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Dividends could fall by a third in 2020! I’d buy these FTSE 100 stocks to protect myself

Those investors seeking big dividends from FTSE 100 stocks have been given some sobering news in start-of-week trading.

Data from Janus Henderson shows that total global dividends rose by mid-single-digit percentages in the first quarter to hit $275.4bn. This was the highest first-quarter total on record. Don’t start celebrating yet, though. With the true economic cost of the Covid-19 outbreak becoming reflected in company updates with greater gusto, Janus Henderson reckons that aggregated payouts could tumble by as much as a third year on year in 2020.

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This is no time for investors to run for the hills, though. The profits (and thus dividend) outlook for scores of UK stocks has worsened considerably since the coronavirus outbreak. But there’s a sea of other shares whose earnings pictures remain just as resilient – or in some cases even better – than before Covid-19 shook the globe.

Brilliant dividend buys

One of the safest places, for instance, that Janus Henderson considers for dividend chasers today is the utilities sector. This isn’t a huge surprise. There are many things we can do without when our spending power comes under pressure. But our need to boil a kettle, watch the television, or do the washing up remains constant.

And this provides the likes of FTSE 100 shares National Grid, Severn Trent, and United Utilities with the sort of earnings visibility that should keep the chunky dividends coming. City analysts certainly think so, and these firms currently sport big forward yields of up to 5.5%.

Janus Henderson also likes the cut of the healthcare segment’s jib. We will continue to pay for medicines and healthcare even when cutting back on other spending. It could be argued, then that AstraZeneca, Hikma Pharmaceuticals, and GlaxoSmithKline are worthy lifeboats in these troubled times.

In normal times, GlaxosSmithKline’s nearly 5% dividend yield for 2020 might make it the only of these pharmaceuticals plays to attract the attention of dividend-hungry investors. However, with dividends still falling like dominoes across the FTSE 100, their prospective yields of between 1.5% and 2.5% certainly shouldn’t be sniffed at.

Screen of price moves in the FTSE 100

A 6.5% yield from the Footsie

You might think that the telecoms industry would be best avoided following BT’s decision to cut dividends last week. However, Janus Henderson still likes the telecoms sector, broadly speaking. And it’s not difficult to see why. Their cash flows tend to remain strong and their recurring revenues robust, too.

BT is a company laden with debt, and one in which sales have been slumping in all areas. Footsie share Vodafone is faring much stronger and as a result confirmed last week that it will keep on paying dividends. The mobile services giant has cut shareholder rewards previously. But with the balance sheet now reinforced it looks in great shape to weather the coming storm. This is why City forecasts produce a monster 6.5% dividend yield for the current fiscal year (to March 2021).

I’d happily load the telecoms giant into my own shares portfolio today, but it’s one of many blue chips that income investors need to think about buying right now.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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.