Dividend stocks are swinging back into favor as the Federal Reserve cuts interest rates. And Fidelity Investments shared some thoughts about where income-oriented and value-focused investors can win.
Investing trends can change quickly. In January, the DeepSeek AI breakthrough highlighted risks in tech-led growth stocks, which led the stock market over the past decade. A new Donald Trump administration and geopolitical uncertainties could threaten the market's momentum in 2025.
Stocks that pay — and grow — dividends are generally seen as less risky. Their regular cash payouts can cushion investors from market volatility, but that doesn't mean they are without risk.
These are 10 dividend stocks that led Fidelity's screen for income investors. They provide a high dividend yield of 3.5% or more. They also offer a five-year dividend growth rate of at least 5.9%. Their generally mediocre IBD Composite Rating highlights the need for investors to do further research of their own.
"Rates began to come down in 2024 and additional cuts are expected in 2025," the investment manager said (though expectations for rate cuts have slowed amid stubborn inflation). "That could further even out the field when comparing stock yields with other investments that generate income," such as bonds.
Fidelity's Top 10 Dividend Stocks For 2025
| Stock | Ticker | Yield | Composite Rating | YTD % chg |
|---|---|---|---|---|
| Abbvie | 3.5% | 41 | 5.5% | |
| Chevron | 4.4 | 55 | 3.5 | |
| PepsiCo | 3.6 | 48 | -0.5 | |
| Bristol-Myers Squibb | 4.2 | 76 | 4.9 | |
| United Parcel Service | 5.7 | 36 | -9.3 | |
| Toronto-Dominion Bank | 5.2 | 73 | 7.7 | |
| Bank of Montreal | 4.5 | 66 | 2.9 | |
| Equinor | 4.6 | 41 | 2.3 | |
| Canadian Natural Resources | 4.9 | 20 | 0.8 | |
| Nestle | 3.8 | N/A | 4.8 |
The focus on dividend growth is important. The best stocks for regular income aren't just the highest-yielding dividend stocks. It's important for investors to look beyond a stock's high yield and screen for reliable and durable dividends as well.
A quality company with steadily growing dividends is more likely to maintain the cash payout ahead. That is more important now than ever, given ongoing economic uncertainty and stock market volatility.
Some Cautions For Income Investors
On Wednesday, UPS plunged on a weak 2025 outlook after halving its business with longtime customer Amazon.com. The delivery giant said it would return $6.5 billion of cash to share owners in 2025 through dividends and share repurchases. That figure ticked higher from the $5.9 billion of cash returned last year.
Chevron earnings disappointed investors on Thursday. The energy giant delivered its first refining loss since 202o but raised its dividend by 5% after record shareholder cash returns in 2024. AbbVie gave an upbeat forecast for key drugs after reporting a fourth-quarter and 2024 earnings decline. The dividend remains safe: AbbVie hiked its 2025 dividend by 5.8% in October.
Dividends come out of retained earnings and cash flow.
While screening for dividends stocks, Fidelity advises investors to bear in mind that the results may bring up foreign companies, like Equinor. Some trade over the counter, such as Nestle.
Foreign stocks bear unique characteristics and risks. An investor should consider whether these stocks align with their individual goals and risk tolerance, the investment firm said.
Fidelity's screen is just one of several possible ways to research dividend stocks. IBD offers some of its own best ideas for income investors here.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
