BMO Capital Markets says dividend stocks are key to riding out bumps in the market and keeping your money safe. They’ve found that companies that regularly pay dividends tend to do better when markets are unpredictable, which is super helpful right now.
This focus on playing it safe comes at a tricky time for investors. President Donald Trump is back in the White House, which has triggered some early positive movements in the stock market. At the same time, though, Wall Street is nervously anticipating the impacts of his proposed trade policies. On top of that, the Federal Reserve is now expected to cut interest rates less than forecast, keeping the Federal funds rate between 4.25% and 4.50%.
After examining the current market environment, analysts have picked three dividend-paying stocks they think could really help keep your investments steady when things get rough. These companies were chosen because they’re likely to keep paying out even when the market is acting up. Let’s take a closer look at these picks and what makes them special.
Dividend Stock #1: Aflac Incorporated (AFL)
Aflac Incorporated (AFL) sells supplemental health insurance in the U.S. and Japan and has been helping people protect their finances for almost 70 years. The company just announced it is bumping up its dividend by 16% to $0.58 per share for early 2025, payable on March 3. Shareholders are rewarded with a 2.18% yield.
The stock has been on a roll lately, gaining 24% over the past year.
Aflac is a big company, worth $59.16 billion, and its price-earnings ratio of 14.64x is higher than its industry peers.
Its latest financial report was a bit of a mixed bag. Aflac brought in $2.9 billion in the third quarter, missing analyst estimates and coming in 40.4% below the prior-year figure. But on the bright side, earnings per share went up 17.4% to $2.16. Analysts are forecasting adjusted earnings of $1.62 per share and revenue of $4.13 billion for Q4.
Aflac is making some big moves in the company, too. It recently promoted Virgil R. Miller to president starting Jan. 1, 2025 and created some new top jobs. This shows the company is serious about using more technology and growing the business.
Wall Street isn’t super excited about Aflac, with a mean target price of $103.67 that indicates about 3% of downside from its current price. With 17 analysts in coverage, it has a consensus “Hold” rating.
Dividend Stock #2: CSX Corporation (CSX)
CSX Corporation (CSX) runs one of the largest rail networks in the eastern U.S., worth about $64 billion. The firm has rewarded shareholders, paying out $0.12 per share every quarter for an annual forward yield of 1.44%.
CSX has not been immune from market volatility. Its shares are down 4.5% over the past 52 weeks and are starting to recover in the new year, up about 2.8%.
CSX’s report for the third quarter of 2024 looked pretty good. The company generated $1.35 billion in operating income, up from $1.27 billion in the prior year. Net earnings hit $894 million, or $0.46 per share, which is 12% more than last year. Overall revenue went up 1% to $3.62 billion.
CSX is making some smart moves to grow and work better. The company is teaming up with Canadian Pacific Kansas City (CP) and Genesee & Wyoming to make a new train connection in Alabama, which should help things run smoother. It is also enabling a new service between the Southeast U.S. and Mexico with Schneider National (SNDR), which could help boost financial results. Plus, it just struck a five-year deal with their workers, which should keep things stable.
Most experts think CSX is a “Moderate Buy.” The average analyst price target is $38.14, which would be 16.17% upside.
Deere & Company (DE)
Deere & Company (DE), the company behind the iconic green tractors and other heavy-duty machines for farms, construction sites, and forests, have been doing a pretty good job of keeping things steady. Right now, Deere is giving out $1.62 per share every quarter, with the next payday coming up on Feb. 10, 2025. This adds up to $6.48 a year, yielding 1.4%.
Shares of DE stock are up over 9% in the year to date, and have posted gains of over 20% in the past 52 weeks.
For the three months ending Oct. 27, 2024, Deere generated $1.245 billion in net income, or $4.55 for each share of stock, on $11.143 billion in sales. The company is forecasting net income between $5 billion and $5.5 billion for fiscal 2025.
At the CES 2025, Deere showed off new machines that can drive themselves and other cool gadgets to help farmers and construction workers do their jobs better. The company is also teaming up with other companies like Trimble (TRMB) to make its machines even smarter.
Analysts have a consensus “Moderate Buy” rating on Deere and an average price target of $472.24, representing upside of roughly 3.5% from its current price.
Conclusion
BMO Capital believes Aflac, CSX, and Deere stand out as solid dividend picks for investors looking to weather market storms. While no investment is without risk, these stocks offer a blend of steady income and growth potential that could help fortify your portfolio.
