Dividend stocks are primed for a comeback in 2025
Subscribe to enjoy similar stories. Owning stocks with big dividends might finally start paying off. Dividend-paying stalwarts such as JPMorgan Chase and Merck are primed to fare better in the coming year, some investors said.
With highflying tech stocks looking expensive and falling interest rates potentially denting the appeal of bonds, dividend shares look good, they said. Investors typically flock to the dividend payers in down markets or when the economic outlook turns cloudy. Indeed, many companies with big payouts, including utilities and consumer staples, produce stable earnings in any weather.
In rallies, though, their shares tend to lag behind. This has been especially true since 2020, when mega-tech stocks such as Tesla and Nvidia have led the market to frequent record highs. The performance gap between the S&P 500 and the dividend stocks has widened this year.
But “that’s when you should be buying" dividend stocks, said Chris O’Keefe, portfolio manager at Logan Capital Management. Logan Capital’s dividend performers portfolio has added more financial stocks recently, including Regions Financial. Visa and Raymond James Financial are the portfolio’s largest overweight positions, according to O’Keefe.
He added that healthcare stocks are inexpensive, and it is likely companies in that sector will boost their dividend payouts over time. That would be a welcome sight for dividend investors, as large U.S. companies’ payouts haven’t kept pace with the market’s rally.
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