Investing

6 Passive Income Dividend Stocks May Explode Higher in 2025 When President Trump Takes Office

Lee Jackson

Published: December 7, 2024 12:15 pm

Key Points

• Energy, financial, and industrial stocks should benefit from a Trump presidency.
• Dividend stocks in these sectors should do well as rates fall in 2025.
• It may be time for investors to ensure their portfolios are ready for a new administration. Qualified financial advisors can offer an unbiased look. Click here to start the process to find one. (sponsored)

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).

Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort. This makes it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence, enhancing their economic security and well-being.

Given the importance of dividend stocks for investors seeking passive income streams, we decided to screen some of the sectors Wall Street feels were boosted by Trump’s victory in November.

Energy, manufacturing, and financials should all benefit from the new administration, and we found six companies that could explode higher in 2025. Trump’s win in November will make him the only second U.S. president to move back to 1600 Pennsylvania Avenue. Democrat Grover Cleveland served as the 22nd and 24th president from 1885 to 1889 and 1893 to 1897, while Republican Benjamin Harrison held the office from 1889 to 1893.

Energy

Energy stocks could benefit as big exploration and production giants expand their efforts and regulations are softened. It should be remembered that President Biden shut down the Keystone pipeline in one of his first days in office, while Trump has repeated the “drill-baby-drill” mantra. After the Trump victory, two industry giants look like outstanding ideas and potential big winners.

Enterprise Products Partners

This company is one of the largest publicly traded energy partnerships and pays a 7% dividend. Enterprise Products Partners L.P. (NYSE: EPD) provides various midstream energy services, including:

• Gathering
• Processing
• Transporting and storing natural gas, natural gas liquids (NGL) fractionation
• Import and export terminalling
• Offshore production platform services

The company has four reportable business segments:

• Natural Gas Pipelines and Services
• NGL Pipelines and Services
• Petrochemical Services
• Crude Oil Pipelines and Services

Many top Wall Street analysts may like the stock because of its distribution coverage ratio, which is well above 1x. This makes the company relatively less risky in the MLP sector.

Exxon Mobil

The slow but steady increase in oil prices still offers investors an excellent entry point, and they will gladly grab a strong 3.26% dividend. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in:

• The United States
• Canada
• South America
• Europe
• Africa
• Asia
• Australia/Oceania

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and transports and sells crude oil, natural gas, and petroleum products.

Top Wall Street analysts expect the company to remain a key beneficiary in a higher oil price environment, and most remain very optimistic about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery.

Exxon offers greater Downstream/Chemicals exposure than its peers and has completed its purchase of oil shale giant Pioneer Natural Resources Company in a $59.5 billion all-stock purchase. The deal created the largest U.S. oilfield producer and guaranteed a decade of low-cost production.

Financials

The large money-center banks stand to benefit, but some on Wall Street point to the top regionals as potential winners as liquidity regulations and a softening of bank capital requirements play out for the sector. We found two stocks offering big dividends and total return potential.

Citigroup

This is a top bank that Warren Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.20% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.

Citigroup offers:

• Consumer banking and credit
• Corporate and investment banking
• Securities brokerage
• Transaction services
• Wealth management services.

Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).

Trading at a reasonable 9.2 times estimated 2025 earnings; this company looks very reasonable in what remains a volatile stock market and in a sector that has lagged some in 2024 but looks to be gaining ground.

Comerica

Based in Dallas, this fast-growing banking center giant pays a substantial 4.04% dividend. Comerica Inc. (NYSE: CMA) provides various financial products and services.

The company operates through:

• Commercial banking
• Retail banking
• Wealth management
• Finance segments

The Commercial Bank segment offers:

• Commercial loans and lines of credit
• Deposits
• Cash management
• Capital market products
• International trade finance
• Letters of credit
• Foreign exchange management services
• Loan syndication services
• Payment and card services for small and middle-market businesses, multinational corporations, and governmental entities

The Retail Bank segment provides:

• Personal financial services, such as consumer lending
• Consumer deposit gathering
• Mortgage loan origination and various
• Consumer products that include deposit accounts, installment loans, credit cards, student loans, home equity lines of credit
• Residential mortgage loans and commercial products and services to micro-businesses.

The Wealth Management segment offers products and services comprising:

• Fiduciary
• Private banking
• Retirement
• Investment management and advisory
• Investment banking and brokerage services
• Annuity products and life, disability, and long-term care insurance products

The Finance segment engages in the securities portfolio and asset and liability management activities.

Comerica operates in:

• Texas
• California
• Michigan
• Arizona
• Florida
• Canada
• Mexico
• Manufacturing

Manufacturing/Industrials

Many Wall Street strategists feel that Trump’s victory will spur a significant effort to increase manufacturing in the United States while luring companies producing goods overseas to return stateside. We found two stocks that could be huge winners in a U.S. manufacturing rebirth.

Honeywell

If global and domestic growth picks back up, this top industrial and manufacturing stock could be poised for a solid 2025, and it comes with a 2% dividend. Honeywell International Inc. (NYSE: HON) engages in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, Europe, and internationally.

The company’s Aerospace segment offers:

• Auxiliary power units
• Propulsion engines
• Integrated avionics
• Environmental control and electric power systems
• Engine controls
• Light safety, communications, navigation hardware
• Data and software applications
• Radar and surveillance systems
• Aircraft lighting
• Advanced systems and instruments
• Satellite and space components
• Aircraft wheels and brakes
• Spare parts; repair, overhaul, and maintenance services
• Thermal systems, as well as wireless connectivity services

Its Honeywell Building Technologies segment provides software applications for building control and optimization, sensors, switches, control systems, and instruments for energy management, access control, video surveillance, fire products, and system installation, maintenance, and upgrades.

The company’s Performance Materials and Technologies segment offers automation control, instrumentation, software, and related services; catalysts and adsorbents, equipment, and consulting; and materials to manufacture end products such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging. It also provides materials based on hydrofluoric-olefin technology.

Its Safety and Productivity Solutions segment provides:

• Personal protective equipment
• Apparel, gear, and footwear
• Gas detection technology
• Custom-engineered sensors
• Switches and controls for sensing and productivity solutions
• Cloud-based notification and emergency messaging
• Mobile devices and software
• Custom-engineered sensors, switches, and controls
• Data and asset management productivity solutions

Lockheed Martin

This company is one of the top aerospace and defense stocks to buy. It is close to a big breakout and pays a dependable 2.35% dividend. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates, and sustains advanced technology systems, products, and services.

The company operates in five principal business segments:

• Aeronautics
• Missiles and Fire Control
• Mission Systems and Training
• Space Systems
• Information Systems and Global Solutions

It also provides a wide range of defense electronics products and IT services.

As the Pentagon’s prime contractor, Lockheed Martin plays a crucial role in national defense, offering a diverse portfolio of global aerospace, defense, security, and advanced technologies.

Its leveraged presence in the Army, Air Force, Navy, and IT programs guarantees a steady inflow of follow-on orders from the U.S. government and many foreign allies of the nation.

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