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This article was originally published on WealthyVC.com.
The financial landscape is currently dominated by escalating trade tensions, with President Trump’s recent tariff policies introducing significant uncertainty. Trump’s tariffs have rattled markets, and the carnage continued on Monday, with the Dow Jones Industrial Average (DJI) tumbling another 890 points (-2.08%). The S&P 500 (SPX) fell 155.64 points (-2.7%), while the tech-heavy NASDAQ Composite (IXIC) plummeted 727.90 points (-4%).
The looming uncertainty and increased volatility have prompted investors to reassess their portfolios and go on the defensive. In such turbulent times, dividend-paying stocks emerge as a beacon of stability, offering both income and potential for capital appreciation.
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Dividend stocks have historically been viewed as defensive investments, particularly during periods of economic uncertainty. Their regular payouts provide a cushion against market downturns, and companies with a consistent dividend history often exhibit strong fundamentals.
As noted in a recent analysis by 24/7 Wall St:
Dividend stocks offer a safe haven for investors because they provide reliable income and a cushion against market volatility. They also tend to outperform non-dividend-paying stocks.
A stalwart in the healthcare sector, Johnson & Johnson (NYSE: JNJ) boasts a dividend yield of approximately 2.98%. With a track record of 63 consecutive years of dividend increases, the company exemplifies stability. In its Q4 2024 earnings report, JNJ posted $22.52 billion in revenue, up 5.3% year-over-year, underscoring its resilience despite global economic challenges.
As a member of the S&P 500 Dividend Aristocrats, Coca-Cola (NYSE: KO) has consistently rewarded shareholders with regular dividends. The company’s global brand recognition and diversified product portfolio make it a reliable choice for income-focused investors. Notably, Coca-Cola has posted gains even as major indexes have declined, highlighting its defensive qualities.
Known as “The Monthly Dividend Company,” Realty Income (NYSE: O) has a strong track record of providing consistent monthly dividends. The company’s portfolio, which includes over 15,450 properties, is anchored by tenants like Walmart (NYSE: WMT) and Dollar General (NYSE: DG), ensuring steady rental income less affected by trade wars. The REIT boasts a 5.4% dividend yield, paying $0.268 monthly, with a 75% payout ratio, ensuring sustainability.
Operating globally, Philip Morris (NYSE: PM) offers a dividend yield of 3.4%, paying $5.30 per share annually, with a 55% payout ratio, ensuring sustainability. The company’s shift to smokeless products, such as its IQOS heated tobacco device, which saw a 14% volume increase in 2024, helps it navigate trade tensions.
As the largest investor-owned water and wastewater utility in the US, American Water Works (NYSE: AWK) provides essential services that remain in demand regardless of economic conditions. The company has 17 years of consecutive dividend increases and offers a dividend yield of 2.1%. In Q4 2024, AWK posted sales growth of 16.4% to $1.2 billion, showcasing its robust financial health.
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For investors seeking diversified exposure to dividend-paying companies, these dividend ETFs present an attractive option:
The Schwab US Dividend Equity ETF (NYSE Arca: SCHD) focuses on high-dividend-yielding US stocks, offering investors a blend of income and potential growth. In 2025, SCHD has risen over 4%, even as major indexes have declined, highlighting its resilience amid market volatility.
Tracking the S&P High Yield Dividend Aristocrats Index, the SPDR S&P Dividend ETF (NYSE Arca: SDY) invests in companies that have consistently increased dividends for at least 20 consecutive years. This focus on dividend growth provides investors with a reliable income stream and potential for capital appreciation. Like SCHD, SDY has also posted gains in 2025, underscoring the defensive nature of dividend-focused investments.
The ongoing trade tensions have introduced a layer of complexity to investment strategies. Companies directly impacted by tariffs may experience squeezed profit margins, leading to potential dividend cuts. However, firms with strong balance sheets, diversified revenue streams, and a history of dividend growth are better positioned to weather such challenges.
It’s essential for investors to conduct thorough due diligence, focusing on companies with sustainable dividend payout ratios and robust free cash flow. Diversifying across sectors less susceptible to tariff impacts, such as utilities and consumer staples, can also mitigate risks.
In the face of escalating trade tensions and market volatility, dividend-paying stocks and ETFs offer a strategic avenue for investors seeking stability and income. By focusing on companies with a proven track record of dividend growth and resilience, investors can navigate the tariff turmoil with greater confidence.
As always, aligning investment choices with individual financial goals and risk tolerance is crucial, ensuring a well-balanced and resilient portfolio.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
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