Navigating the stock market can be akin to riding a roller-coaster, particularly in times of economic uncertainty such as the current era marked by tariff discussions and significant developments in the tech world, like China’s DeepSeek. Amid this tumult, investors are increasingly drawn to the perceived stability of dividend stocks. However, the immense variety of dividend-paying companies can complicate the selection process. This article explores several strategies to identify promising dividend stocks, highlighting insights from preeminent Wall Street analysts who base their recommendations on thorough financial assessments and growth prospects.
In volatile market periods, dividend stocks can offer more than just a yield; they can serve as a buffer against losses. These stocks pay investors regularly, typically every quarter, and deliver a tangible return regardless of stock price fluctuations. Yet, the challenge lies in selecting the right stocks, particularly when the market is saturated with numerous alternatives. Consequently, investors should consider leveraging the expertise of seasoned analysts who provide insights stemming from rigorous research into a company’s financial health and future potential.
First on the radar is tech behemoth IBM (IBM), which has recently garnered attention following an impressive fourth-quarter performance that surpassed market expectations. A significant driver of this growth was the company’s Software segment, which has seen increased demand fueled by advances in artificial intelligence (AI) and integration with the Red Hat Linux operating system. During the last quarter, IBM distributed $1.5 billion to its shareholders through dividends, achieving a notable dividend yield of 2.6%.
According to industry analyst Amit Daryanani from Evercore, this performance warrants a revised price target of $275 for IBM stock, an upgrade from a previous $240. Daryanani lauds the growth in IBM’s Software business as an essential factor in propelling revenue, counterbalancing downturns in its Consulting and Infrastructure segments. He believes that ongoing investments in AI will only further bolster IBM’s position in the market.
Moreover, Daryanani suggests that although the Consulting segment has experienced stagnation recently, forecasts for IT spending in 2025 present a promising outlook. IBM’s commitment to a steady and growing dividend reinforces the company’s investment appeal, especially since there have been no share repurchases—indicating a robust focus on shareholder returns through dividends. Daryanani’s impressive track record positions him well within the analyst community, where he boasts a 61% success rate and an average return of 14%.
Next up is Verizon Communications (VZ), a telecommunications powerhouse that has shown resilience during the fourth quarter of 2024, boasting the best growth in postpaid phone additions in five years. Verizon’s dividend, which is just over 67 cents per share, provides an attractive yield of 6.8%.
Tigress Financial’s Ivan Feinseth recently reiterated a ‘buy’ rating for Verizon with a target price of $55. According to him, the robust 5G acceptance and a resurgence in mobile broadband subscriptions are crucial factors driving growth. He emphasizes Verizon’s capacity to leverage artificial intelligence for optimizing its network and enhancing operational efficiency. This dual focus on technology and consumer needs positions Verizon to capitalize on emerging trends such as autonomous vehicles and smart city solutions.
Feinseth’s optimism about Verizon stems not just from its immediate performance but also from its long-standing tradition of increasing dividends over the past 18 years—an indicator of reliability and growth potential. With a 62% success rate and an average return of 15%, Feinseth’s insights can guide investors through the complex landscape of dividend investing.
Lastly, we consider EPR Properties (EPR), a real estate investment trust (REIT) uniquely concentrated on experiential locations such as theaters and amusement parks. With a dividend yield of 7.2%, EPR offers an appealing investment opportunity for those seeking substantial returns.
Recent analyses by RBC Capital’s Michael Carroll have restated confidence in EPR, with a price target set at $50. Notably, Carroll highlights a notable recovery in consumer behavior following the pandemic, suggesting a return to pre-COVID levels of engagement in communal experiences. As box office revenues and foot traffic in entertainment venues rebound, EPR stands to gain significantly.
Carroll’s insights into EPR’s tenant health and management’s future outlook underscore a promising trajectory, forecasting an increase in wide releases by film studios conducive to revenue growth. His positive outlook is bolstered by an expected annual growth rate for dividends between 3% and 5%, making EPR a worthy contender for dividend-focused portfolios.
As the stock market navigates a maze of uncertainties, dividend stocks present a viable strategy to achieve stable returns. The cases of IBM, Verizon, and EPR Properties demonstrate how robust financial performance paired with expert analysis can illuminate pathways to successful investments. By aligning with seasoned analysts, investors can make informed choices, ensuring their portfolios remain resilient and prosperous, even amidst market fluctuations.