I like the look of two dividend shares that could boost my wealth. Let’s take a look at them.
Consumer goods giant
My first pick is Unilever (LSE: ULVR). There is a high likelihood you will have purchased and used one of its products. These include personal hygiene, food, and cleaning goods. Some of its biggest brands are Dove, Ben & Jerry’s, and Comfort.
I like Unilever for a few reasons. To start with, it is a global giant and possesses significant brand power. Next, I believe it stands to do well in the face of a recession or economic downturn. After all, people need to use cleaning and hygiene products. One potential risk here is that some consumers may turn to cheaper unbranded alternatives during tough times.
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Unilever currently has a dividend yield of 3.5%. Although this isn’t the highest yield out there, I prefer a solid yield with a good track record of payout coupled with strong financials and fundamentals. The company possesses all these traits, in my opinion.
I have noticed that Unilever’s shares are trading at a premium currently, which could be seen as risky. As I write they’re trading for 4,350p, which is an 18% increase compared to this time last year when they were priced at 3,666p. A price-to-earnings ratio of over 16 is above average. Macroeconomic shocks, or a poor period of performance, could send the price downwards.
Defensive traits
My second pick is National Grid (LSE: NG). It owns, operates and maintains the electric and gas transmission system in the UK. I believe it possesses a major defensive trait as it is the only company to do so. Aside from supplying the UK, it also has operations in the US where it serves over 7m customers across three states.
Due to its lack of competitors in the UK, National Grid is able to generate stable and consistent revenues. This leads to healthy and regular dividends. In fact, it has paid a dividend annually since 1996, which is a remarkable feat. At present, its dividend yield stands at just over 4.5%.
Another bullish trait for National Grid is the fact it hasn’t historically been affected by macroeconomic headwinds or recessions. There is proof of that when the pandemic hit in 2020, and the financial crash of 2008 occurred. Performance remained steady and dividends were still paid.
One drawback that could impact National Grid is the fact it needs to update its infrastructure. This is due to the fact that the UK is looking to move away from gas, and towards more greener alternatives. The company has set aside £40bn of investment needed by 2026 and more could be needed to meet the 2050 Net Zero target. This expenditure could impact dividend payouts in the future.
Dividend shares for the win
It is always worth noting that dividends are never guaranteed and can be cancelled at the discretion of the business to conserve cash.
Despite this, if my sole aim were to bolster my holdings with dividend shares, I would buy Unilever and National Grid shares. I believe their brand power, defensive traits, as well as performance and dividend record would serve me well.
