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I'm referring to the abilities from white mage and black mage. Which one applies first and can both apply to an instance of damage taken by the user?

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Based on what I have found, these two abilities can and do work together (and can do so quite well).

Here is a damage-reduction setup that involves both Damage Dispersion and Angelic Ward:

Valkyrie / Merchant may perhaps be one of the most defensive character builds in the game to survive an onslaught of attacks (without Rampart / Ninja Evade move / Spiritmaster stuff), thanks to a generous amount of pure damage reduction abilities.

The key skills:

  • Valkyrie- Spirit Barrier: 10% of incoming damage is dealt to MP, rest of the damage ignores HP
  • Merchant- Low Leverage: Halves damage that everyone can deal out
  • Merchant- Hedge Risk: Reduces damage to your HP by half, taking out that much pg from your money reserves

Key support Skills:

  • Angelic Ward- 50% chance of 50% damage received
  • Damage Dispersion- 15% of HP damage received is transferred to allies for single target attacks
  • Steady MP- Recover 30 MP every turn

Spirit Barrier, so long as you have at least 1 MP left, will always protect you from one attack no matter how damaging it is due to damage not spilling over after MP has been drained. This skill alone with Steady MP can ensure you survive at least one attack every turn (though you have to recast it after MP drops to 0).

Combining the percentages from Spirit Barrier and Low Leverage, you will receive 5% of the original incoming damage as MP damage, or 2.5% if Angelic Ward procs.

Should enemies attack your HP, they will deal 25% of their original damage with Low Leverage + Hedge Risk out, or 12.5% if Angelic Ward procs. The percentages change to 21.25% and 10.625% respectively if hit with a single target attack.

This all doesn't even consider damage reduction via Defaulting or the damage nullification skills from Rampart / Spirit Master. Better defences would of course lower the initial damage taken.

The part I have bolded is the interaction between Angelic Ward and Damage Dispersion. Damage Dispersion activates when the target is hit with a single-target attack, but not when hit with a multi-target attack. Angelic Ward, however, has a 50% chance to activate upon being hit with any attack.

Thus, if you are hit with a single-target attack, there is a 50% chance that your damage will be halved and then split between members of your party.

If you are hit with a multi-target attack, then there is just a 50% chance that the incoming damage will be halved.

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