Are these 2 of the best dividend stocks to consider buying in these uncertain times?

Searching for safe-haven dividend stocks to buy ? Here are two from the FTSE 100 and FTSE 250 I think merit a close look right now.

Posted by Royston Wild

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 

Confidence among stock traders and investors is plummeting. With fears over the macroeconomic and geopolitical landscape growing, so are concerns over the capital gains and dividend income that global stocks might deliver in 2025 and potentially beyond.

I’m not saying that fresh trade tariffs, signs of resurgent inflation, and a weakening US economy are nothing to worry about. However, with some shrewd stock picks, UK share investors can limit the impact these hazards may have on their portfolios.

Here are two I think are worth considering today. I’m expecting them to deliver solid dividends regardless of these external factors.

The PRS REIT

We need to keep the rain off our heads regardless of the economic backdrop. This can make residential property stocks like The PRS REIT (LSE:PRSR) lifeboats for investors in tough times.

Rent collection at this FTSE 250 share has ranged between 98% and 100% in the last three years, even despite the twin problems of higher-than-normal inflation and a struggling domestic economy.

It’s worth noting that private rental growth in the UK is cooling sharply at the moment. Latest Zoopla data showed annual growth of 3% for new lets, down from 7.4% a year ago.

Further cooling is possible, although Britain’s rapidly growing population could put a floor under future declines. PRS REIT’s focus on the family homes sector, where accommodation shortages are especially sharp, might also support rental growth.

I’m certainly confident that the business will remain profitable enough to continue paying a large and growing dividend. Under real estate investment trust (REIT) rules, the company has to pay at least 90% of yearly rental earnings out to shareholders.

For this financial year (to June 2025), PRS REIT’s dividend yield is a market-beating 3.8%.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

BAE Systems

The stable nature of arms spending makes defence stocks classic safe havens during tough times. With Europe proposing hikes to regional defence budgets, now could be an especially good time to consider buying shares like BAE Systems (LSE:BA.)

I like this particular firm because of its considerable financial resources and strong balance sheet, which add extra strength to dividend forecasts. This has underpinned steady payout growth dating back to the early 2010s.

Free cash flow remains considerable, and in 2024 remained stable at around £2.5bn. In my opinion, this gives BAE enough wiggle room to continue paying a growing dividend while also servicing its rising debt pile (net debt increased to £4.9bn last year following the acquisition of Ball Aerospace).

I think its terrific record of dividend growth makes it a great passive income stock to consider, even though recent share price strength has reduced its forward dividend yield to a modest 2.3%. This is some way below its 10-year average of around 4%.

On the downside, BAE Systems may face the prospect of cooling US sales as President Trump seeks to boost government efficiency. But on balance, I think the FTSE 100 stock still merits a close look from savvy dividend investors.

££££££££££££££££££

Note:

The PRS REIT plc

(“the PRS REIT” or “the Company”)

Q2 Dividend Increased

and

Update on the Strategic Review & Formal Sale Process

The PRS REIT, the closed-ended real estate investment trust that invests in high-quality, new build, family homes in the private rented sector, is pleased to declare an increased interim quarterly dividend of 1.1 pence per ordinary share (Q2 24: 1.0 pence) in respect of the second quarter (October-December 2024) of its current financial year ending 30 June 2025.

The dividend increase reflects the Company’s continued strong rental and earnings growth. Accordingly, the dividends declared in respect of the first six months of its current financial year (being 2.1 pence in aggregate) will be covered by EPRA earnings.

One hundred per cent. of the Q2 dividend (1.1 pence per share) will be paid as a Property Income Distribution.  

The Q2 dividend will be payable on or around 7 March 2025, to shareholders on the register on 21 February 2025. The ex-dividend date will be 20 February 2025. 

Update on the Strategic Review & Formal Sale Process

The Board of The PRS REIT plc is pleased to provide an update on its Formal Sale Process, a constituent of its Strategic Review announced on 23 October 2024.

The Board confirms that, having made available a data room to multiple interested parties, it has now received several non-binding proposals in connection with the acquisition of the Company. The majority of these proposals were pitched within a price range representing a premium to the current share price of 109.2 pence per share and a discount to the latest published net asset value as at 30 June 2024 of 133.2 pence per share. The Board intends to invite a subsection of such parties to enter into a confirmatory due diligence process which is expected to be completed no later than the end of calendar Q1 25.

There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made. Further announcements regarding the Formal Sale Process will be made when appropriate.

Reflecting on the remit of the Strategic Review, the Board continues to explore all the options available to the Company, with a view to maximising value for the Company’s shareholders.

$$$$$$$$$$$$$$$$

Current share price 113p

Current yield around 4%

Current discount to NAV 15%