These dividend stocks could give your portfolio a boost, says Bank of America
Investors seeking stability in rocky markets may want to consider dividend stocks, and Bank of America Securities said they should seek companies that aren’t stretching to make those payouts. Volatility has been the norm this summer, although stocks remain near their highs. In fact, the S & P 500 has already surpassed Bank of America Securities’ year-end target of 7,100. That means investors may want to be discerning as a bigger dip may be ahead, said Savita Subramanian, head of the firm’s U.S. equity and quantitative strategy. “Now is not the time to buy the index and close your eyes,” she said in an interview with CNBC’s ” Squawk Box ” Tuesday. “You get a 10% correction effectively once a year, on average.” Dividend stocks can provide a relatively safe harbor from volatility since they provide a way to get paid when price appreciation is uncertain. Yet investors shouldn’t reach for the highest yields, which could mean the stock price is on a downward path. The companies may also be more apt to slash payouts if they face financial pressure. Subramanian suggests searching for stocks with sustainable dividends that can still provide solid income. “If we are returning to a total return world in which the contribution of dividends to total market returns could be higher than during the zero interest rates period, we advise investors to seek out companies with above-market but not stretched dividend yields,” she wrote in a note Friday. The S & P 500 index as a whole currently yields 1.02% To find stocks that qualify, Subramanian looked at names in the second quintile of trailing dividend yield in the Russell 1000. The companies are less likely to be distressed compared to those offering the highest yields in the first quintile. Here are some of the names that made the list for August. Chevron , which pays a 3.55% dividend yield, has already run 31% higher so far this year as the Middle East conflict has kept oil prices elevated. The oil major beat on both the top and bottom lines when it reported quarterly results on July 31. Its net income surged to $12 billion, a roughly 400% jump compared to the same period last year. “We’re kind of firing on all cylinders, which is good, because the world needs it,” CEO Mike Wirth said in an interview at the time with CNBC’s Becky Quick. CVX YTD mountain Chevron year to date Chevron is a Dividend Aristocrat, which means it has increased its payout for more than 25 consecutive years. Analysts covering the stock give it an average rating of buy, according to LSEG. It has 8% upside to the average price target. Duke Energy also has an average rating of buy, per LSEG. It has nearly 13% upside to the average price target. The utility company posted mixed second-quarter results earlier this month, with its adjusted earnings per share topping expectations, while its revenue came up short. The stock has a 3.59% dividend yield and has gained 3% year to date. DUK YTD mountain Duke Energy year to date Meanwhile, investors will soon find out how Gap did in its second quarter when it releases results after the bell Thursday . Investors were disappointed after its last report in late May, when the retailer posted mixed results and cut its sales guidance . Gap’s Old Navy brand saw sluggish sales due to products that failed to land with shoppers — and not a larger macroeconomic issue, CEO Richard Dickson told CNBC at the time. “It’s not a consumer issue,” he said. “We’re winning with all income cohorts across low, middle, and high. When you have the right product at the right price value equation, customers are there, and our seasonal categories just got off to a weaker start.” GAP YTD mountain Gap year to date Gap delivers a 3.29% yield. Shares are down about 17% in 2026. However, analysts largely see better times ahead, according to LSEG. The stock has nearly 20% upside to the average price target, and almost half of the analysts covering the name rate it a buy or strong buy. Lastly, Host Hotels & Resorts also has an average rating of buy, per LSEG. It has 11% upside to the average price target. HST YTD mountain Host Hotels & Resorts year to date The real estate investment trust, which owns luxury and upper-upscale hotels across the globe, yields 3.56%. Its second-quarter adjusted funds from operations and revenue both beat expectations earlier this month. Host Hotels & Resorts also lifted its full-year adjusted FFO guidance. “We are encouraged by the durability of demand across our portfolio, as affluent consumers continue to prioritize travel and group demand remains healthy across many of our markets,” CEO James Risoleo said in an earnings release. “We believe our investment-grade balance sheet, strong liquidity, and a diversified portfolio position Host to deliver long-term value, capitalize on favorable industry fundamentals, and selectively pursue growth opportunities.” Shares have jumped about 27% year to date. — CNBC’s Gabrielle Fonrouge contributed reporting.
