Dividend growth slowed in the second quarter, but experts predict an improvement in the second half of 2025. According to S&P Dow Jones Indices, the net change in dividends for domestic U.S. common stocks rose $7.4 billion, significantly less than the $16 billion increase in the year-ago period.
Economic uncertainty may have led companies to limit dividend increases, but once policies become clear, they will adjust their business plans, which could include a higher commitment to dividends. Senior index analyst Howard Silverblatt expects stronger-than-historical-average dividend growth in the second half of 2025.
Help from banks is expected to drive this improvement, with big banks increasing their dividends as the Federal Reserve’s recent stress test results become clear. The third quarter has the potential to set a new quarterly dividend payment record, and S&P 500 is forecasted to post a record payment for 2025, with a 6% increase in dividend payments.
However, dividends are not as favored as they once were, and companies have turned to share buybacks instead. This shift creates more risk in the market, as buybacks can be discontinued quickly and may inflate corporate earnings. Experts argue that valuations and investor expectations have become stretched, and the lack of durable income from dividends could matter more than markets currently appreciate.
Despite this, some experts predict a major paradigm shift in the market, with dividends returning to their former glory or trending upwards over time. Investors looking for dividend-paying stocks can find options in the Vanguard Dividend Appreciation ETF, which includes companies like Bank of America and Coca-Cola that consistently grow their dividends and are favored by Wall Street.
The article highlights two such companies: Bank of America, with a 2.2% dividend yield and 13% upside to the average price target, and Coca-Cola, with a 2.9% dividend yield and 13.5% upside to analysts’ average price target.
Source: https://www.cnbc.com/2025/07/14/dividend-payouts-are-rising-these-stocks-are-wall-streets-favorites.html