3 Dividend Giants To Buy As Tariffs Hit Stocks

This year’s tariff storms have hit tech stocks, semiconductor stocks and even metal and mining stocks. Now, they’re starting to hit dividend stocks, too.

Ford CEO Jim Farley recently stated, “If tariffs persist, it will mean billions of dollars of losses for the domestic car industry.”

That’s a problem for investors counting on Ford’s usual robust dividend yield, currently at 6.10%. That figure could easily fall as the auto manufacturer’s profitability guidance points to lower net income levels as tariffs hit the company’s investments in manufacturing in Canada and Mexico.

It’s not just about Ford, either. Other major American brands face lower dividend payouts, too, mostly due to affordability.

But three big-name dividend stocks look set to weather the tariff storm.

A Souring Dividend Climate 

In 2024, Ford’s high dividend was supported by $5.9 billion in net income and $6.7 billion in free cash flow. The company projects the free cash flow figure will decline to between $3.5 billion and $4.5 billion in 2025, as the company figures to pay more to ship products into the US in a post-tariff shift business environment.

Consequently, analysts expect Ford to curb its dividend payout to approximately .12 cents per share, with more doubts sown daily, and the 25% tariffs remain in place.

Some market experts say companies like Ford, which may cut dividend payouts, can’t solely blame tariffs.

“Although the general impact of any additional fiscal burdening, including not only tariffs but, let’s say, tax increases, on stock dividends, is unequivocally negative, we should be able to separate apples from oranges here,” said John Murillo, chief dealing officer of B2BROKER, a global fintech solutions provider for financial institutions:

In Murillo’s view, Ford’s claim that their intention to cut dividends would be linked to the tariff situation appears unjustified. “In fact, Ford Motor Company is a gross and net beneficiary of Trump’s imposition of tariffs on European automobile imports.”

Ford isn’t the only company affected. “The tariff/dividend issue is significant,” said David Capablanca, a veteran securities trader and host of the Friendly Bear Podcast. “When tariffs are introduced, consumer spending typically decreases, which affects the entire economy and, by extension, the stock market.”

As a result, stock prices generally go down, and dividend payouts are often reduced. “This is just the nature of things,” Capablanca said. “Companies adjust their dividends based on how the company is performing, and when the market is in a downturn, dividends will reflect that.”

Three Good Dividend Stocks In Tough Tariff Times

Capablanca advises income-minded investors to focus on stocks with good overall performance, not just those offering a high dividend.

“Look at the stock’s chart and see if it looks bullish,” he said. “Make sure it’s trending upward or at least holding steady. If you believe in the company and its sector, it’s important to ensure the stock isn’t in a downward spiral.”

Many struggling companies will try to entice investors with high dividends. “In those cases, the stock’s performance is what’s important,” he added.

Here are three dividend-paying stocks that fit the bill.

UPS

UPS UPS is a sold dividend stock on Capablanca’s radar screen right now, and the delivery giant is continuing to back its shareholder payouts. In a January analyst call, company CEO Carole Tome noted, “From a dividend payout perspective, we’re targeting 50% of earnings, and we’re higher than that… So (we have) plenty of liquidity to pay the dividend.”

Despite recently losing about 50% of its Amazon delivery business, UPS says it has $5.7 billion in free cash flow, plans to pay $5.5 billion in dividends and will rebuy $1 billion of stock. The stock is down 12.50% this year, far outpacing the market and presenting a buying opportunity, especially when considering the current 5.94% dividend yield.

PepsiCo

PepsiCo PEP is one of the bigger US companies that appears to be immune to the Trump tariffs, taking on fewer trading risks than its competitors, having relatively fewer products on tariff lists and being another company that values its shareholders with regularly substantial dividend payouts.

“This is a worldwide consumer staple with pricing power and a 50-plus year dividend history that is resilient even in markets filled with tariffs,” said Fei Chen, CEO of Intellectia AI and a long-time market investment strategist. The stock is down a bit this year, at -1.14%, but much less than the market’s 5% drop. It also boasts a 3.61% dividend yield.

Proctor & Gamble

A traditional inflation-passer with worldwide brand power, Proctor & Gamble PG historically absorbs price increases while continuing to make steady payouts. “Firms like Proctor & Gamble score well on pricing power and capital efficiency, the two pillars of dividend safety in volatile times,” Chen notes. It’s almost flat for the year, with a -0.30% return and a 2.40% dividend yield.

Don’t Make These Dividend Investing Mistakes

The most typical mistake investors make when buying high-dividend stocks is failing to diversify across sectors.

“Many investors prioritize the dividends’ percentage value and payout history while playing down the essence of the companies’ operations,” Murillo said. “The current turmoil beating some dividend stocks ostensibly linked to impairments caused by the U.S. import tariffs brings this omission to the forefront.”

Capablanca warns that income-minded investors should also be cautious and not buy stocks solely based on high dividend yields.

“Some companies that aren’t performing well may try to attract investors by offering high dividends, but this can be a dangerous strategy,” he said. “If the stock price is consistently falling, the dividend won’t compensate for the loss in stock value.”

For example, if you buy a $100 stock that offers a decent dividend but the price drops to $90, $80, or even $60, the dividend becomes insignificant because you’re losing money on the overall investment,” he said. “The key is to look for stocks with decent dividends and a healthy trajectory.”

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