For income-seeking investors, there's a powerful opportunity in a select group of dividend stocks that offer not just reliable income, but also a compelling combination of momentum and future growth potential. While many dividend payers are slow and steady, these two stand out for having delivered strong returns recently while maintaining attractive yields, making them worthy candidates to consider doubling down on.
First on the list is IBM (NYSE: IBM), a technology giant with a remarkable dividend pedigree. While its past performance was often seen as sluggish, the company has reinvented itself and is now delivering impressive returns, with its stock showing a total return of over 66% in the last year alone.
This resurgence is fueled by its strategic focus on hybrid cloud and AI, positioning it to capitalize on the AI boom. With a consistent quarterly dividend payment since 1916, yielding a solid 2.4%, IBM offers a rare blend of stability and growth, with analysts projecting its revenue to climb to $69 billion by 2026.
Next, consider a company that has been focused on strengthening its core business: AT&T (NYSE: T). This telecom leader has also experienced a strong recovery, rewarding investors with a total return of 61% over the past year. This turnaround is no accident; it's a direct result of management's disciplined strategy to focus on its core wireless and fiber businesses and, most importantly, to dramatically improve its balance sheet.
By successfully slashing its net debt from a staggering $180 billion to a more manageable $121 billion, AT&T has significantly de-risked its financial position, enabling it to sustain a robust quarterly dividend with a generous yield of about 4%.
In summary, both IBM and AT&T have demonstrated impressive momentum in the past year, driven by strategic repositioning and a focus on core strengths. For income-focused investors, their attractive yields and long-standing commitments to returning capital to shareholders make them compelling candidates.
Their renewed growth prospects and improving financial health provide a strong case for considering them as key additions to a dividend portfolio.
