Don't Push for Growth in 2026, Push for Yield: The Case for 3 Top Dividend Stocks

"Growth stocks have clearly provided much of the total return many investors have seen within their portfolio in recent years. That's a dynamic some investors clearly expect to continue, with capital inflows into higher-growth stocks continuing to outpace the move in value stocks and companies paying out meaningful dividend yields. That said, the macro environment we're heading into for the duration of 2026 looks to be far different than the one we entered into this past year."

"Plenty of exuberance around re-elected president Donald Trump's tax policies prompted earnings growth expectations to be ratcheted up. But with tariff, trade and geopolitical policies now providing investors with plenty of concern around inflation and a slowing jobs market, it's unclear whether these high-flying growth stocks can have a fourth double-digit up year in a row. For investors looking to play more defense within their portfolios, here are three top dividend stocks I think are worth considering right now."

"Pepsi's upside in the past has come from immense pricing power, which I'd argue hasn't gone away. The ability for Pepsi to raise prices on its core snack business in particular has driven significant margin explosion in recent years, with the company's gross margin coming in at 53.6% this past quarter and its operating margin coming in right around 15%. For this sector, that's incredible."

Growth stocks drove much of recent portfolio returns as capital inflows favored higher-growth names over value and dividend-paying companies. The macro environment for 2026 is expected to differ, with earlier earnings growth optimism tied to re-election tax expectations now countered by tariff, trade, and geopolitical concerns that could increase inflation and slow the jobs market. Those forces make consecutive double-digit returns for growth stocks uncertain. Defensive investors may consider dividend-paying equities. PepsiCo combines a broad snack and beverage portfolio, strong pricing power, high margins (53.6% gross, ~15% operating) and resilient sales through downturns, offering a roughly 4% dividend yield.

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