The S&P 500 index is down 10% in 2025, and it isn't hard to see why. A combination of erratic trade policy, rising fears of recession, and persistently high interest rates has sapped investor confidence. That said, when stock prices decline, dividend yields tend to increase, creating an opportunity to shop for great deals in the market.
Let's explore why Dollar General (DG +2.17%) and Vici Properties (VICI +0.70%) could help your portfolio weather the storm.
Dollar General
With shares up 23% year to date, Dollar General has outperformed the market sharply this year. There are several reasons. Coming into 2025, shares already traded at a rock-bottom valuation, and President Donald Trump's trade war may actually help the company by hurting its competitors more.
According to analysts at Citigroup, only 10% of Dollar General's merchandise is exposed to tariffs, putting it at a significant advantage over rival Dollar Tree, which is 50% exposed. Citi claims mainstream retailers can reach almost 100% exposure. Furthermore, Dollar General focuses on low-priced consumer essentials, such as food and groceries, which remain in demand even during a recession.
The company's business model involves locating its stores in rural and neglected urban areas where rent and labor costs are lower. It also implements a streamlined and no-frills shopping experience in order to pass these savings on to consumers. But Dollar General's prices aren't the only low thing it offers. The stock's valuation is also too cheap to ignore.
With a forward price-to-earnings (P/E) multiple of 17, Dollar General trades at a sharp discount to the S&P 500 average of 20. And the stock's dividend yield of 2.5% is a nice icing on the cake for long-term investors.
Vici Properties
Defensive investors may overlook the gambling industry when seeking a safe stock to buy. However, Vici Properties dispels some of those preconceptions with a business model that bets on the most reliable aspect of this consumer discretionary industry: its real estate.
Vici specializes in triple-net leases, which are one of the most attractive arrangements from a corporate landlord's perspective. While Vici owns its properties, the tenant is responsible for paying rent, as well as other expenses such as property taxes, insurance, and maintenance. These would be the property owner's responsibility in a traditional lease agreement.
Triple net leases maximize the safety and stability of Vici's cash flow. And as a real estate investment trust (REIT), it returns the majority of its profits to shareholders through a generous 5.3% dividend yield.
Vici's edge comes from the quality of its portfolio. The company dominates the Las Vegas Strip, owning some of its most iconic resorts, including Caesars Palace, MGM Grand, and The Venetian. It is also diversifying its business model by purchasing more non-casino properties across North America, including water parks and sports complexes. So far, this is working out great for investors.
Vici's 2024 revenue increased 6.6% year over year to $976.1 million, while management increased the dividend payout by 4.2% for Vici's seventh consecutive annual dividend increase since its IPO in 2018.
It's time to pivot to defensive stocks
Over the last few years, investors have enjoyed massive gains by betting on speculative growth opportunities like crypto and generative AI. However, it may be time to pivot to more defensive value stocks that can withstand a worsening macroeconomic environment.
Analysts at J.P. Morgan believe the U.S. has a 60% chance of entering a recession this year. And Trump's on-again, off-again trade policy could sow uncertainty in the economy. In times like these, stocks such as Dollar General and Vici Properties are likely to outperform the broader market.
