By Paul R. La Monica

With the major market indexes all at or near all-time highs, powered ahead by momentum growth stocks such as Nvidia and Broadcom, you'd think that investors looking for stodgier income plays this year would be out of luck. You're right: The S&P 500's dividend yield for the last 12 months is just 1.1%, the lowest since November 2000, according to Dow Jones Market Data.

What's more, the SPDR S&P Dividend ETF was up only 4.5% in 2025 through Monday's close, compared to a 13.8% gain for the S&P 500. But dig deeper, and you'll actually find that there are plenty of good income-producing stocks -- that are also posting solid price gains.

We wanted to find companies that are outperforming the S&P 500 and also have above-average yields. According to a screen Barron's ran using data from FactSet, there are 81 stocks in the S&P 500 that a) have a trailing dividend yield higher than the index's and b) have gained at least 14% in 2025 through Monday's close. This list of market-beating stocks includes the hard drive and data storage company Seagate and the gold miner Newmont, both of which have more than doubled this year.

Other highflying dividend stocks that made the cut: Coach owner Tapestry, CVS, Corning, Citigroup, eBay, and Bank of New York Mellon. We show the ten best-performing S&P 500 stocks with yields above 1.1% in the chart below.

The time may be right for these and other high-yielding stocks to keep climbing, especially after the Federal Reserve cut interest rates last week -- and signaled that there is more easing to come. The yield on the 10-year Treasury note has tumbled from about 4.5% in mid-July to a current level of around 4.12%. Bond yields -- especially those for bonds with shorter durations -- are likely to fall further if the Fed keeps cutting.

"The Fed is becoming more accommodative," said Wayne Wicker, president of Opal Capital, which runs two actively managed exchange-traded funds focusing on dividend payers, in an interview with Barron's. "And there are plenty of nice names with steady growth."

To that end, the Opal Dividend Income ETF, which has pretty much matched the S&P 500 with a 13.5% gain this year, owns several dividend payers that made it through Barron's screen, including Citi, AT&T, and Philip Morris. Wicker also singled out big yielder Verizon, plus oil pipeline company Enbridge and energy infrastructure provider MPLX, as top holdings in the fund.

Many other dividend ETFs have failed to keep up with the market, though. The Vanguard Dividend Appreciation ETF and iShares Core Dividend Growth ETF are each up 10.5% in 2025, respectable but still lagging the S&P 500. Both funds own JPMorgan Chase and Johnson & Johnson, two stocks that made it through Barron's screen, as top ten holdings.

But dividend stocks could soon pick up more steam, especially if the market is right about the Fed continuing to cut rates this year and into 2026. They could also rally if President Donald Trump nominates an even more dovish choice for Fed chair to replace Jerome Powell after his term as chair ends in May 2026.

"I'm surprised there is such a dramatic difference between dividend stocks and the rest of the market," said Nathan Thooft, chief investment officer of equity and multi-asset solutions with Manulife Investment Management, in an interview with Barron's.

Thooft added that quality dividend payers which are generating strong cash flow and have attractive valuations should be the types of stocks to catch up with the broader market. He pointed to health care and financials in particular.

Barron's agrees. Abbott Laboratories, AbbVie, Cardinal Health, Gilead Sciences, Medtronic, Bank of America, Citizens Financial, Franklin Resources, State Street, Travelers, and Wells Fargo all made it through our dividend screen.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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September 23, 2025 14:47 ET (18:47 GMT)

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