Industrials are top sector in 2025. These dividend payers have room to run
Industrials are in the spotlight, emerging as the top sector in 2025 – and a few names happen to offer the prospect of upside and dividend income. Year to date, the industrials sector is up 17%, overshadowing even the high-flying tech sector, which is up 13%. A couple of factors are behind industrials’ rise: For starters, the U.S. economy has remained solid even as the Trump administration has been rolling out its tariff announcements. Further, the trade policy is expected to boost U.S.-based manufacturing. In addition, Bank of America’s Industrial Momentum Indicator shows a continuing rebound. “The BofA Industrial Momentum Indicator recovery from the tariff lows continues, helping regain some of the lost ground and bringing the Indicator back near post-election levels,” wrote analyst Michael Feniger in a report last week. “The easing of tariffs helped remove pressure on the key inputs,” he added, noting that these inputs include fund manager profit expectations and positioning. “The risk to the Indicator’s rebound in recent months is if the recovery in the positive sentiment inputs do not show up in ‘on the ground’ inputs in 2H,” Feniger said. While GE Vernova and Howmet Aerospace are among the top performers in the industrials space this year, there are overlooked opportunities within the sector. CNBC Pro used its Stock Screener tool to turn up S & P 500 names with dividend yield of at least 1.5% and implied upside that exceeds 5% based on consensus price targets. Upside data is current as of Friday afternoon. Freight transportation giant C.H. Robinson Worldwide emerged on the list. Shares are down about 1% in 2025, and they offer a current dividend yield of 2.4%. Earlier this month, Wolfe Research upgraded the stock to outperform from peer perform. “While we see [earnings per share] risk in 2Q with weaker Forwarding results, CHRW is one of just a handful of stocks where we’re now above Consensus in C26,” analyst Scott Group wrote. “As investor focus starts to shift over the next couple of months to C26, valuation for CHRW is attractive in our view on both an absolute and relative basis.” The company also stands to see labor productivity gains, as “CHRW seems to be one of the few transports benefiting from [artificial intelligence],” Group said. Consensus price targets call for about 8% upside from current levels, and about 14 out of 27 analysts rate C.H. Robinson a buy or strong buy, per LSEG. Shipping company FedEx also made the grade. Shares are down about 14% in 2025, and they pay a dividend yield of 2.4%. Wells Fargo rates the stock equal weight, but analyst Christian Wetherbee earlier this month said that his team preferred FedEx to UPS , citing tailwinds from FedEx’s Drive and Network 2.0 – the company’s cost-cutting initiatives. FedEx has also seen “solid demand surcharges for peak,” Wetherbee said. “FedEx announced 22% and 5% YoY increase in its Ground residential and Express demand surcharges, respectively,” he added. The stock is well liked on Wall Street, with 22 out of 32 analysts rating it a buy or strong buy, per LSEG. Consensus price targets call for about 9% upside. Elevator manufacturer and service company Otis Worldwide also showed up on CNBC Pro’s screen. Shares are off more than 4% in 2025, and the stock offers a dividend yield of about 1.9%. JPMorgan’s Stephen Tusa upgraded Otis to overweight from neutral on July 15, noting that the name “now qualifies as non-consensus ‘cheap visibility.'” “We see a stable near-term outlook, attractive in context of recent underperformance, with challenges in China [original equipment] more than offset by the service business that represents nearly 90% of profits,” he wrote, noting that the name is at a discount versus the sector. Consensus price targets call for roughly 11% upside, and Wall Street largely rates Otis a hold. — CNBC’s Michael Bloom contributed reporting.
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