September often presents challenges for the stock market, but incorporating dividend-paying stocks can provide a stabilizing effect. Morgan Stanley recently identified several firms that have increased their dividend payouts. With the S&P 500 up 0.4% early in the month, equities have experienced significant volatility this week due to surging Treasury yields, climbing oil prices, and apprehension regarding a potential Federal Reserve rate hike at the upcoming meeting. In times of uncertainty and elevated valuations, dividend stocks can serve as a reliable cushion.
Morgan Stanley strategist Todd Castagno noted in an August report that “Dividends can offer a reliable income stream, signal confidence to the market, and help stabilize [a] portfolio during periods of uncertainty and high valuations.” To identify such opportunities, his team screened the Russell 1000 for companies that have increased their dividends by at least 15% quarter-over-quarter over the past year. Key selections from this screen include:
East West Bancorp, based in California, raised its dividend in January, increasing the quarterly payout by 20 cents to $0.80 per share. The stock is performing well in 2026, with a 16% gain year-to-date and a current dividend yield of 2.4%. In July, the bank reported second-quarter earnings of $2.63 per share on revenue of $791 million, exceeding the FactSet consensus estimates of $2.61 per share and $785.5 million. Furthermore, East West raised its full-year net interest income growth forecast to a range of 7% to 9% year-over-year, up from its previous guidance of 6% to 8%. Among the 17 analysts covering the stock, 13 rate it a buy or strong buy, with an average price target indicating 13% upside, according to LSEG.
Morgan Stanley also highlighted Packaging Corporation of America. The stock currently yields 2.5% and has climbed 15% year-to-date. In May, the company increased its quarterly dividend by 20%, bringing the annual payout to $6 per share. Over half of the analysts covering the stock rate it a buy or strong buy, with consensus price targets implying 7% upside from current levels, per LSEG.
Devon Energy also appeared on Morgan Stanley’s screen, with the investment bank naming the exploration and production company its top pick in the sector as oil prices near $100 per barrel. Morgan Stanley analyst Devin McDermott stated, “We prefer Integrateds & Majors with strong refining leverage and select oil E&Ps with positive rate of change.” Devon also recently appeared on Goldman Sachs’ list of undervalued dividend-paying energy stocks. The company offers a current dividend yield of 2.3% and is up 31% year-to-date. Its board approved a 33% dividend increase in May, bringing the payout to $0.32 per share. Of the 30 analysts covering the stock, 27 rate it a buy, with consensus price targets implying nearly 23% upside, according to LSEG.
Other companies featured on Morgan Stanley’s list of consistent dividend growers include Nvidia, Royal Caribbean, and Capital One Financial.
