemic has had a deep impact on FTSE 100 and FTSE 250 dividend shares. Businesses are looking for ways to conserve cash. And a large number of companies have been announcing dividend cuts. Some boards have axed even previously-declared dividends. And there may be others that could find themselves in a situation where they have to hold on to their cash until the storm passes.
However, I believe a number of companies are likely to keep their dividends intact in 2020. I think these two stocks could be worth a look for including in long-term portfolios and I’d regard any further dip in their prices as a chance to buy into the shares.
Safety in storage
FTSE 250 member Safestore (LSE: SAFE) is the UK’s largest provider of self-storage. It has 163 stores nationwide as well as 38 more locations in Europe (including France, the Netherlands, and Spain).
Nationwide, demand for storage space exceeds supply. And management has been successful in capitalising on the growth of self-storage for households and businesses.
The group, which has been listed on the London Stock Exchange (LSE) since 2007, entered the FTSE 250 index in late 2015. Over the years, SAFE has grown both organically and through acquisitions. And it has consistently produced consensus-beating results.
On 2 April, the storage company released a trading update which said all its stores in the UK, Paris, Barcelona and the Netherlands are “currently open or accessible… Since the Company’s AGM and update on 18 March 2020, the Group’s key trading performance indicators continue to see a relatively limited impact … Safestore is well-capitalised with a strong balance sheet”.
Obviously, management’s words were quite reassuring. Year-to-date (YTD), SAFE stock is down about 9%. In comparison, the FTSE 250 has plummeted around 26%.
In January, the board announced a 7.6% increase in the final dividend to 12p giving a total for the year of 17.5p. The current yield stands at 2.2%. The shares are expected to go ex-dividend next in early July.
Dividends in an economic downturn
Do you think we’re in a recession? If yes, then FTSE 100 member United Utilities (LSE: UU) may be a company to research further. It provides water and wastewater services to homes and businesses in the North West of England.
Utilities and water may initially sound boring. But given the current volatility in broader markets, who needs more excitement? While Britons may end up cutting down on a lot of expenses, their utility bills are unlikely be at the top of that list.
On 25 March, the water giant released a trading update and said”“Our revenues are fixed under the regulatory revenue control for the next five years, with shortfalls in any year being recoverable in later years”. It added that it has “a robust liquidity position extending out for 24 months. which is at the upper end of our policy range”.
Despite the dynamic situation regarding the pandemic, management expects revenue to be higher than last year.
YTD, the stock is down about 7.5%. In comparison, the FTSE 100 has fallen about 23%. UU stock’s 52-week price range has been 743p-1,104p and the shares are currently hovering around 873p.
Finally, the current dividend yield stands at 4.8%. And the shares are expected to go ex-dividend next in the second half of June.
