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When hunting for stocks to buy, it’s important to always consider current geopolitics and macroeconomic factors that might impact performance. Interest rates, oil prices, and political uncertainty all feed directly into share prices and dividend safety.
Here’s what’s impacting stocks this month. Oil prices have fallen sharply from the $90+ levels seen in June, reflecting easing geopolitical tensions or demand concerns.
That’s less favourable for energy names. But lower energy costs reduce input costs for manufacturers, retailers, and transport companies. Discretionary spending may improve as consumers face lower fuel bills.
So which sectors benefit most?
Defensive dividend stocks stand out
In the current environment, defensive dividend stocks look most attractive to me. British American Tobacco, National Grid, and Legal & General all look appealing. They’re less sensitive to oil prices and more dependent on interest rates and domestic demand.
| Company | Dividend yield | Key metric | Why it matters |
|---|---|---|---|
| British American Tobacco | 5.3% | 68.8% payout ratio | Defensive, essential consumer product |
| Legal & General | 7.6% | 16-year dividend growth streak | Insurers benefit from higher investment returns |
| National Grid | 3.9% | 1.6 times dividend coverage | Inflation-linked revenues |
But while those all look good, the one I’m mostly interested in this month is NatWest (LSE: NWG). Why? Because the bank’s latest results were impressive, and the dividend outlook keeps getting better.
Could this be the bank stock I’ve been missing from my portfolio?
NatWest’s rising appeal
NatWest is quickly becoming one of the most attractive bank stocks that I don’t hold yet. But if it keeps this performance up, that might soon change.
It’s trading at a lower valuation than Lloyds and has enjoyed stronger profit growth lately, helping drive up the dividend. Not only that, but it has far less exposure to the car finance mis-selling scandal than Lloyds.
Here’s a quick breakdown of key elements from its 2025 results:
- Profit before tax rose 24% year on year to £7.71bn.
- Income rose 13% to £16.64bn.
- Return on tangible equity (RoTE) climbed to 19.2% from 17.5%.
These are the kinds of numbers that get income investors excited.
Admittedly, it doesn’t have the same defensive qualities as others. Bank stocks are particularly exposed to the UK economy, and with the current political uncertainty, this is a key risk.
But forecasts remain optimistic, predicting NatWest’s earnings will increase by a yearly average of 4.7% to end-2028. Meanwhile, the current 4.8% dividend yield is forecast to reach 6.9% by 2028.
That’s a meaningful jump in income without taking on excessive risk. But is the dividend safe enough to justify buying now?
So is it the best stock for me to buy this July?
My verdict
It’s impossible to say what the ‘best’ stock is in any one situation. But if the domestic political situation settles, I think NatWest could emerge as one of the UK’s top banks this July. If so, I may consider reallocating some of my finance sector funds into the stock.
With a strong yield and impressive results, I think it’s one of the top stocks to consider this month. The combination of rising dividends, solid profitability, and a reasonable valuation makes it hard to ignore.
But I’ll be watching the next quarterly update closely before committing any capital.
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Mark Hartley owns shares in Lloyds, British American Tobacco, National Grid, and Legal & General.
This story originally appeared on Motley Fool
