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This year has been outstanding for U.S. equity markets, which charted record-high territories. Buoyed by solid economic strength, healthy labor market conditions, moderating inflationary pressure and an accommodative Federal Reserve stance (albeit in the second half), the outgoing year proved conducive to healthy stock market growth momentum. Moreover, optimism regarding potentially lower taxes and less regulation in President-elect Donald Trump's second innings has proved beneficial.
However, the dream run was interspersed by some of the scariest drops and intense market volatility in recent memories due to geopolitical conflicts, raging wars, an aggressive rate-hiking cycle and policy paralysis owing to the lack of political consensus on broad-based issues. In addition, mixed economic data at certain times was also misleading as it lacked clarity on the broader economic picture. Global macroeconomic uncertainty and volatile oil prices added to the cacophony.
Amid the vagaries of the broader equity market, a prudent investment decision would be to focus on stocks that promise a steady revenue stream with a recent dividend hike history, leading to a healthy dividend yield. Added to the intrinsic value proposition of such stocks, a healthy dividend yield would satiate the appetite of risk-averse investors. The fact that these stocks have the potential to outperform the market, while also providing a decent dividend yield, has made them prized assets. With market volatility likely to stay in 2025, Broadcom Inc. (AVGO - Free Report) , Realty Income Corporation (O - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and NIKE, Inc. (NKE - Free Report) appear to be healthy bets.
Key Picks for Dividend Investing
These stocks have a strong history of dividend growth, which portrays that they are primarily mature companies that are less susceptible to large swings in the market. Consequently, these stocks largely act as a hedge against economic or political uncertainty as well as stock market volatility and offer downside protection with their consistent increase in payouts.
Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, healthy liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that a dividend increase is likely in the future.
Let us dig deep into four such stocks from diverse sectors.
Broadcom: Headquartered in San Jose, CA, Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices. Broadcom’s focus on multiple target markets mitigates operating risks and lessens the exposure to volatility in any single market. Based on its expanding product portfolio, the company is well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Broadcom generates significant cash flow that enables it to pay out consistent dividends. The company is committed to returning half of the normalized free cash flow generated in the previous year to shareholders as cash dividends. As part of this strategy, Broadcom increased its quarterly common stock cash dividend in the fourth quarter of fiscal 2024 to 59 cents per share, up 11% year over year. In fiscal 2024, Broadcom spent $12.4 billion on share repurchases and $9.8 billion in dividend payments. Due to strong and relatively stable cash flow, we believe that the dividend payout is sustainable, making the stock attractive.
This Zacks Rank #3 (Hold) stock has a long-term earnings growth expectation of 17.8% and has gained 107% over the past year. It delivered an earnings surprise of 3.6%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-fiscal earnings for Broadcom has been revised 12.1% upward over the past year.
Realty Income: Headquartered in San Diego, CA, Realty Income is engaged in the acquisition and management of freestanding commercial properties that reap rental revenues under long-term net lease agreements. Its portfolio is well diversified with respect to tenant, industry, geography and property type. Moreover, this REIT (real estate investment trust) targets industrial properties leased to industry leaders, mainly investment-grade rated companies, providing more reliable streams of income, which boosts the stability of rental revenues and generates predictable cash flows.
In December 2024, the company announced a marginal hike in the common stock monthly cash dividend to 26.40 cents per share, indicating its 128th dividend increase since its NYSE listing in 1994. The company enjoys a trademark of the phrase “The Monthly Dividend Company” and has increased its dividend 24 times in the past five years.
This retail REIT has witnessed compound annual dividend growth of 4.2% since 1994. Given the company’s healthy financial position and a lower debt-to-equity ratio compared with the industry, the latest dividend rate is likely to be sustainable in the forthcoming period. Realty Income carries a Zacks Rank #3. It has a long-term earnings growth expectation of 6.4%.
Motorola: Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear and government communications. The company is poised to gain from robust organic growth, disciplined capital deployment and strong demand across land mobile radio products, services and software. As the public safety market continues to embrace software offerings to enhance workflows, Motorola is able to sell cloud-first SaaS offerings in addition to on-premise solutions with ancillary implementation and managed services.
The company recently announced an 11% year-over-year hike in its quarterly dividend payout to $1.09 per share. A steady dividend payout is part of the long-term strategy of Motorola to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of its strengths.
This Zacks Rank #3 stock has a long-term earnings growth expectation of 10.1% and has gained 51.6% over the past year. It delivered an earnings surprise of 9.3%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-year earnings for Motorola has been revised 8% upward over the past year.
Nike: Headquartered in Beaverton, OR, NIKE designs, develops and markets athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. The company is intensifying its focus on sports while enhancing its storytelling efforts with greater impact and boldness to elevate the overall experience, strengthen brand distinction and align with consumer preferences. Additionally, the company is accelerating its innovation pipeline. Focus on its sports performance product category has been the key to its strategy.
The company recently announced an 8% year-over-year hike in its quarterly dividend payout to 37 cents per share. This marks the 23rd consecutive year that Nike has increased its quarterly dividend. For the past 14 years, the company has distributed regular dividends and made share repurchases to improve shareholder returns. In first-quarter fiscal 2025, the company returned $1.8 billion to shareholders, including $1.2 billion in share repurchases and $558 million in dividends.
