Bank of America expects a boost in dividends in 2026. These stocks have payouts that beat the market – CNBC
Bank of America is expecting an uptick in dividend payouts in 2026. Dividend growth has historically lagged the growth of earnings per share by about three quarters, said Savita Subramanian, the firm’s head of U.S. equity and quant strategy. With the S & P 500 likely having seen a strong year of EPS growth in 2025, dividend growth should follow, she said. Subramanian is forecasting 8% year-over-year dividend growth in 2026, up from 7% in 2025. “There is ample room for companies to increase dividends, as the S & P 500’s dividend payout ratio sits near its record low at 30%,” she wrote in a note Wednesday. “We believe we are in a total return world, where dividends should contribute more to total returns than the prior decade.” In this environment, Subramanian advises investors to look for companies that have yields that are above market but are not stretched. The S & P 500 currently yields around 1.1%. To find those names, Subramanian and her team first looked at companies in the Russell 1000 index . Then they calculated and ranked companies by their trailing 12-month yield, re-running the screen each month. Those in the second quintile of dividend yielders are less likely to include distressed companies that may migrate up to the first quintile — that is, the highest dividend yield group — if their stock price falls ahead of potential dividend cuts, Subramanian said. Here are some of the stocks that made Bank of America’s latest list. Investors can earn an attractive yield of about 4% with Reynolds Consumer Products . The maker of Hefty trash bags and Reynolds Wrap reported a revenue beat in October for its third quarter, per FactSet. It also topped expectations for adjusted earnings before interest, taxes, depreciation and amortization, but its adjusted earnings per share fell slightly short. Reynolds is winning during a challenging environment, CEO Scott Huckins said in the earnings release. “We are becoming a more agile organization, while implementing programs that leverage the growth and earnings potential of our US-centric business model,” he said. REYN 1Y mountain Reynold’s Consumer Products one-year performance The stock has an average analyst rating of overweight and 20% upside to the average price target, according to FactSet. Shares have fallen 14% over the past year. Macy’s also made the cut. The department store posted its strongest growth in more than three years in December. Its fiscal third-quarter adjusted earnings came in at 9 cents per share, versus the 14-cent loss anticipated from analysts polled by LSEG. Its quarterly revenue also topped expectations. In addition, Macy’s raised its full-year sales and earnings guidance, although it was cautious around holiday spending. The company is in the midst of implementing a turnaround strategy that includes investing in staffing and shuttering lower-performing stores. The stock has an average rating of hold and roughly 5% downside to the average price target, per FactSet. Shares have a dividend yield of 3.2% and have gained about 37% over the past year. Meanwhile, Prologis has jumped nearly 24% in the past 12 months. Shares yield 3.1%. The real estate investment trust, which focuses on warehouses and e-commerce fulfillment centers, raised its 2025 guidance for core funds from operation, or FFO, guidance back in October. FFO is a key measure of cash generated from a REIT. Business has been improving after experiencing vacancies, CEO Hamid Moghadam told CNBC’s Jim Cramer after the company’s latest earnings in October. “Today, we’re at a trough,” Moghadam said. “We already see signs of companies committing to significant amount of space, particularly the strong ones.” PLD 1Y mountain Prologis one-year performance Analysts covering the stock give it an average rating of overweight, per FactSet. It has 3.3% upside to the average price target. Lastly, Exxon Mobil is among the energy names on the list. The stock, which has a dividend yield of about 3.4%, has gained 14% over the past year. Notably, it closed above $120 for the first time in 2025 as the year drew to a close, Jay Woods, chief market strategist at Freedom Capital Markets, pointed out on Friday . That threshold is seen as a key level of resistance. “The risk/reward is looking good and potentially great,” Woods said. “We have eclipsed that $120 level and hope to keep trending above there as we attack major resistance at $126.” Analysts covering the oil giant give it an average rating of overweight, according to FactSet. It has 7.4% upside to the average price target.
