3 Ultra-Safe Dividend Stocks That Yield Over 5%

It might seem counterintuitive to buy safe dividend stocks with “boring” underlying businesses when everyone else is scrambling to buy the hottest AI and tech stocks at any price. The latter strategy has worked wonders for investors, but safe dividend stocks have stood the test of time.

Investors will eventually pile back into safe stocks like they did in 2021. No one knows if that will happen in months or years, howbeit it’s never too late to start preparing.

The inflation report yesterday showed that tariffs are just starting to translate over into the hard data. The Consumer Price Index (CPI) rose 2.7% (annualized) in June, slightly higher than expectations. The trend of CPI coming in lower than expectations has been reversed, and a continuation may lead to investors surging into safer assets.

Below are three safe dividend stocks to look into if you expect more trouble. Even if you don’t, having some money in lower-beta equities is a good idea. Yields of over 5% also keep you ahead of inflation.

As a final note, I would warn against having unrealistic expectations for any of these picks. A full-blown recession will not allow even “safe” stocks to defy gravity, especially those paying high dividends. You’ll likely see temporary drawdowns, but what matters is that they are highly likely to recover post-recession.

NorthWestern Energy Group (NWE)

NorthWestern Energy Group (NASDAQ:NWE) is a company that focuses on delivering electricity and natural gas to customers in Montana, South Dakota, Nebraska, and the Yellowstone National Park.

I’d go with NWE for high yields without taking on significant risk. Most other utility stocks with comparable safety profiles yield 3-4%. There are awful caveats if you want even more yield. Edison International (NYSE:EIX) yields 6.52% but may get fined billions for the Eaton Fire.

If you just want to buy, hold, and receive dividends. Utility companies are going to be your best friend in the next three and a half years or more. The current administration has extended tax cuts and added even more incentives. Medicare and Medicaid cuts, plus some debt, won’t be enough to fund the One Big Beautiful Bill.

Tariffs are still being looked at as temporary ammunition for negotiations. “Temporary” is very unlikely to be the case. Trump will likely offset OBBB cuts through tariff revenue, and utilities are among the few sectors almost completely outside the purview of these tariffs. Average tariffs could permanently end up north of 20% instead of the 10% being priced in by the market.

There’s also a deadline of 50 days on Russia, after which “secondary tariffs of up to 100 percent on countries that still trade with Russia” (Brazil, India, and China) will be imposed. Russia may end up ignoring the deadline if it believes these secondary tariffs will pull these countries closer to itself.

You don’t want to be in the line of fire.

NWE stock comes with a 5.12% forward dividend yield and a payout ratio of 68.91%.

NorthWestern Energy derives 100% of its revenue domestically. There have been 21 consecutive years of dividend hikes. Plus, NWE will benefit from the data center buildout and the electricity demand as they come online.

United Parcel Services (UPS)

United Parcel Services (NYSE:UPS) derives around 80% of its revenue domestically, and while tariffs do hurt it, this business is far from feeble.

It’s a household name that a significant number of Americans depend on. It’s essential for the broader economy and contributes greatly to the U.S. GDP. The business also benefits from the long-term growth of e-commerce.

The COVID growth wave lifted the business by over 140% from April 2020 prices, but the stock has since corrected below $100. It’s unlikely to dip below these levels as analysts expect revenue to start growing again next year. EPS is also expected to start recovering and grow 12.16% in 2026.

UPS has emerged stronger from COVID and has retained most of the revenue. It is now focusing on margins. Operating margin bottomed out in Q2 2024 at 8.24% and has recovered to 9.37%. I see it going higher as UPS sheds Amazon’s (NASDAQ:AMZN) low-margin shipments and cuts 20,000 workers. If tariffs stick, this will end up being a net positive move that’ll save UPS a lot of hassle.

UPS yields 6.6% with an 83.75% payout ratio. There have been 16 consecutive years of dividend increases.

Pfizer (PFE)

Pfizer (NYSE:PFE) has a lot more to offer beyond just vaccines. It’s a well-diversified biopharma business generating cash flow from dozens of drugs. If you exclude COVID products, Pfizer’s operational revenue growth was 12% last year.

This core business is now what the market considers for valuing the business. Here, the cash flows are solid and stable. Established biopharma companies like Pfizer are much safer than you think. When an individual starts taking medicine, there’s a good chance they’ll take it for a lifetime and generate annuity-like revenue.

The stock is consolidating below $25, well below pre-COVID prices. I see plenty of upside as pandemic-era products become more irrelevant and the spotlight shifts to the core business. In the meantime, PFE will yield you 6.97% with a 55.74% payout ratio. The dividends have been increased for 16 consecutive years.

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