Image: Bigstock
4 Best Dividend Stocks to Watch in 2025
This year has been outstanding for U.S. equity markets, which charted record-high territories. Buoyed by solid economic strength, healthy labor market conditions, moderating inflationary pressure and an accommodative Federal Reserve stance (albeit in the second half), the outgoing year proved conducive to healthy stock market growth momentum. Moreover, optimism regarding potentially lower taxes and less regulation in President-elect Donald Trump's second innings has proved beneficial.
However, the dream run was interspersed by some of the scariest drops and intense market volatility in recent memories due to geopolitical conflicts, raging wars, an aggressive rate-hiking cycle and policy paralysis owing to the lack of political consensus on broad-based issues. In addition, mixed economic data at certain times was also misleading as it lacked clarity on the broader economic picture. Global macroeconomic uncertainty and volatile oil prices added to the cacophony.
Amid the vagaries of the broader equity market, a prudent investment decision would be to focus on stocks that promise a steady revenue stream with a recent dividend hike history, leading to a healthy dividend yield. Added to the intrinsic value proposition of such stocks, a healthy dividend yield would satiate the appetite of risk-averse investors. The fact that these stocks have the potential to outperform the market, while also providing a decent dividend yield, has made them prized assets. With market volatility likely to stay in 2025, Broadcom Inc. (AVGO - Free Report) , Realty Income Corporation (O - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and NIKE, Inc. (NKE - Free Report) appear to be healthy bets.
Key Picks for Dividend Investing
These stocks have a strong history of dividend growth, which portrays that they are primarily mature companies that are less susceptible to large swings in the market. Consequently, these stocks largely act as a hedge against economic or political uncertainty as well as stock market volatility and offer downside protection with their consistent increase in payouts.
Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, healthy liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that a dividend increase is likely in the future.
Let us dig deep into four such stocks from diverse sectors.
Broadcom: Headquartered in San Jose, CA, Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices. Broadcom’s focus on multiple target markets mitigates operating risks and lessens the exposure to volatility in any single market. Based on its expanding product portfolio, the company is well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Broadcom generates significant cash flow that enables it to pay out consistent dividends. The company is committed to returning half of the normalized free cash flow generated in the previous year to shareholders as cash dividends. As part of this strategy, Broadcom increased its quarterly common stock cash dividend in the fourth quarter of fiscal 2024 to 59 cents per share, up 11% year over year. In fiscal 2024, Broadcom spent $12.4 billion on share repurchases and $9.8 billion in dividend payments. Due to strong and relatively stable cash flow, we believe that the dividend payout is sustainable, making the stock attractive.
This Zacks Rank #3 (Hold) stock has a long-term earnings growth expectation of 17.8% and has gained 107% over the past year. It delivered an earnings surprise of 3.6%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-fiscal earnings for Broadcom has been revised 12.1% upward over the past year.
Realty Income: Headquartered in San Diego, CA, Realty Income is engaged in the acquisition and management of freestanding commercial properties that reap rental revenues under long-term net lease agreements. Its portfolio is well diversified with respect to tenant, industry, geography and property type. Moreover, this REIT (real estate investment trust) targets industrial properties leased to industry leaders, mainly investment-grade rated companies, providing more reliable streams of income, which boosts the stability of rental revenues and generates predictable cash flows.
In December 2024, the company announced a marginal hike in the common stock monthly cash dividend to 26.40 cents per share, indicating its 128th dividend increase since its NYSE listing in 1994. The company enjoys a trademark of the phrase “The Monthly Dividend Company” and has increased its dividend 24 times in the past five years.
This retail REIT has witnessed compound annual dividend growth of 4.2% since 1994. Given the company’s healthy financial position and a lower debt-to-equity ratio compared with the industry, the latest dividend rate is likely to be sustainable in the forthcoming period. Realty Income carries a Zacks Rank #3. It has a long-term earnings growth expectation of 6.4%.
Motorola: Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear and government communications. The company is poised to gain from robust organic growth, disciplined capital deployment and strong demand across land mobile radio products, services and software. As the public safety market continues to embrace software offerings to enhance workflows, Motorola is able to sell cloud-first SaaS offerings in addition to on-premise solutions with ancillary implementation and managed services.
The company recently announced an 11% year-over-year hike in its quarterly dividend payout to $1.09 per share. A steady dividend payout is part of the long-term strategy of Motorola to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of its strengths.
This Zacks Rank #3 stock has a long-term earnings growth expectation of 10.1% and has gained 51.6% over the past year. It delivered an earnings surprise of 9.3%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-year earnings for Motorola has been revised 8% upward over the past year.
Nike: Headquartered in Beaverton, OR, NIKE designs, develops and markets athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. The company is intensifying its focus on sports while enhancing its storytelling efforts with greater impact and boldness to elevate the overall experience, strengthen brand distinction and align with consumer preferences. Additionally, the company is accelerating its innovation pipeline. Focus on its sports performance product category has been the key to its strategy.
The company recently announced an 8% year-over-year hike in its quarterly dividend payout to 37 cents per share. This marks the 23rd consecutive year that Nike has increased its quarterly dividend. For the past 14 years, the company has distributed regular dividends and made share repurchases to improve shareholder returns. In first-quarter fiscal 2025, the company returned $1.8 billion to shareholders, including $1.2 billion in share repurchases and $558 million in dividends.
The stock has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 29.8%, on average, in the trailing four quarters. Nike carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.