Volatility has boosted dividend stocks. These are one firm’s favorites
This year’s market swings have investors turning to dividend-paying stocks. While the S & P 500 is in the green on Monday, the broad market index has now lost about 2% in 2026 as the Iran war led to a spike in oil prices. Fears about artificial-intelligence disruption have also damaged sentiment this year. That has led investors to seek out companies that are thought to be immune to such risks, in what’s come to be known as the ” HALO ” — “heavy assets, low obsolescence — trade. Part of the strategy can involve reliable income paid by dividend stocks, which can help investors ride out a bumpy market. Such companies are also generally considered defensive and therefore less volatile than the wider market. In fact, income-paying stocks are outperforming the broader market this year, including dividend growth and high yield strategies. Both the ProShares S & P 500 Dividend Aristocrats ETF (NOBL) and the Vanguard High Dividend Yield ETF (VYM) have each gained about 4% so far this year — excluding their dividends. NOBL .SPX YTD line ProShares S & P 500 Dividend Aristocrats ETF vs. S & P 500 year to date Wolfe Research’s favorite way to play defense is through so-called dividend aristocrats, or companies that have increased their payouts in each of the past 25 years. It is also historically the best dividend theme in a rate-cutting cycle, chief investment strategist analyst Chris Senyek said in a Feb. 23 note. The Federal Reserve last cut rates in December and the market anticipates it will resume cutting later this year. To further narrow down names for its dividend buy ideas, Senyek also screened for a number of other factors — including for those stocks in the second-highest quintile of dividend-yielding names. “These stocks have performed better than the top quintile yielding stocks over the cycle, have more room for potential dividend growth and less risk of a cut,” he wrote. Here are some of the dividend aristocrat names that fall into the second-highest quintile based on dividend yield: Among the stocks outperforming the market is Colgate-Palmolive . The household products company is up about 14% and pays a 2.39% dividend yield. Last week, Colgate-Palmolive raised its quarterly dividend to 53 cents from 52 cents per share, a nearly 2% bump. New York-based Colgate has paid uninterrupted dividends since 1895. While soap-and-toothpaste maker posted a fourth-quarter revenue and earnings beat in January, its 2026 guidance for revenue growth disappointed. “As we begin 2026, while we expect the difficult operating environment and slower category growth to continue in the short term, we are operating from a position of strength and are confident that the changes we are making will enable us to deliver consistent, compounded earnings per share growth and drive shareholder value in the long term,” CEO Noel Wallace said in the earnings release. Colgate-Palmolive is set to report first-quarter results May 1. Pharmaceutical giant Johnson & Johnson also made it on to Wolfe’s screen. The company, which last raised its payout in May 2025, has a 2.15% dividend yield. Earlier this year, Johnson & Johnson struck a deal with the Trump administration to cut drug prices for consumers in exchange for tariff exemptions. As part of its commitment to provide direct drug access, J & J recently launched a website to sell some of its products to patients that don’t have insurance or who want to pay out of pocket. The New Jersey-based company has a massive pipeline of potential new treatments, covering diseases from cancer to Crohn’s Disease to depression. Just last week, for instance, Johnson & Johnson announced the Phase 1 trial for its investigational bladder cancer treatments demonstrated “complete and durable responses” in patients. The company, which delivered strong sales and profit guidance for 2026 in January, is expected to issue its first-quarter results on April 14. The stock is up about 17% year to date. Shares of Fastenal are also outperforming, gaining about 13% so far this year. It boasts a 2.11% dividend yield. The industrial supplier, a play on the manufacturing recovery in the U.S., is expanding its footprint. It recently announced it will begin construction on a new 900,000 square-foot operations and logistics hub in Carrollton, Georgia. Fastenal’s fourth-quarter earnings were in line with expectations, while revenue fell short. Last week, the company reported a February net sales increase of 13.3%, versus the 12% growth it saw in January. It is scheduled to release first-quarter results on April 13.
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