In this unsettled environment, investors may be considering dividend stocks for income. But not all of them are created equal. With equities near record highs, dividend stocks can help bolster portfolios during times of market volatility and economic uncertainty. They also become relatively more attractive to income-seeking investors as the Federal Reserve cuts rates and yields come down on bonds. Just last week, the central bank lowered the federal funds rate by a quarter percentage point, but left a potential cut at its next meeting in December in doubt. Traders are now pricing in 65% odds of another quarter-point move at that next policy meeting, according to the CME FedWatch tool . Bank of America Securities cautions investors not to reach for the highest yielding stocks. Dividends that are too far above the market average could be a sign of trouble. Payouts that prove unsustainable could end up being slashed if the company hits hard times, at the same time as they could suggest the share price is heading lower. Above market but not stretched “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,” Savita Subramanian, equity and quant strategist with Bank of America Securities, said in a note last week. To find stocks that qualify, Subramanian and her team looked first at the companies in the Russell 1000 index. Then they calculated and ranked companies by their trailing 12-month yield, re-running the screen each month. Those in the second quintile of dividend yielders are less likely to include distressed companies that may migrate up to the first quintile, the highest dividend yield group, if their stock price falls ahead of potential dividend cuts, Subramanian said. Here are some of the stocks that made Bank of America’s latest list. Skyworks Solutions , which has a 3.65% dividend yield, is down nearly 13% year to date. The company, which makes high-performance analog and mixed-signal semiconductors, struck a deal last week to buy rival Qorvo. The combined company will be valued at about $22 billion. Skyworks shareholders will control about 63% of the new company and Quorva holders the rest. The company is set to report its fiscal fourth-quarter financial results after the bell Tuesday, but released preliminary results last week. Skyworks’ preliminary adjusted earnings were $1.76 per share, versus the $1.40 FactSet consensus estimate. Preliminary revenue was $1.10 billion, versus the $1.01 billion expected from analysts. CVS Health released third-quarter earnings last week, blowing past estimates for both adjusted earnings and revenue. The drug-store chain and health insurer also raised its guidance, anticipating adjusted earnings for 2025 in a range of $6.55 to $6.65 per share, up from a prior forecast of $6.30 to $6.40. ″[I] couldn’t be more happy about the fact that this is three quarters where we’ve had a beat and raise and obviously, looking into Q4, we feel really, really good about our ability to close out the year favorably,” CEO David Joyner said. CVS yields 3.4% and has soared 73.9% this year. Phillips 66 has gained nearly 20% year to date and has a dividend yield of 3.53%. The integrated oil refiner and marketer scored an earnings beat for its third quarter last week. Starbucks has struggled so far this year, losing nearly 11%. Last week, the coffee chain posted disappointing adjusted earnings but beat revenue estimates for its third quarter. It also saw quarterly same-store sales return to growth for the first time in about two years. “Critical moment for our company, we’re really proud of where we are,” CEO Brian Niccol said in an interview on CNBC’s ” Squawk on the Street ” on Thursday. Starbucks pays a dividend equal to a yield of 3.07%.
