The Morning Filter Why 2026 Could Be a Breakout Year for Dividend Stocks
Dec 1, 2025
Dan Lefkovitz, a Morningstar Index strategist and dividend investing expert, shares insights into the current landscape of dividend stocks. He discusses why U.S. dividend stocks have lagged while international ones have thrived, attributing it to market dynamics and the stock buyback boom. Listeners learn to identify potential dividend cuts using key metrics and explore undervalued stock picks like Merck and Pepsi. Lefkovitz also outlines why dividend growth investing is often undervalued and predicts a favorable outlook for dividends in 2026.
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AI-Driven Tech Outperformance Hurt Dividends
- Dividend strategies have lagged the broader U.S. market in 2025 mainly due to heavy tech/AI leadership.
- Dan Lefkovitz attributes the gap to limited tech exposure in dividend-focused portfolios.
Divergent Sector Drivers Within Dividend Stocks
- Sector dynamics vary widely: utilities and some financials outperformed while REITs and energy lagged.
- Dan links utility strength to rising power demand from AI data centers and energy weakness to lower oil prices.
International Dividends Outperformed U.S. In 2025
- International dividend stocks outperformed U.S. peers in 2025, helped by European banks and a weaker dollar.
- Tech has smaller weight overseas and financials are a larger, dividend-rich share of international markets.