Finance

Dividend Safe Harbor: 2 stocks to watch

admin 2 weeks ago

0 12 4 minutes read

AI Image Produced Under the Direction of Shannon Harms

Important Points

Rising international tensions, rising oil prices, and rising volatility are weighing on US stocks and driving a shift toward a more defensive stance.

Pfizer offers health care sustainability, strong institutional penetration, and an attractive 6% dividend yield.

Energy Transfer combines industry-leading energy efficiency with near 7% yield and moderate charge-based stability.

It has been a lackluster year so far for US markets. Year to date, the benchmark S&P 500 is slightly in the red, weighed down primarily by a selloff in mega-cap tech. What started as a temporary hiatus in leadership has turned into widespread instability, and now, political tensions are adding another layer of uncertainty.

Over the weekend, the joint US-Israeli campaign against Iran significantly increased tensions in the Middle East. In response, markets have begun pricing in higher risk. Brent crude is trading near its 52-week high, the US Dollar Index appears to be drawing near-term lows, and the CBOE Volatility Index (VIX) is trying to break out of a long-term consolidation.

Rising oil prices, a strong dollar, and rising volatility generally do not create a favorable backdrop for equities in the near term. If risk-off sentiment continues to build, investors may look to rebalance portfolios in a defensive position.

For those looking for stability and income amid continued uncertainty, dividend-paying defensive stocks provide a potential safe haven, especially those with consistent demand profiles and attractive valuations.

The healthcare giant and the midstream operator check both boxes.

Pfizer: Preventive Health Care with Yield

Pfizer (NYSE: PFE ) stands out for both its defensive positioning and its revenue appeal. Health care has been one of the biggest beneficiaries of the exchange rate this year, as investors have shifted to sectors less sensitive to macroeconomic fluctuations. Pfizer has demonstrated that trend. The stock is up about 9.5% year to date, significantly outperforming the overall market.

One of the most compelling aspects of Pfizer’s profile is its dividend. The company currently offers a yield of 6.3%, above the S&P 500 average. In an environment where volatility is rising and growth expectations are diminishing, that level of income is increasingly attractive.

Basically, the results have also been strong. In its Q4 2025 earnings report, Pfizer posted EPS of 66 cents, beating consensus estimates of 57 cents. Revenue came in at $17.56 billion, down slightly year-over-year but still ahead of expectations. Although top-line growth has slowed, the company continues to show solid earnings.

The balance strengthens the case. With a forward P/E ratio of 9.6, Pfizer trades at a significant discount to the broader market. For long-term investors looking for value within a defensive sector, that much seems compelling.

Institutional flows also suggest growing confidence. Over the past 12 months, the stock has seen revenue of $16.1 billion compared to revenue of less than $12 billion, resulting in revenue of about $4 billion. That continued accumulation reinforces the protective narrative.

Power Transfer: Yield and Capacity of the Sector

Energy Transfer (NYSE: ET ) offers a different kind of defensive exposure, with the added benefit of sector momentum. Based in Dallas, Energy Transfer is a mid-sized energy company that develops and operates infrastructure to transport, store, and process hydrocarbons. Its integrated network of pipelines, terminals, and storage facilities transports natural gas, natural gas liquids, crude oil, and refined products across North America.

Unlike upstream producers, midstream companies are generally less exposed to commodity price fluctuations and instead generate revenue based on volume-bound fees. That structure can provide relative stability, even during periods of price volatility. That said, rising oil prices serve as a support base for the broader energy sector. With crude oil trading near a 52-week high amid tensions in the country, the main currency has turned into energy stocks. The energy sector is currently one of the strongest performers of the year so far, and Energy Transfer is playing a role in that momentum.

The stock recently broke out at a new 52-week high, clearing key resistance levels on the daily chart. Shares are up nearly 16% year to date, significantly outperforming the S&P 500.

Income investors will also note the company’s high dividend yield, currently close to 7%. With a forward P/E ratio of around 11, the stock offers a combination of income and a reasonable valuation. Wall Street sentiment is consistent with positive price action. Analysts maintain a Neutral buy rating on the stock, with a consensus price target suggesting a potential upside of around 11% from current levels.

Get Money-Growing Stocks Like Power Transfers In Your Inbox.

Stop riding the roller coaster of the stock market and sign up for DividendStocks.com’s daily ex-dividend stock and stock investment news for ET and related companies.