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UBS Highlights Top Dividend-Paying Stocks with Strong Fundamentals

Dividend stocks offer a reliable income stream, but quality is key when seeking yield.

UBS has curated a list of high-quality, dividend-paying stocks for its UBS Global Quality Dividend Payers Index, using a blend of quantitative models and fundamental analysis.

The firm projects a robust 7.2% dividend growth in the U.S. over the next 12 months, the highest in its global coverage, with a low 4.5% chance of dividend cuts, making the U.S. the safest region for dividend investors, according to UBS analyst Amanda Belcaid.

UBS employs a meticulous process, starting with machine-learning algorithms to evaluate companies based on earnings strength, balance sheet health, and potential to outperform their sectors. Fundamental analysts then review top-scoring stocks, and an algorithm ensures sector and regional diversity.

Below are key U.S. stocks from the index:

Dick’s Sporting Goods (DKS)

Dick’s Sporting Goods offers a 2.26% dividend yield, with a quarterly payout of $1.2125 per share, despite a -7% YTD return as of July 15, 2025.

The company reaffirmed its fiscal 2025 guidance, projecting EPS of $13.80–$14.40 and revenue of $13.6–$13.9 billion, aligning with LSEG estimates.

Its $2.4 billion Foot Locker acquisition, expected to close in H2 2025, aims to create a $21 billion sports retail leader, boosting market share and cost synergies ($100M–$125M). The GameChanger app enhances youth sports engagement, driving digital growth. Analysts rate it a buy with a 19.5% upside (average price target ~$250).

McDonald’s (MCD)

McDonald’s provides a 2.37% dividend yield, with a 4% YTD gain as of July 15, 2025.

Despite a 3.6% Q1 U.S. same-store sales decline, the company’s scale and innovation keep analysts optimistic, rating it overweight with an 11% upside (average price target ~$300).

Goldman Sachs upgraded to buy, citing new offerings like snack wraps and the McValue platform’s daily double burger. Global strength and digital sales growth via the MyMcDonald’s app offset domestic challenges. Investors should monitor Q2 earnings for recovery signals, as cost-conscious consumers may pressure margins.

Bank of America (BAC)

Bank of America yields 2.21%, with a quarterly dividend of $0.28 per share, up 8% after passing the Federal Reserve’s 2025 stress test, and boasts a 7% YTD return as of July 15, 2025.

Strong capital ratios and a robust balance sheet support its dividend hike. Q2 2025 earnings, due soon, will likely reflect steady loan growth and investment banking recovery, though net interest margins may face pressure from rate cuts.

Analysts rate it a buy, with a 12% upside (average price target ~$45). Investors should watch for macroeconomic impacts on credit quality.

Merck (MRK)

Merck’s 3.86% dividend yield is attractive, despite a -16% YTD decline as of July 15, 2025, driven by tariff concerns impacting $200 million in costs and lowered profit guidance.

Its core portfolio, led by Keytruda, remains strong, with oncology and vaccine segments driving growth. Analysts rate it overweight, with a 24% upside (average price target ~$140), citing innovation and pipeline resilience.

Tariff risks may persist, but Merck’s diversified revenue and R&D investments mitigate concerns. Investors should focus on upcoming earnings for clarity on cost management and tariff impacts.

Equinix (EQIX)

Equinix, a data-center REIT, offers a 2.47% dividend yield but is down -19% YTD as of July 15, 2025, after underwhelming long-term guidance.

Its global data-center network supports AI and cloud demand, positioning it for secular growth. Analysts rate it overweight, with a 28.5% upside (average price target ~$950), and Guggenheim initiated a buy rating, viewing the dip as a buying opportunity.

Stable cash flows and long-term leases ensure dividend sustainability. Investors should monitor hyperscale demand and energy cost trends, as these could impact margins.

Though there are some names with higher yield, we feel these offer double whammy as they’re expected to grow in value too.

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