3 of the safest dividend stocks on Earth

No income stream is truly secure. However, some dividend stocks have a better chance of consistently delivering money than others, based on their track record.

As luck would have it, some of these are listed in the UK.

Diageo

Premium spirit manufacturer Diageo (LSE: DGE) sells many of its best-known alcohol brands in more than 180 countries around the world. The bottom line is that this is a drink that people will consume regardless of what happens in the economy.

This defensiveness that keeps the money rolling in, the proportion that regularly pays out to shareholders.

But a ‘safe’ dividend is not necessarily a ‘great’ dividend. Indeed, Diageo’s current yield is only 2.3%. For perspective, the FTSE 100 index returns around 3.5%. Some companies offer it in double figures.

However, we are interested in consistency, not size. As an indication of the former, Diageo has steadily raised its cash return while also managing to raise its share price by over 46% over the last five years. As I type, the FTSE 100 is only up 11% since 2018!

All this makes me think that Diageo would be a fundamental investment if I wanted to build a portfolio focused on generating passive income.

Halma

FTSE 100 peers Halma (LSE: HLMA) is another dividend aristocrat. In fact, it almost puts Diageo to shame.

This group of life-saving technology providers is growing its total payout by 5% or more annually… for the past 43 years.

I think the 44th year seems likely. After all, Halma has shown himself adept at implementing a ‘buy-and-build’ strategy by snapping up companies that will increase earnings and, therefore, dividends.

The bad news is that Halma stock has been expensive for a long time. Although the price has fallen over the past year, the stock is still changing hands at a price-to-earnings (P/E) ratio of 31.

The yield (0.9%) is also minute compared to what I can get in other markets. Even bog standard cash savings accounts now offer more.

For me, however, Halma is worth the risk for the combination of income and growth. I would buy this stock now if I had the funds to do so.

BAE system

BAE system (LSE: BA) was the best performing stock in the FTSE 100 last year, rising 55%. While this reason is not difficult to understand or exciting, the owner should be very happy.

For me, however, BAE has long appealed more as a stock held for income. Like Diageo and Halma, the defense giant has an impressive history of raising its dividend every year.

It is expected to increase its payout by another 7% in 2023. This would yield a 3.4% yield, based on current stock prices. Another thing worth mentioning is that BAE’s profits are expected to cover the dividend twice. This makes it highly unlikely that there is a cut in the horizon.

Clearly, some gains can be made if we achieve a compassionate resolution to the Ukraine/Russia conflict. However, last year’s invasion has certainly pushed countries around the world to consider increasing their defense budgets.

So, while I still wouldn’t prioritize buying these UK stocks for short-term capital gains, I think their income credentials are getting stronger. I would buy it today if I had the funds.