When the Fed raised its benchmark rate 11 times in 2022 and 2023, many investors pivoted from dividend stocks to risk-free CDs and T-bills to earn higher yields. But the Fed cut those rates six times in a row in 2024 and 2025, driving more investors back toward dividend stocks.
Many analysts expect Kevin Warsh, who could become the next Fed chair this May, to continue cutting rates to spur fresh lending and economic growth. If that happens, it could be smart to buy these two dividend stocks: Energy Transfer (ET 1.01%) and Verizon (VZ 0.10%).
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Energy Transfer
Energy Transfer, which operates over 140,000 miles of pipeline across 44 states, is one of America's top midstream companies. It charges upstream extraction companies and downstream refining companies "tolls" to deliver natural gas, liquefied natural gas (LNG), natural gas liquids (NGLs), crude oil, and other refined products through its pipelines.
NYSE: ET
Key Data Points
That business model is well-insulated from volatile commodity prices, since it merely needs those resources to keep flowing through its pipes to generate stable profits. It's also a master limited partnership (MLP), which blends a return of capital (which isn't taxed at the capital gains rate unless the underlying position is sold) and its own income to fund its distributions.
Energy Transfer's evergreen business model, tax-efficient structure, and exposure to soaring energy demand (partly driven by the cloud and AI markets) all make it an attractive investment. It pays a high forward yield of 7.3%, and it looks like a bargain at 12 times forward earnings.
Verizon
Verizon, which serves 146.7 million wireless customers, is one of America's top telecom companies. In recent years, it struggled to gain more wireless subscribers as its competitors ramped up their promotions and bundling strategies. Its business wireline segment also shrank as more companies pivoted toward cloud-based communications services.
NYSE: VZ
Key Data Points
To offset that pressure, Verizon expanded its higher-growth broadband business (including its Home Internet and FiOS fiber plans), and it recently added more than 2.2 million new fiber subscribers through its takeover of Frontier Communications. It's also bundling more wireless and broadband plans, upgrading its enterprise plans with additional AI tools, and using AI to streamline customer support and network deployments.
As those turnaround strategies bear fruit, analysts expect its adjusted EPS to rise 4% in 2026 and 7% in 2027. Its stock still looks dirt cheap at 10 times forward earnings, and it pays an attractive forward dividend yield of 5.7%.
