The stock market has certainly had its ups and downs as the year kicked off, but there’s a silver lining for income investors: companies are continuing to bump up their dividends. February saw the S&P 500 take a 1.4% hit, largely due to concerns over inflation, former President Trump’s expected tariffs, and escalating geopolitical tensions that weighed heavily on investors’ minds. On Friday, the index even flirted with dipping into the red for 2025. Nonetheless, fourth-quarter earnings reports have been rolling out, presenting another catalyst for market activity. As of Friday, around 97% of the S&P 500 had shared their earnings results, with more than 75% beating analysts’ expectations, according to FactSet.
For income investors, there’s more good news. In the week ending February 25, 20 S&P 500 companies declared dividend increases, based on data from JPMorgan. There were no dividend reductions or suspensions announced during the same period. Notably, Coca-Cola announced an increase in its dividend by 5.2%, now at 51 cents per share. “Capital return is a priority for us, and we are committed to growing our dividend as we’ve done for 62 consecutive years,” stated John Murphy, Coca-Cola’s Chief Financial Officer, during their February 11 earnings call. He noted, “Our dividend is supported by long-term free cash flow, which comprised 73% of adjusted free cash flow in 2024.” Other major players like Occidental Petroleum, Home Depot, and General Motors also joined in on the dividend hike trend.
From the start of the year to February 18, over 80 S&P 500 companies have announced increases in their dividend payouts, according to S&P Dow Jones Indices. Semiconductor giant, Analog Devices, heightened its quarterly dividend by 8% to 99 cents per share. Despite the tech sector facing challenges, with a 6% drop this year, Analog Devices’ stock is up more than 6% in 2025. This marks their 21st year of consecutively raising dividends. Benchmark Equity Research kicked off coverage of the stock with a buy rating, setting a target price of $245, projecting more than 9% upside from recent prices. Analyst David Williams noted, “ADI is positioned uniquely within the high-performance analog semiconductor scene to drive growth, expand margins, and offer compelling returns to shareholders.” The company’s strong cash flow model and generous capital allocation policy aim to return 100% of free cash flow to shareholders. Among the 32 analysts surveying Analog Devices, 20 recommend buying or strongly buying, with consensus targets predicting a 13% upside, as per data from LSEG.
Walmart, a so-called dividend aristocrat for having increased its dividends for over 25 years, has just announced its 52nd consecutive year of dividend hikes. The retail giant raised its dividend by 13% to 94 cents per share, paid out in four installments of 23.5 cents each. Although Walmart reported strong fiscal fourth-quarter results, indicating a slowdown in profit growth, its shares dipped 6.5% after releasing the results. “Cash flow has been robust,” stated CFO John David Rainey on Walmart’s earnings call. “We’ve increased the dividend by 13% this year, marking the largest increase in over a decade, underlining our commitment to returning value to shareholders.” Despite the drop, JPMorgan analyst Christopher Horvers viewed it as a “near-term buying opportunity,” maintaining an overweight rating by highlighting Walmart’s “high quality” U.S. same-store sales growth and its increasing market share. Out of 43 analysts, 41 recommend Walmart as a buy or strong buy, with consensus forecasts seeing a 12% upside from current levels. So far, Walmart shares have increased by more than 8% in 2025, and the stock currently offers a 1% dividend yield.
For those interested in diving into individual dividend-paying stocks, scrutinizing a company’s balance sheet and free cash flow can provide insights. Consistent earnings and a reasonable dividend payout ratio are also key considerations, as a high payout ratio might indicate that a company is funneling more earnings into dividends rather than reinvesting in itself. Elevated dividend yields could also point to declining share prices. For investors seeking a more diversified strategy, the S&P 500 Dividend Aristocrats ETF (NOBL) might be a suitable starting point. It includes well-known firms like Emerson Electric, Clorox, and Walmart among its holdings.
