2 top dividend stocks that I’d buy for October

Over the course of September, the FTSE 100 average dividend yield has risen. It currently sits at 3.5%. So, as we go into October, there are several top dividend stocks that I’d consider buying with cash that I have ready to invest.

A defensive top dividend stock

First up is National Grid (LSE:NG). The company delivers electricity and gas to UK customers, being one of the largest providers in this space. It also has some operations in the US. The share price is up 5% over the past year, but a 6.5% fall over the past month has helped to push the dividend yield up to 5.47%

As a utility company, I think this is a good addition to my portfolio with the current state of the stock market. Jitters that are present could see a nervous Q4 in the markets. Therefore, having a defensive stock like National Grid in my portfolio should help to protect me.

I think the outlook is positive for the company. At the start of September, it received clearance from the Competition and Markets Authority (CMA) to buy Western Power Distribution. This is the largest electricity distribution business in the UK, making it of strategic importance for National Grid going forward.

One risk to this top dividend stock is the current issues with rising energy prices in the UK. Spikes in commodity prices could negatively impact the company depending on how it plans to pass on rising costs.

A strong yield and share price growth

Another company I’m considering to buy in October is Aviva (LSE:AV). I wrote about this stock earlier this summer, as one of the top dividend stocks in the FTSE 100 at the time. I still think this is the case. It currently has a yield of 5.32%, with the share price up 36% over a one-year period. 

Aviva is a UK-based insurance provider but also offers savings and other retirement products. Having once spanned many geographical regions, the business has trimmed down operations to focus on key markets. Ultimately, this will be the UK, Ireland and Canada.

I think this outlook is positive for the company as it will allow the business to better service these markets. I also think this can help my dividends going forward. Excess cash from sales of other Aviva businesses could be returned as special dividends in the future. I’ll also be able to benefit from the above average dividend yield irrespective of special dividends.

A risk here is that the company is trying to rebrand, which always carries uncertainty. The new brand, “it takes Aviva”, will see a change of direction with its marketing. It’s too early to tell whether the focus and pivot of the overall business is working. If it doesn’t, then another strategy rethink will be needed.

Overall, I’d consider investing in both firms as top dividend stocks for October.

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jonathansmith1 has no position in any share mentioned. The Motley Fool UK has recommended National Grid. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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