2 Safer Dividend Stocks for October Market Volatility

September’s surprising market strength has given way to October, a month that historically presents challenges for investors. The unexpected performance in September, typically the “nastiest month of the year for market returns,” has created a cautious backdrop as we enter the final quarter. With the U.S. government shutdown already causing ripples in market waters and prominent investors expressing concerns about the current rally’s sustainability, defensive positioning has become increasingly important.

Leon Cooperman and Jeremy Grantham are among the brilliant investors raising questions about how much longer the current market advance can continue. Whether we’re in the “latter innings” of the bull market or somewhere in between, the consensus suggests it’s prudent to play defense ahead of time. This environment makes lower-beta stocks with reliable dividends particularly attractive, as they can provide stability during potential volatility spikes while generating income for patient investors.

General Mills (NYSE:GIS) stands out as a defensive powerhouse in today’s potentially rich market. The consumer packaged foods company has been stuck in a multi-year bear market, currently trading down approximately 44% from its 2023 all-time high. Despite facing significant headwinds that have weighed on quarterly sales and the share price, management remains confident in their ability to turn the corner as consumers feel economic pressure at grocery store middle aisles.

What makes GIS particularly compelling for defensive investors is its combination of a substantial 4.9% dividend yield and a beta close to zero—actually slightly negative. This unique characteristic means the stock could provide genuine shelter during the next market storm. The company’s ongoing turnaround plan includes new products and marketing initiatives that could potentially jolt sales, though investors are still waiting for that decisive quarterly upside surprise that would validate the recovery narrative.

For investors with patience, General Mills represents a classic “show-me” story with attractive income compensation during the waiting period. The stock’s resilience to broader market movements, combined with its generous dividend, positions it as a strategic defensive holding ahead of potential October volatility.

Starbucks (NASDAQ:SBUX) presents a different but equally compelling defensive opportunity. The coffee giant has shed around 2% of its value over the past five years and currently trades approximately 33% below its early 2021 all-time high. While the stock might not fit the traditional definition of a “safer” investment, its current valuation and turnaround potential make it an attractive value proposition for investors seeking both defense and upside potential.

The company’s most significant asset in its recovery effort is CEO Brian Niccol, recognized as a proven turnaround artist. Under his leadership, Starbucks has initiated substantial restructuring measures including 900 job cuts and plans to close hundreds of stores. These strategic moves, combined with seasonal drivers like Pumpkin Spice season and new initiatives to expand the protein lineup, could fuel a resurgence when consumer sentiment improves.

While investors wait for the turnaround to gain traction, Starbucks offers a respectable 2.93% dividend yield. The combination of a premier global brand, strategic restructuring, and income generation creates a compelling package for investors looking for defensive positions with growth potential. Despite being more volatile than traditional defensive stocks, SBUX’s severe oversold condition and identifiable catalysts position it well to withstand potential October market roadbumps.

Both General Mills and Starbucks represent strategic opportunities for investors looking to balance defense with income generation and value potential. GIS offers near-immunity to market movements through its negative beta and substantial dividend, while SBUX provides turnaround upside under proven leadership with a solid yield. Their significant discounts from recent highs—44% for GIS and 33% for SBUX—create compelling entry points for value-oriented investors.

The ongoing turnaround plans at both companies add an additional layer of potential upside. General Mills’ focus on product innovation and marketing coincides with Starbucks’ operational optimization and menu expansion. These initiatives, combined with their attractive dividend yields, provide multiple pathways for investor returns regardless of broader market direction. In an environment where experts question the sustainability of the current rally, such defensive-yet-potential-rich positions could prove particularly valuable throughout October and beyond.