Sector by sector, U.S. dividend stocks have outperformed so far this year, with historically dividend-friendly industries surpassing those with a more growth-oriented focus.
Take utilities, long a dividend staple.
They comprise 2.4% of the broader U.S. Market Index, yet are up 10.7% year-to-date. Compare that to technology stocks, which make up 30.9% of the U.S. Market Index, but are only up 2.6% in 2025.
Income-oriented financial and consumer defensive stocks are also up over 5% for the year, while offering solid dividend payouts.
Consequently, if you’ve ignored dividend stocks lately, now’s the time to reconsider.
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“A few key tailwinds are making income-paying stocks look a lot more attractive than usual,” said Paul Holmes, a financial markets analyst at BrokerListings.com, a brokerage trading services and leads platform. “Buybacks are slowing. High interest rates and the new buyback tax have cooled corporate repurchases. That leaves dividends as the go-to method for returning capital to shareholders.”
All told, U.S. companies are on track to pay out over $660 billion in dividends this year, a new record. Payout growth in Q2 2025 alone was up 7.7% year-over-year.
“Valuations are rich elsewhere,” Holmes said. “The AI trade has stretched tech multiples, making them relatively thin. Rotating into high-quality income names offers lower volatility and a shot at real total return. “
For 2025, at least, the dividend story is so powerful that it has established new portfolio benchmarks.
“With the 10‑year Treasury still hovering near 4.5%, yield alone no longer turns heads; investors are gravitating toward companies that can both fund a respectable payout and grow cash flow faster than nominal GDP,” said Chad Harmer, founder and chief investment officer at Harmer Wealth Management. “Balance‑sheet leverage is generally lower than it was before COVID, so the risk of widespread dividend cuts looks manageable.”
Harmer argues that the new stock market sweet spot is stocks yielding roughly 1.5% to 4%, while compounding that payout at 8% to 10% a year. “That’s where we’re seeing genuine outperformance,” he said.
With income rising in a volatile 2025 stock market, there’s no shortage of stocks that offer returns comparable to or even better than those of growth stocks, while still providing a potent dividend yield. Here are five names at the top of that list.
NRG Energy
YTD Return: +86.67%
NRG Energy (NYSE:NRG) is one of the biggest total-return stories in the market right now. “NRG has rebounded well in 2025 thanks to strength in the power and smart-home space,” Holmes noted. “The dividend adds extra juice, but the price rise is what’s turning heads.” The stock currently offers a dividend yield of 1.04%.
CVS Health
YTD Return: +47.47%
After a rough patch in 2023–24, CVS Health (NYSE:CVS) is back. “Cost cuts, margin improvements, and a rock-solid payout policy make this a textbook dividend recovery stock, ” Holmes added. “The yield is over 4%, and they’re still buying back shares on the side.”
Broadcom
YTD Return: +30.49%
Broadcom (NASDAQ:AVGO) is up about 42% and yields roughly 0.8 %. “Broadcom’s custom AI‑chip sales are surging, and management still has room to lift the dividend after digesting the VMware deal,” Harmer noted.
AbbVie
YTD Return: +30.55%
AbbVie (NYSE:ABBV) has gained roughly 30% this year and yields about 3.4%. “Its next‑generation immunology drugs are handily offsetting the long‑expected decline in Humira, and the company even raised 2025 earnings guidance,” Harmer said.
Cigna Group
YTD Return: +3.18%
Cigna Group (NYSE:CI) is up only 2% this year with a 2.1% yield, but it should be a long-term gainer for income-minded investors. “A lighter medical‑cost trend and strong pharmacy‑benefits revenue allow Cigna to boost profit guidance and step up buybacks without jeopardizing the payout,” Harmer added.
How To Play The Dividend Investing Game
For newcomers hunting dividend deals, focus on payout quality rather than headline size.
A 7% yield can mask an unsustainable 90% payout ratio, so ensure the dividend is covered by free cash flow after accounting for growth capital expenditures, Harmer advises.
He recommends deploying a “three and three” trading strategy, which includes at least three consecutive years of increases and a forward dividend that consumes no more than one‑third of projected free cash flow.
“Pay close attention to tax treatment as well; in taxable accounts, a qualified‑dividend payer often beats a high‑yield REIT, whereas in an IRA, the math can flip,” Harmer said. “Reinvesting at least part of the income is critical, because most of the long‑run total return from dividend stocks comes from compounding, not the quarterly check.”
Finally, don’t chase yield into single names before you’ve done the homework. “A low‑cost dividend‑growth ETF can be a sensible training ground while you learn to read payout ratios and coverage metrics,” he added.
Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.
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