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Passive Income: 2 Safe Dividend Stocks to Buy in an Uncertain Market

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Cogs turning against each other
Cogs turning against each other

Written by Nicholas Dobroruka at The Motley Fool Canada

Now more than ever, I’m looking to add a couple of dependable dividend stocks to my investment portfolio. Passive income generated through dividend stocks is one way to help offset some of the volatility in the stock market.

There’s a list of catalysts to choose from to blame for the stock market’s wild performance this year. Whether it’s interest rates, inflation, or geopolitical concerns, there’s enough uncertainty in the market today for me to bet that volatility will not be going away anytime soon.

All that to say, it was promising to see the Canadian stock market end last week in positive territory. U.S. stocks surged even higher, with the major American indices gaining close to 10%.

Even if that does mean a bull run is around the corner, I’m still preparing my portfolio for more volatility.

Building a passive-income stream

It’s important to remember that no dividend is ever guaranteed. A company has the right to cut its dividend at any time. However, the TSX has plenty of Dividend Aristocrats with payout streaks spanning decades. As a result, it may be easier than you may think to build a dependable stream of passive income in today’s volatile market.

I’ve reviewed two top dividend stocks that can provide a portfolio with both passive income and defensiveness. I’ll admit that they’re not the most exciting companies on the TSX. But if you’re looking for dependability, there’s absolutely nothing wrong with boring.

Dividend stock #1: Sun Life

Nearing a market cap of $35 billion, Sun Life (TSX:SLF)(NYSE:SLF) is one of Canada’s largest insurers. The company also boasts a growing international presence, providing its global customers with a range of insurance and wealth management services.

A top yield isn’t the only reason Sun Life is on my watch list today. The dividend stock can provide a portfolio with defensiveness, which can be particularly useful during today’s volatile market conditions.

Insurance is far from the most exciting industry to invest in. It is, however, dependable. Sun Life is by no means immune to volatility, but over the long term, I firmly believe that there will still be a strong demand for all sorts of different insurance policies.

At today’s stock price, Sun Life’s annual dividend of $2.76 per share is good enough for a yield above 4.5%.

Dividend stock #2: Brookfield Infrastructure Partners

Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is another slow-growing dependable dividend stock that’s on my watch list right now.

Similar to insurance stocks, there’s not much to get excited about with utility companies. But if you’re like me, in the process of building a dependable stream of passive income, utility stocks are one of your best bets.

Even more so than in the insurance industry, utility stocks experience very low levels of volatility compared to the majority of companies on the TSX. That’s a result of the dependable nature of the utility business. Irrespective of the health of the economy, demand for utilities doesn’t waver all that much.

At today’s stock price, Brookfield Infrastructure Partners’s annual dividend of $1.82 per share yields just under 4%.

Brookfield Infrastructure Partners may not be able to match Sun Life’s 4.5% yield, but it sure makes up for it with the defensiveness that it provides a portfolio.

The post Passive Income: 2 Safe Dividend Stocks to Buy in an Uncertain Market appeared first on The Motley Fool Canada.

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Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infra Partners LP Units.

2022

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