Financial markets and the economy could be in for further turbulence, but the right dividend-paying stocks may help smooth the ride, according to Jefferies. Uncertainty around the Trump administration’s approach to tariffs resulted in a rocky first quarter for the major market averages. The S & P 500 dropped 4.6% in the period, while the Nasdaq Composite t umbled 10.4% — in both cases, the worst quarterly performances since 2022. Dividend-paying stocks can stand out in rocky times, particularly a period of stagflation – when economic growth slows and inflation remains high – according to Desh Peramunetilleke, head of quantitative strategy at Jefferies. His team sees U.S. dividend payers outperforming this year, led by high-quality yield stocks and bond proxies or defensive yield names. “A study of past stagflation-like period shows that it is a headwind for equities, but dividend strategies tend to be more resilient,” the strategist said in a March 27 report. “Since 2001, [bond proxies] and [high-quality yield] have outperformed the most during such periods in [the] U.S.” Jefferies identified a few stocks that could be poised to outperform in a stagflation environment. High quality names include those that are in the top two quintiles for quality, while bond proxies or defensive yield plays include real estate investment trusts, railroad and transport infrastructure. Here are some stocks that made the Jefferies cut. Beverage and snacks giant Coca-Cola got the nod from Jefferies as a high-quality yield stock. Shares are up 15% in 2025, and the stock pays a dividend yield of about 2.9%. Consumers are feeling less confident about where the economy is headed , but Coca-Cola is well-positioned to navigate any tough times, according to Wells Fargo analyst Chris Carey. He and his team met with management at the Sprite- and Fanta-maker and came away reassured, according to a March 19 report. “We couldn’t help but hear a message even if unstated: storm clouds come and go… all weather strategy does not,” he wrote, sticking with his overweight rating on Coca-Cola. “KO is showing a renewed ability to deliver $ EPS growth even despite macro headwinds, with sustainable organic sales growth drivers (both volume and price/mix) and steady investment levels,” Carey added. He is in good company, with 22 of 28 analysts rating Coca-Cola a buy or strong buy, according to LSEG. Average price targets call for more than 4% upside from current levels. Adding to the allure, Coca-Cola announced a 63rd consecutive annual dividend increase in February, hiking the payment more than 5% to 51 cents per share. Computing giant and high-quality pick International Business Machines also made Jefferies’ list. In what’s been a difficult 2025 for the technology sector – which is down 13% year to date – IBM is up more than 12%. The stock offers a dividend yield of 2.7%. Last week, Wedbush added IBM to its “best ideas” list, noting that the company is “well positioned” to capitalize on the demand shift for hybrid and artificial intelligence applications. “While the company remains committed to investing into further driving growth, IBM looks to balance growth with operating leverage into its business model to drive its free cash flow profile, which is expected to be ~2-3 points above revenue growth,” Wedbush analysts said. The firm rates the original tech stock outperform. About half of the analysts covering IBM rate the equivalent of a buy, LSEG says, and consensus price targets call for nearly 2% more upside. Jefferies called out JPMorgan Chase as a defensive yield play. Shares are up just 1% in 2025, and the country’s largest bank pays a dividend yield of 2.3%. Analysts are largely upbeat on the New York-based stock, with 14 of 24 giving it a buy or strong buy, per LSEG. The average price target suggests shares could rise nearly 10% from current levels. Wells Fargo analyst Mike Mayo last week reiterated his buy rating on JPMorgan and hiked estimates “to above consensus” for the first quarter. “Short term, JPM should benefit from volatility given its role as market facilitator, likely helping trading —our EPS ests. are above consensus,” he wrote in a report. In the medium term, he sees JPMorgan benefiting from deregulation, while technology spending 50% above the next largest bank should spur market share gains longer term. JPMorgan, like Coke, also recently bumped its quarterly dividend , this time to $1.40 per share, up from $1.25. “The off-cycle 12% dividend increase… is positive,” Mayo wrote. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
