3 Dividend Stocks That Could Pay You for Life, Even in a Recession

When the market entered a correction in February and March, uncertainty about America’s economic future weighed heavily on investors’ minds with many people are looking for high-yield dividend stocks with the potential to help their portfolios weather tougher times.

Unfortunately, the S&P 500 average is currently offering a yield of just 1.3%, which is fairly low by historical standards. The good news is that several individual stocks offer much higher yields and have the potential to benefit from an eventual market rebound. Among the smartest dividend stocks to buy now are Target with a yield near 4%, Archer Daniels-Midland paying 4.19% and T. Rowe Price offering 5.28%.

Key Points

• With the S&P 500 yielding just 1.3%, Target, Archer-Daniels-Midland, and T. Rowe Price offer stronger dividends and upside potential.

• Proven Dividend Growth:

  • TGT: 54 years of increases, 19% upside potential.
  • ADM: Market leader with a compelling valuation.
  • TROW: 39 years of dividend growth, debt-free, strong value play.

• Despite short-term risks, these stocks offer solid financials, consistent payouts, and attractive valuations for income-seeking investors.

Target

Retail major Target (NYSE:TGT) was one of the more volatile retail stocks during the 2020-21 era. Shares of TGT soared in 2021, reaching a high of over $245. By late 2023, however, the stock was trading at barely over $100 after falling on a combination of heavy losses caused by organized retail theft and worries over excess inventory. Since then, however, Target has mounted a modest recovery and trades about 15% higher than those floor prices.

While Target’s price has been all over the board, one thing that never changed was its dividend growth. Target has been increasing its dividend for 54 years, a track record that has brought its annual payout to $4.44 per share.

TGT currently yields 3.9% and has a payout ratio of just over 50%. As such, it’s likely that management will be able to continue raising the quarterly payout in future years.

It’s worth acknowledging that Target is once again facing modest difficulties, though far from the problems that more than cut its shares prices in half a few years ago. The company has seen its earnings decrease in the last two quarters and its revenue decrease for one quarter.

Despite this, analyst price forecasts on Target a optimistic with the average coming in at $136.36, implying a possible gain of over 19%. Alongside Target’s wide moat in physical retail and high yield, this upside potential makes Target attractive for a wide range of investment strategies.

Archer-Daniels-Midland

Another company with an extremely solid dividend is agricultural giant Archer-Daniels-Midland (NYSE:ADM). With a 4.1% yield, ADM delivers more than triple the dividend income of the S&P 500.

The company is the largest agricultural production business in the US, commanding a market share of nearly 30%. ADM is also one of the largest ethanol producers in the United States.

Helpfully, Archer-Daniels-Midland is trading at an attractive valuation that makes the stock appear fairly cheap at the moment. ADM shares trade at 0.3x sales, 1.0x book and 13.7x earnings.

While an agricultural company like AMD is extremely unlikely to trade at the kinds of multiples one would find among large tech companies because of its lower growth potential, these metrics are still low enough to make ADM’s price look quite compelling.

It’s worth acknowledging that ADM is likely to face some short-term headwinds. Agricultural companies in general are currently dealing with lower margins on soybeans, the price pressure of rising output in emerging markets and uncertain policy from the Trump administration on biofuels. The effects of tariffs may add extra pressure, as retaliatory tariffs placed on American goods could make products from companies like ADM less competitive on the global market. As such, ADM could be in for a period of lower stock prices ahead.

With that said, the agricultural industry is generally cyclical and goes through periods of higher and lower profitability over time. ADM has been a market leader for a very long time, and its dividend has remained a consistent feature of the company as an investment. For investors seeking higher levels of income from their portfolios, the stock still has both current and future potential.

T. Rowe Price

Another attractive dividend stock is T. Rowe Price (NASDAQ:TROW), whose dividend is currently 5.0%. T. Rowe Price is a publicly traded asset manager and venture capital investor that offers a wide range of actively traded ETFs. At the time of this writing, T. Rowe Price had over $1.6 trillion in total assets under management.

T. Rowe Price has been one of the largest asset managers in the industry for many years, a fact that is reflected in its strong dividend growth history. It has been increasing its payout steadily for 39 years. In the trailing 10 years alone, the dividend has grown at a compounded annual rate of 10.9%.

Like ADM, T. Rowe Price could be in for a period of weaker performance ahead, though this doesn’t seem likely to impede its ability to pay and even raise its dividend. As an asset manager, T. Rowe Price is heavily dependent on the advisory fees it charges for its assets under management. With investors becoming increasingly worried about the effects of new American tariffs and even the possibility of a recession later this year, asset managers could see investors withdrawing funds. This, in turn, could lead to lower revenues and earnings.

Fortunately, TROW shares trade at a low P/E that could compensate for some of the risks associated with the stock. Despite its trailing 12-month net margin of 29.6% and return on invested capital of 19.3%, T. Rowe Price only trades at 10.8 times its earnings.

Even with headwinds factored in, this could make the stock a reasonable value opportunity for long-term investors. In the coming 12 months, analysts expect TROW to rise about 11.5% to an average target of $109.79.

T. Rowe Price also has no long-term debt on its balance sheet, a fact that could give it significant protection from temporary market downturns. As a leading financial company with a very solid balance sheet, T. Rowe Price is unlikely to remain depressed indefinitely. Until the company can begin making a comeback from the current difficulties, though, a dividend of almost four times the S&P 500 average will likely keep shareholders looking for immediate income satisfied.