It’s been a brutal few days for inventory markets however some dividend revenue shares have proven their defensive capabilities.

Whereas the FTSE 100 is down practically 11.5% over the past week, two quiet achievers have managed to climb nearly 5% every. 

In turbulent instances like these, that sort of resilience grabs my consideration. Particularly when it’s from a sector I’ve ignored for years: water utilities.

Utilities have lengthy been seen as basic defensive shares. Folks don’t abruptly cease turning on the faucets or boiling the kettle throughout a downturn. Their earnings are sometimes regulated too, which can assist clean the monetary experience.

In fact, they’re not excellent. Utilities are likely to lag in growth instances and infrequently carry excessive ranges of debt. 

In at this time’s world of elevated rates of interest, meaning larger borrowing prices. It additionally makes their dividends look much less interesting in comparison with the return on money and bonds, which carry little or no capital threat.

Even so, these two water giants have defied the market panic

United Utilities is that this week’s greatest winner

United Utilities (LSE: UU) is the very best performer on the FTSE 100 over the previous week, the shares leaping 4.9%. Over 12 months, it’s barely moved (up lower than 1%), however over 5 years, it’s climbed 25%.

That’s earlier than factoring in its dividend, which at present yields a tempting 4.88%. Final yr, it hiked the dividend by 9.4% to 49.78p per share.

There are larger yields on the market, however few include the identical degree of perceived stability. That stated, United Utilities isn’t low cost. At 33 instances earnings, the inventory trades on a premium valuation.

The group can be dedicated to a £13bn funding programme over the subsequent 5 years, which is able to go in direction of the most important infrastructure improve in additional than a century. And it’s placing apart £525m to assist low revenue households pay their payments. Web debt is already excessive at round £9bn, larger than its £7bn market cap.

Regardless of that, the board expects to extend dividends in keeping with inflation, whereas the steadiness sheet nonetheless appears to be like sturdy, with £2.6bn in liquidity.

Personally, I’m extra serious about shares which have dropped however for extra cautious buyers, this type of efficiency could also be price contemplating.

The Severn Trent share price is on the up

Severn Trent (LSE: SVT) has additionally made a splash this week, with its share price up 4.77%. It’s gained 5% over the yr, and 22% over 5 years (once more, earlier than dividends). That’s additionally a reasonably strong whole return from an simply neglected FTSE inventory.

Like United Utilities, it’s not low cost, with a price-to-earnings ratio of round 33. It has web debt of round £7bn towards a £7.7bn market cap.

The group tripled half-year earnings to £192m in November however got here underneath fireplace for lacking ingesting water requirements, whereas paying CEO Liv Garfield £3.2m regardless of a £2m positive for a sewage spill within the River Trent. Final yr, it hiked the dividend greater than 9% to 116.84p per share. The present trailing yield is a strong 4.57%.

If markets recuperate shortly, these regular climbers might fall out of favour. But when rates of interest drop or market volatility continues, these are price contemplating for buyers who prize a great evening’s sleep.