With President Trump’s tariff plan set to be announced on Wednesday after the closing bell, investors should focus on one area of the market to weather the storm: dividend growth stocks.
That’s according to David Bahnsen, chief investment officer of the $7 billion Bahnsen Group.
The uncertainty surrounding the tariffs is why investors should focus their investments on companies with a long-term vision. Companies with such long-term outlooks have a history of increasing their dividend every single year.
“Rather than trying to read the tea leaves and adjust investments based off of what’s going on in Washington, we’re focused on investing in companies that have superior cash flow generation during all seasons, and not just seasons when we’re worried about tariffs,” Bahnsen said in an e-mail to BI.
Some publicly traded companies have a track record of consecutively increasing their dividend for many decades despite countless recessions, the 2001 dot-com bubble unwind, the 2008 housing crisis, and a global pandemic.
There’s no sign that Trump’s tariff proposals would spur these long-term focused companies to change their strategy or cut their dividends.
“Companies that have a decades long track record of growing their dividend don’t just suddenly stop growing their dividend because there are tariffs,” Bahnsen said.
Some of the companies Bahnsen is focusing on are concentrated in the financials, energy, consumer staples, and healthcare sectors, which have performed well so far this year.
That lines up with a recent note from Bank of America, which argued that value sectors should continue to perform well this year, especially if Trump’s tariff plans fuel stagflation concerns.
“Any tariff news tomorrow that fuels stagflation concerns could drive further upside in Utilities, Energy and Staples, and downside in exporters,” BofA strategist Savita Subramanian said in a note on Tuesday.
Here are the top five dividend growth stocks owned by the Bahnsen group.
-
Enterprise Products Partners
Ticker: EPD
Market capitalization: $73.8 billion
Dividend yield: 6.16%
Consecutive dividend growth: 27 years -
Simon Property Group
Ticker: SPG
Market capitalization: $63.7 billion
Dividend yield: 4.90%
Consecutive dividend growth: 32 years
-
Chevron Corporation
Ticker: CVX
Market capitalization: $291.5 billion
Dividend yield: 4.12%
Consecutive dividend growth: 38 years -
Merck
Ticker: MRK
Market capitalization: $217.5 billion
Dividend yield: 3.67%
Consecutive dividend growth: 14 years -
Verizon
Ticker: VZ
Market capitalization: $188.5 billion
Dividend yield: 6.00%
Consecutive dividend growth: 18 years