3 Defensive Dividend Stocks With Predictable Cash Flows For Retirement

The AI buildout is pulling in trillions of dollars of planned spending on data centers and chips, while profit margins across big tech are under pressure from rising costs, price wars, and growing open source competition. If those huge bets do not pay off, the shock could reach pension funds, banks, and everyday portfolios. Against that backdrop, some investors are looking at defensive dividend stocks that may offer steadier cash flows and less direct exposure to the AI arms race. Below, this article walks through 3 stocks from a Defensive Dividend Stocks screener that appear positively exposed to this news backdrop.

Overview: Artesian Resources is a regulated water utility that supplies drinking water, wastewater and related services to homes, businesses and public customers across Delaware, Maryland and Pennsylvania, along with contract operations and service-line protection plans.

Operations: Artesian Resources generates most of its roughly US$114.8 million in revenue from its Regulated Utility business at US$107.2 million, with a smaller US$7.9 million contribution from other non utility services and a minor inter segment elimination.

Market Cap: US$343.0 million

For investors worried about AI related volatility, Artesian Resources offers exposure to essential water services with a long operating history, improving profitability and a 3.73% dividend yield, although the dividend is not well covered by free cash flow. Earnings grew 8.9% over the past year and recent quarterly results show higher revenue and EPS. The stock trades close to an internal fair value estimate on a slightly lower P/E than the global water utilities average. The trade off is a highly leveraged balance sheet that relies on external borrowing, which could matter if funding markets tighten. The real question is whether this mix of income, regulation and debt fits your definition of a defensive dividend stock.

Artesian Resources appears to be a classic income story on the surface, yet the real tension lies between its leveraged balance sheet and steady utility cash flows, so review the 2 key rewards and 2 important warning signs

Overview: American States Water provides regulated water, wastewater and electric services to residential, commercial, industrial and military customers in the United States, with a core footprint in California and long running contracts on several military bases.

Operations: The company generates most of its US$679.3 million revenue from Water at US$475.2 million, with US$60.9 million from Electric and US$143.2 million from Contracted Services, all within the United States.

Market Cap: US$3.2b

American States Water gives you classic regulated utility exposure with a long dividend track record, but with some extra angles that matter when AI spending is directing capital into higher risk projects. Recent results show higher revenue and EPS, management is targeting US$170 to US$210 million of infrastructure investment in 2025, and new California connections plus military contracts support recurring cash flows, even as earnings and revenue growth are expected to run below the wider market. The catch is a high reliance on external borrowing, equity issuance that can dilute returns, and regulatory shifts in California that may add earnings volatility. The real interest lies in how that balance of steady income, growth projects and financing risk compares with other defensive dividend options in your portfolio.

American States Water’s mix of regulated income and planned US$170 to US$210 million infrastructure spend looks like a story investors may not have fully joined together yet, so walk through the 3 key rewards and 2 important warning signs to see what could quietly tip the balance.

Overview: Smith & Nephew is a global medical device company that supplies hospitals and clinics with orthopaedic implants, sports medicine and ear, nose and throat products, and advanced wound care solutions for conditions such as ulcers, burns and post operative wounds.

Operations: Smith & Nephew generates about US$2.4b in revenue from Orthopaedics, US$1.9b from Sports Medicine & ENT and US$1.8b from Advanced Wound Management, with the United States its largest market at roughly US$3.3b.

Market Cap: £9.7b

Smith & Nephew gives you a large, long established healthcare business with products that sit at the heart of joint replacement, sports injury repair and chronic wound care. These are areas that can stay in demand even if AI related spending comes under pressure. Earnings grew 51.7% over the past year, profit margins improved to 10.1%, and the stock trades at a P/E of 20.4x, below many medical equipment peers, while still paying a 2.6% dividend and running a sizeable buyback program. The other side of the story is a balance sheet with high debt and pressure on parts of the wound business from pricing and reimbursement changes. The key question is whether the margin gains, robotics roll out and new products are enough to justify taking on that risk profile.

Smith & Nephew’s accelerating earnings and margin gains hint at a story investors may be underestimating. Walk through the 6 key rewards and 1 important warning sign to see whether the balance sheet risk is masking something bigger.

The three stocks covered here are only a starting point, as the full Defensive Dividend Stocks screener has identified 9 more companies with equally compelling income and stability stories that could fit the kind of portfolio you are building. To identify and analyze the highest conviction opportunities for your own plan, head to the Defensive Dividend Stocks screener where you can filter for the specific catalysts, balance sheet strength and dividend narratives that matter most to you.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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