Vardah Gill
5 min read
In This Article:
We recently published a list of the 20 Best Dividend Growth Stocks with High Yields. In this article, we are going to take a look at where Flowers Foods, Inc. (NYSE:FLO) stands against other best dividend growth stocks.
Dividend-paying stocks have been gaining popularity among investors due to their long-term advantages. According to Jeremy Zirin, who leads the US equity team for private clients at UBS Asset Management, companies with a consistent track record of increasing dividends are a smart choice for investors seeking a balanced approach in the current market environment. When markets dipped in April after President Donald Trump announced new tariff policies, investors gravitated toward high-yield dividend stocks. However, as trade tensions began to ease and negotiations progressed, markets recovered. Stocks surged particularly after the US and China agreed to temporarily reduce tariffs. He made the following comment about dividend stocks:
“The higher-dividend-yielding strategies tend to do better when markets are in real turmoil and declining, but if there’s more chop, more volatility and potentially upside … you don’t want to be overly defensive.”
Historically, companies that consistently increase their dividends have tended to be less volatile and often delivered stronger returns than the broader market, including benchmarks like the S&P Equal Weight Index. According to a report by Guggenheim, from May 2005 through December 2024, firms that either initiated or raised their dividends generated an average annual return of 10.5%. In contrast, companies that cut or suspended their payouts posted just 5.5% annually. The overall market returned 10.4% during this timeframe, slightly behind the dividend growers. The report also highlighted that dividend growth strategies have historically performed well in both rising and falling markets, making them an attractive option for investors focused on long-term gains and downside protection.
According to a report by S&P Global, the growth of global dividend payments had been slowing since the post-COVID recovery, but that trend reversed last year. In 2024, the growth rate unexpectedly accelerated to 8%, with shareholders receiving approximately $180 billion more than the previous year. This increase came as a surprise given the persistent geopolitical and economic challenges. The report also highlighted that several sectors and regions saw record dividend initiations, including the US technology, media, and telecom (TMT) sector, banks in Italy and Spain, Japan’s automotive industry, and a general rise in payouts from Mainland China. Even with extreme price fluctuations, dividend payments from the oil and gas sector remained strong. Looking ahead, the report suggested that this high level of dividends is likely to hold steady, with global payouts expected to remain at $2.3 trillion in 2025.
