The Federal Reserve’s recent moves and Bank of America’s cautious outlook for 2025 have created an interesting setup for investors who rely on dividends. After cutting rates three times in 2024, the Fed may take a more conservative approach in the new year.
While many expected more aggressive rate cuts, the Bank of America now predicts rates will stay high through 2025. This shift is driven by stubborn inflation and a surprisingly strong job market, with 256,000 jobs added in December and unemployment dropping to 4.1%, prompting BofA economist Stephen Juneau to rule out any rate cuts.
This could be good news for dividend investors. Dividend stocks help offset inflation and provide stable income, and many experts consider them all-weather investments.
Teekay Corporation (TK), Service Properties Trust (SVC), and Icahn Enterprises (IEP) rank highly on Barchart’s Top Dividend Stocks list thanks to their high yields in 2024. Although these companies haven’t had the best results in recent months, they are potential turnarounds to watch. Dividend stocks in general are key plays in 2025, especially as global dividend payouts hit record highs in 2024, with $606.1 billion paid out in the second quarter alone.
Teekay Corporation (TK)
Teekay Corporation (TK) is a major player in marine energy transportation, handling the shipping of crude oil (CLH25), liquefied natural gas (LNG), and liquefied petroleum gas (LPG). The company runs a diverse fleet of tankers and offshore production assets, providing essential services to oil and gas producers around the world.
Over the past year, TK’s stock has been quite volatile, with its price ranging from a low of $5.98 to a high of $9.95 — a swing of about 66.4%. Despite the ups and downs, the stock has recently gained some positive momentum, rising 7% so far in the year to date.
With a market cap of $681 million and a trailing price-earnings ratio of 5.74x, it’s catching the eye of value-focused investors. On top of that, its annual dividend yield is an impressive 43%. However, investors should note that its $3.25-per-share payout in 2024 was a bit unusual. The company paid out two special dividends, one for $2 per share and one for $1 per share. Prior to 2024, the company last paid a dividend in 2019.
In the third quarter, Teekay reported net income of $20.1 million ($0.22 per share), down from $26.2 million ($0.28 per share) in net income in 2023. The company brought in $272.6 million in revenue, also down from $311.7 million in the year-ago period.
However, CEO Kenneth Hvid noted that seasonal headwinds are transitioning into tailwinds for Q4 2024.
Also in Q3, Teekay announced it would sell its Australia operations for $65 million. It launched a $40 million share repurchase program, focusing on streamlining operations and rewarding shareholders — especially relevant as Bank of America predicts no Fed rate cuts in 2025.
That said, analysts remain cautious about TK’s outlook, with a mean target price of $3.50, suggesting significant downside from its current levels.
Service Properties Trust (SVC)
Service Properties Trust (SVC) is a real estate investment trust (REIT) that owns a mix of 214 hotels and 745 retail properties focused on long-term leases. Its business model aims to generate steady cash flow through partnerships with well-known brands like Sonesta and Hyatt (H).
SVC’s stock has had a tough year, dropping nearly 70% from its 52-week high of $8.14 to its current price near $2.60. So far, in 2025, there has been little recovery, with shares gaining just over 2% in the year to date.
The company’s market cap stands at $440 million, and its forward P/E ratio of 2.33x is far below the sector average of 34.10x, signaling undervaluation but also reflecting ongoing struggles. SVC recently cut its quarterly dividend by 95% to $0.01 per share, bringing its forward yield down to 1.54%, much lower than the real estate sector’s average of 4.46%.
In Q3 2024, SVC reported $491.17 million in revenue, slightly down from the previous year, and a net loss of $46.9 million, much wider than its net loss of $4.1 million in 2023. Normalized funds from operations (FFO) were $52.9 million ($0.32 per share), while adjusted EBITDA reached $155 million. Both figures were down from the year-ago period. Rising costs and renovation disruptions hurt profitability.
To address these challenges, SVC plans to sell 114 Sonesta-managed hotels in 2025 for around $850 million, using the proceeds to pay down debt and save $725 million in future capital expenditures over six years. CEO Todd Hargreaves highlighted that this strategy aims to improve liquidity, reduce debt, and focus on higher-performing full-service hotels, which could drive better long-term results for shareholders.
Analysts are split on SVC’s outlook, with one rating it a “Hold” and one a “Strong Sell.” The mean price target of $2.75 represents 6% of upside from current prices.
Icahn Enterprises L.P. (IEP)
Icahn Enterprises L.P. (IEP) is a holding company run by well-known investor Carl Icahn. The company operates in various industries, including energy, automotive, real estate, and food packaging. Its strategy focuses on finding undervalued businesses, improving operations, and creating long-term value through smart investments and acquisitions.
IEP’s stock had a rough year, dropping 58.17% from its high of $22.59 in February 2024 to a low of $8.53 by the end of December. However, it has started to bounce back in 2025, gaining 8% year-to-date and trading near $9.40.
The stock looks reasonably priced with a market cap of $4.59 billion and a forward P/E ratio of 11.81x — lower than the sector average of 20.69x. Its forward dividend yield of 21.3% is particularly attractive for income-focused investors, even after the company cut its quarterly payout from $1.00 to $0.50 per unit in late 2024 to preserve cash for future opportunities.
In Q3 2024, IEP reported $2.8 billion in revenue, slightly down from $3 billion the year before. Net income improved to $22 million ($0.05 per unit), compared to a $6 million loss in Q3 2023, although adjusted EBITDA dropped from $243 million to $183 million due to challenges in areas like energy and automotive. The company’s net asset value also fell by $423 million to $3.6 billion as of Sept. 30, 2024.
Icahn remains confident about IEP’s future, pointing to opportunities in undervalued markets and highlighting the company’s strong liquidity position of $2.3 billion as of Oct. 31, 2024. IEP recently announced plans to increase its stake in CVR Energy (CVI) through a tender offer, which is part of its broader strategy to capitalize on promising investments while maintaining flexibility.
One analyst has rated IEP as a "Strong Buy," with a price target of $15.00 — suggesting potential upside of about 58.73% from its current price.
Conclusion
Teekay Corporation, Service Properties Trust, and Icahn Enterprises have all weathered poor share price performance over the past year, and these companies also face challenging financials and dividend cuts. However, their high annual yields are eye-catching, and all three companies are banking on better results in the year ahead. Investors should keep an eye on these three names especially as the Federal Reserve charts its interest-rate course in the new year.
