The Dividend Safe Harbor: 2 Stocks to Watch

Key Points

Rising geopolitical tensions, surging oil prices, and increasing volatility are pressuring U.S. equities and driving a shift toward defensive positioning.
Pfizer offers healthcare stability, strong institutional inflows, and an attractive 6%dividend yield.
Energy Transfer combines sector-leading energy momentum with a near 7% yield and fee-based midstream resilience.

It’s been a lackluster year so far for U.S. equities. Year-to-date, the benchmark S&P 500 is slightly in the red, weighed down primarily by a selloff in mega-cap technology. What began as a pause in leadership has evolved into broader volatility, and now, geopolitical tensions are adding another layer of uncertainty.

Over the weekend, a joint U.S.-Israel mission targeting Iran significantly escalated tensions in the Middle East. In response, markets have begun pricing in higher risk. Brent crude is trading near 52-week highs, the U.S. Dollar Index appears to have carved out a short-term bottom, and the CBOE Volatility Index (VIX) is attempting to break out of a prolonged consolidation range.

Rising oil prices, a strengthening dollar, and expanding volatility typically don’t create a favorable backdrop for equities in the near term. If risk-off sentiment continues to build, investors may look to rebalance portfolios toward more defensive positioning.

For those seeking stability and income amid lingering uncertainty, dividend-paying defensive stocks offer a potential safe harbor, particularly those with steady demand profiles and attractive valuations.

A healthcare giant and a midstream operator check both boxes.

Pfizer: Defensive Healthcare With Yield

Pfizer (NYSE: PFE) stands out for both its defensive positioning and its income appeal. Healthcare has been one of the primary beneficiaries of capital rotation this year, as investors shift toward sectors less sensitive to macroeconomic swings. Pfizer has reflected that trend. The stock has increased by nearly 9.5% year-to-date, significantly outpacing the overall market.

One of the most compelling aspects of Pfizer’s profile is its dividend. The company currently offers a yield of 6.3%, well above the S&P 500 average. In an environment where volatility is rising and growth expectations are moderating, that level of income becomes increasingly attractive.

Fundamentally, results have also been steady. In its Q4 2025 earnings report, Pfizer posted EPS of 66 cents, beating consensus estimates of 57 cents. Revenue came in at $17.56 billion, slightly down year over year but still ahead of expectations. While top-line growth has moderated, the company continues to demonstrate earnings resilience.

Valuation further strengthens the case. With a forward P/E ratio of 9.6, Pfizer trades at a significant discount to the broader market. For long-term investors seeking value within a defensive sector, that multiple appears compelling.

Institutional flows also suggest growing confidence. Over the past 12 months, the stock has seen $16.1 billion in inflows versus just under $12 billion in outflows, resulting in roughly $4 billion in net inflows. That steady accumulation reinforces the defensive narrative.

Energy Transfer: Yield and Sector Strength

Energy Transfer (NYSE: ET) offers a different type of defensive exposure, with the added benefit of sector momentum. Based in Dallas, Energy Transfer is a midstream energy company that develops and operates infrastructure for transporting, storing, and processing hydrocarbons. Its integrated network of pipelines, terminals, and storage facilities moves natural gas, natural gas liquids, crude oil, and refined products across North America.

Unlike upstream producers, midstream companies are typically less exposed to commodity price volatility and instead generate fee-based revenue tied to volume. That structure can provide relative stability, even during periods of price swings. That said, rising oil prices act as a supportive tailwind for the broader energy sector. With crude oil trading near 52-week highs amid escalating geopolitical tensions, capital has aggressively rotated into energy stocks. The energy sector is currently one of the strongest performers year-to-date, and Energy Transfer has participated in that strength.

The stock has recently broken out to new 52-week highs, clearing key resistance levels on the daily chart. Shares have increased by nearly 16% year-to-date, strongly surpassing the performance of the S&P 500.

Income investors will also note the company’s substantial dividend yield, currently near 7%. With a forward P/E ratio of around 11, the stock offers a blend of income and reasonable valuation. Wall Street sentiment aligns with the positive price action. Analysts maintain a Moderate Buy rating on the stock, with a consensus price target implying almost 11% upside potential from current levels.

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