Dividend stocks are still a good investment right now, even though many investors are focusing on buying the dip. However, you should have a good portion of your portfolio in defensive stocks since many expect a technical recession or more. Analysts on CNBC discussed a possible hard landing taking unemployment up to 7% as tariff shocks and a macro slowdown ripple through the economy.
The tariff pause caused relief, but this is not a long-term solution, especially considering that the White House clarified that tariffs on China are actually at 145%. If these tariffs stick around, a decoupling from China will be necessary, and it will be very costly for companies that have their supply chains there. It won’t be pretty for the stock market.
You should also keep in mind that a 90-day tariff pause is not a reversal of President Donald Trump’s trade policy. This is likely to give the market more breathing room before a continuation of reduced tariffs if negotiations are successful with the 75-ish countries. In the meantime, 10% baseline tariffs and 145% tariffs on China are more than enough to lead to a lot of pain.
Here are three dividend stocks with over an 8% yield and strong financials. Realistically, none of these stocks are going to stay unscathed in a full-blown recession. But it’s likely they won’t fall as much and keep their dividends relatively intact.
TIM S.A. (TIMB)
TIM S.A. (NYSE:TIMB) is a Brazilian telecommunications company. It is the third largest wireless carrier in the country, with 62 million subscribers or about 24% of the Brazilian mobile market.
It also has a 49% ownership stake in I-Systems for broadband services to around 10-15% of Brazil. The fundamentals here are quite solid and either profits or dividends going down is unlikely in the coming years. Brazil’s economy has been quite stable, and the country’s central bank has also been proactive in fighting inflation. They were one of the first countries to aggressively hike their interest rates and have hiked it again to 14.25% in March. The current inflation rate is at 5.48%.
This company posted $323.7 million in net interest expenses due to the interest rate. Even then, net income came in solid at $517 million and paid out solid dividends.
The current dividend yield is 9.9% (TTM). You’re only paying 10.5 times forward earnings for this stock and both the top line and the bottom line are expected to keep growing. EPS is expected to grow from $1.37 in 2025 to $1.7 in 2027. Interest rates could also come down in the coming quarters and lift cash flow.
Westlake Chemical Partners LP (WLKP)
Westlake Chemical Partners LP (NYSE:WLKP) is a master limited partnership that primarily sells ethylene. It is a part of the larger Westlake Corporation ecosystem, and although it has a market capitalization below $800 million, it still posts consistent cash flows.
The cornerstone of this company is its long-term Ethylene Sales Agreement with Westlake Corporation, which owns a 63.4% limited partnership interest in WLKP. Westlake guarantees to purchase 95% of WLKP’s ethylene production at a fixed margin and gives Westlake Chemical a very solid footing.
The stock is up just 1% in the past year and is only down 3.3% year-to-date compared to the S&P 500 being down 10.6% year-to-date as of writing. Even if it goes down further, the consistency here should cause a quick recovery. The EBITDA has hovered around $470 million (±$30 million) annually for the past decade.
The dividend yield here is at 8.48%, with an 88.3% payout ratio. That payout ratio is not too concerning for an MLP with great earnings consistency.
Global Ship Lease (GSL)
Global Ship Lease (NYSE:GSL) is a maritime transportation company. The global shipping industry has been pretty volatile, but the volatility is not too bad for the companies as shipping rates have increased. The conflict in Eastern Europe re-routed global supply chains in a way that increased shipping demand significantly. Moreover, the conflict in the Middle East has made supply chains even worse due to disruptions in the Red Sea. A big portion of vessels are now going around southern Africa. That’s a much longer route and has increased transit times significantly.
The financials here have been getting consistently better year after year. It posted $263 million in revenue and $40 million in profits in 2019, but that rose to $706 million in revenue and $354 million in profits. Its charter strategy with fixed-rate agreements insulates GSL from cyclical downturns and has added $885 million of contracted revenues in its backlog in the past 14 months.
Supply disruptions are still ongoing, and there are no Middle East peace deals in sight. Things have instead gotten even more dangerous around the Red Sea, so shipping rates are expected to remain high. In turn, this should allow Global Ship Lease to capitalize and keep paying solid dividends.
The dividend yield here is at 9.29%, with a 19.59% payout ratio.
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