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As I head into winter, I’m faced with higher bills and lower income levels. Considering the steady stream of income from dividend stocks, now more than ever I’m looking for safe and secure payouts. With that in mind, here are the two most sustainable options for me right now, that I’m pretty confident about going forward.
A long-term dividend
It’s the first stock I’m referring to. British American Tobacco ( LSE:BATS ) business currently offers a dividend yield of 6.27%, above the FTSE 100 average of 3.89%. Last year, the stock price increased by 27%, which is an amazing profit.
It has had 22 consecutive years of dividend growth, which is one of the signs I look for when trying to find a good dividend. For the most part, payments spread over time are a reflection of the business’s core profitability.
The tobacco industry may not be to everyone’s liking, and some may not want to invest in this area. But basically, it’s been a huge source of profit for the last decade now. High repeatability of people, market structure similar to oligopoly allows the institution to achieve better results.
Of course, the shift to vaping and nicotine alternatives means that British American tobacco is in danger of becoming an unadaptable dinosaur. However, I don’t see any materially worrying signs that the business isn’t planning for the future of the industry.
A household favorite
It’s the second stock I’m thinking of buying. Unilever ( LSE:ULVR ) share price hasn’t moved much over the past year, down a modest 3%. As for the dividend, it is 3.8%.
I understand that people say that the yield is actually slightly below the index average. This is true, but if I look at Unilever’s yield over the past two decades, it has remained in a tight range between 2.5%-4%. It will never set my world on fire, but at the same time I’m sure I’ll be taking episodes of this size for the next decade. This counts for one thing.
The reason it is a constant dividend payer is related to the sector. It owns various family brands in all kinds of areas. This is from Ben and Jerry Ice cream to Hellman Mayonnaise. The items have a proven track record of being popular with consumers in the past, bringing in strong revenue. I don’t see this changing anytime soon, which should allow for continued strong profits. From this, dividends should continue to be paid.
I got to follow the steps of famous activist investor Nelson Peltz, who buys stock in a company that aims to make a difference. Following his recent purchase of a large stake in Unilever, I’m sure his intentions are for the best. But it can cause unnecessary disruption to the business.
I would like to add both stocks to my portfolio soon with free cash.