Dividend-paying stocks are getting some attention from Wall Street as recession worries and anxiety over President Donald Trump ‘s tariff policy rattles the market. This is only the second week of March, but the S & P 500 is already off more than 5% in the month, while the Nasdaq Composite is toting a 6.5% decline. The Dow Jones Industrial Average closed below its 200-day moving average on Monday for the first time since November 2023. Dividends can give investors some cushioning when tumultuous markets shake up their portfolios. “Dividends can help reduce volatility in a time of greater uncertainty and geopolitical risks,” wrote Todd Castagno, a strategist for Morgan Stanley. “In periods of slow growth, dividends become more important and make up a larger percentage of investors’ total returns.” In particular, special dividend issuers – that is, companies that can make one-time payments to shareholders outside of their regular dividend cycle – can also offer investors a boost. This cohort has beaten the market by 4.1% in the six months following the announcement of the special dividend, Castagno found. This outperformance grew to 7.8% in the 12-month period following the news. That effect is magnified for small cap names, as those that announced special dividends beat the market by 5.7% in the six-month period following the news and by 11.1% in the 12-month period after. “Committing to a consistent, ordinary dividend sends a positive signal to the market, conveys management’s confidence in the business, and opens the stock to income oriented investors,” Castagno wrote, “while special dividends are a bonus – implying optimism attributable to M & A synergies, secular tailwinds and/or an extraordinary series of events.” Morgan Stanley shared a list of stocks that paid special dividends over the last 12 months. Here are a few of the names. Paccar , a designer of large commercial trucks, made the grade. In December, the company’s board of directors declared an additional cash dividend of $3 a share, payable on Jan. 8. It has a current dividend yield of 1.2%, and shares are down about 7% over the past 12 months. Wall Street is largely neutral on the name, with 12 of the 21 analysts covering the stock rating it hold and seven deeming it a buy or strong buy, per LSEG. Bank of America is among the shops that are upbeat on Paccar, upgrading it to buy in January. “We forecast PCAR delivering a new peak EPS of $10.25 in ’26e ($1 above consensus) as freight conditions recover & customers purchase trucks ahead of EPA27 [an emissions regulation],” wrote analyst Michael Feniger, adding that the PCAR dividend is “likely to screen quite attractive in 2026.” Insurer American Financial Group was another highlight on Morgan Stanley’s list. In late February, the company announced a special dividend of $2 a share , payable on March 28. That payment is in addition to AFG’s regular dividend of 80 cents a share. The insurer also said that it repurchased about $50 million of its common stock year to date through Feb. 27. AFG has a dividend yield of 2.5%, and shares are off roughly 2.5% in the past 12 months. Analysts largely deem the name a hold, according to LSEG. Piper Sandler’s Paul Newsome, who is neutral on the stock, last month noted that AFG “is an example of a company with a high class problem.” “Its underwriting profitability and [return on equity] are excellent, but it is difficult in an increasingly competitive market to maintain those returns,” he said. The analyst added that while his team thinks returns on an absolute basis should be “very good,” AFG “likely has limited earnings growth for the foreseeable future.” Other names that made it to Morgan Stanley’s list include timberland real estate investment trust Rayonier , which has a dividend yield of 4%; property casualty insurer RLI , with a dividend yield of 0.8%; and CNA Financial , with a 3.8% current dividend yield.
