Welcome to Extreme Investor Network, where we provide expert insights and unique information to help you make profitable investment decisions. October may have started off on a rocky note, but fear not, as a strong period of seasonality is just beginning, especially for select dividend-paying stocks.
According to a report from Bespoke Investment Group, entering October marks the strongest period of the year for three-month returns, with shorter-term returns also showing strong performance. Dividend-paying stocks have been particularly robust in the fourth quarter over the past decade, with a list of 30 S&P 500 dividend stocks averaging a gain of over 11.5%.
But why are dividend stocks expected to shine even brighter in the coming months? In addition to seasonality, these stocks are poised to benefit from the Federal Reserve’s interest rate cutting cycle. With interest rates on Treasurys falling, the higher dividend yields of these stocks become more attractive to income-seeking investors.
One standout stock on Bespoke’s list is Tapestry, the fashion brand behind Coach New York. With an average fourth-quarter jump of over 17% in the past 10 years, Tapestry boasts a year-to-date total return of 28.3% in 2024 and a dividend yield of 3%. JPMorgan analysts see the company as an “overweight opportunity,” citing global momentum and new product offerings driving upside potential.
KeyCorp is another dividend-payer that historically performs well in the final quarter of the year. With an average climb of nearly 15% over the past decade, the stock has a total return of over 21% in 2024 and a dividend yield of almost 5%. Analysts at Piper Sandler are optimistic on KeyCorp’s outlook, raising their price target and expecting continued growth in net interest income.
BlackRock, the global asset manager, also stands out with an average fourth-quarter gain of almost 14% over the past 10 years. With a dividend yield of 2.2% and a total return of 18% in 2024, Wells Fargo initiated coverage on the company with an overweight rating, highlighting its industry leadership and potential for increased fixed income flows.
Other notable names on Bespoke’s list include JPMorgan Chase, Bank of America, and Lamb Weston, the potato processor. As we head into the final quarter of the year, these dividend-paying stocks present attractive opportunities for investors looking to capitalize on seasonal trends and the shifting interest rate environment.
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