Bank of America expects its dividend to increase in 2026. Savita Subramanian, the firm’s head of U.S. equities and quantitative strategy, said dividend growth has historically lagged earnings per share growth by about three-quarters. The S&P 500 is likely to have a strong year of EPS growth in 2025, and dividends should follow suit, he said. Subramanian expects dividend growth in 2026 to be 8% year over year, up from 7% in 2025. “With the S&P 500’s payout ratio near an all-time low of 30%, there is plenty of room for companies to increase their dividends,” he wrote in a note Wednesday. “We believe we are in a world of total returns, where dividends should contribute more to total returns than they have in the past 10 years.” In this environment, Subramanian advises investors to look for companies that are outperforming market yields, but whose yields are not stagnant. The current yield on the S&P 500 is approximately 1.1%. To find these names, Subramanian and her team first looked at the companies in the Russell 1000 index. We then reran that screen every month and calculated and ranked the companies based on their yield over the past 12 months. Subramanian said companies in the second quintile of dividend-yielding companies are less likely to include distressed companies that could move into the first quintile, or highest-yielding group, if stock prices decline ahead of a potential dividend cut. Here are some of the stocks selected for Bank of America’s latest list. Investors can earn an attractive yield of approximately 4% with Reynolds Consumer Products. The maker of Hefty trash bags and Reynolds wraps reported third-quarter revenue growth in October, according to FactSet. Earnings before interest, taxes, depreciation and amortization also exceeded expectations, but adjusted earnings per share were slightly below expectations. CEO Scott Huckins said in an earnings call that Reynolds continues to win despite a difficult environment. “We are becoming a more agile organization as we execute programs that leverage the growth and revenue potential of our U.S.-centric business model,” he said. REYN 1Y Mountain Reynold Consumer Products 1 Year Performance Analysts on the stock have an average rating of Overweight, with an upside of 20% from the average price target, according to FactSet. The stock price has fallen 14% over the past year. Macy’s also got involved. The department store posted its biggest increase in December in more than three years. Adjusted earnings for the fiscal third quarter were 9 cents per share, compared to analysts polled by LSEG who had expected a loss of 14 cents. Quarterly sales also exceeded expectations. Macy’s also raised its full-year sales and profit forecasts, although it remained cautious about holiday spending. The company is currently in the midst of implementing a turnaround strategy that includes investing in staffing and closing underperforming stores. According to FactSet, the stock has an average rating of Hold, with about a 5% downside to its average price target. The stock’s dividend yield is 3.2%, an increase of about 37% over the past year. Meanwhile, Prologis has soared nearly 24% in the past 12 months. The stock yield is 3.1%. The real estate investment trust, which focuses on warehouses and e-commerce fulfillment centers, raised its 2025 guidance for core funds from operations (FFO) in October. FFO is an important measure of cash generated by a REIT. CEO Hamid Moghaddam told CNBC’s Jim Cramer after the company’s latest financial results in October that the company’s performance is improving even after experiencing vacancies. “Today we are in the valley,” Moghaddam said. “We’re already seeing signs that companies, especially strong ones, are committing to a significant amount of the space.” PLD 1Y Mountain Prologis’ 1-Year Performance The average rating among analysts covering the stock is Overweight, according to FactSet. There is 3.3% upside room compared to the average target price. Finally, ExxonMobil is also one of the energy companies on the list. The company’s dividend yield, which is around 3.4%, has increased by 14% over the past year. Jay Woods, chief market strategist at Freedom Capital Markets, noted Friday that the stock closed above $120 for the first time in 2025 as the year draws to a close. This threshold is considered a critical level of resistance. “The risk/reward looks good and could potentially be significant,” Woods said. “We are above that $120 level and would like to continue trending above that level while attacking the key resistance at $126.” Analysts covering the oil giant have an average rating of Overweight, according to FactSet. There is 7.4% upside room compared to the average price target.
