Two Dividend Champions Still Outpacing the Market in 2025

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There’s something about the stock market that always reminds me of a 1990s family reunion. You know, the kind where no one really wants to be there, but everyone is oddly fixated on how much Uncle Larry is making from his old tech stocks. “Tech stocks,” of course, meaning the kind of stock that’s always just a little too hot to touch-like a toaster that only works if you slap it first. These days, in a world of plummeting interest rates and investors shuffling like old-timey Gold Rushers looking for the next big find, dividend stocks seem to be the new silver lining. But here’s the thing: not all dividend stocks are built equal. The truth is, many of them underperform, clinging to their “slow-growth” label like a parent trying to justify their out-of-date DVD collection.

Yet, somehow, there are always a few that break free from the pack. The divvies that somehow manage to outperform even the S&P 500’s 13% gain in 2025. Enter Altria and IBM, two companies that have outpaced the market like a dog sprinting away from its owner’s inevitable “No more treats” lecture. But how did they manage this, especially when so many others fell flat? Let’s dig into it, and maybe you’ll have a reason to thank the stock gods-or at least send a polite thank-you note to your financial advisor.

1. Altria

Altria-oh, the Marlboro man. If cigarettes were a cultural cornerstone, Altria would be the marble foundation, weathered but standing firm against the tides of change. The company, which birthed the Marlboro brand into the world, is far from the lumbering dinosaur it might appear to be at first glance. It’s not just standing around, watching the cigarette world burn (in a very literal sense); it’s pivoting, innovating, and, most importantly, raising its dividend like it’s preparing for a nationwide “I’m feeling lucky” lottery draw.

Now, let’s talk about how it manages to stay on top, even as smoking rates in the U.S. plummet. You might think it’s a risky bet, especially when the numbers are as bleak as the weather forecast for a high school prom. But Altria is like that one aunt who always brings a Tupperware full of cookies, even when the party’s winding down. The company has been raising prices, getting into the smoke-free game (nicotine pouches, e-cigarettes-basically anything that doesn’t burn the house down), and buying back shares like it’s on some kind of stock market clearance sale. Analysts, perhaps channeling the same optimism they reserve for New Year’s resolutions, expect Altria’s earnings per share (EPS) to grow 6% in 2025. And let’s not forget: its projected 2026 EPS of $5.60 should cover its forward dividend of $4.24. Basically, if you’re still concerned about that 6.5% forward dividend yield, don’t be. It’s like finding an extra $5 in your jeans pocket-pleasant, but hardly world-shattering.

The real kicker is Altria’s e-cigarette acquisition of NJOY. Sure, it closed that deal in 2023, but it doesn’t expect this acquisition to really start working its magic until 2026. So, if you’re looking for immediate results, you might want to reconsider your expectations. But long-term, this could curb its reliance on traditional cigarettes, much like how I depend on coffee to curb my early morning impulse to snooze the alarm for the 15th time.

2. IBM

IBM. The name alone invokes images of bulky, business-casual polos and the distant hum of outdated servers. But here’s the thing: IBM is *not* your dad’s tech company. It was once regarded as the tech giant whose time had passed. For nearly a decade, it was flailing around like a person at a dinner party trying to remember the name of someone they met once at a networking event. Between 2011 and 2020, IBM’s revenue halved as it tried to hold onto an identity that no longer worked. At its lowest point, it looked like it might just send itself into retirement early, with Big Blue waving goodbye as the golden years slipped away.

Enter Arvind Krishna, the former cloud guru who became CEO in 2020 and decided that IBM could do better than keep waving the flag for old infrastructure services. Instead of competing directly with the likes of Amazon and Microsoft in the cloud space, Krishna chose to develop a different approach, focusing on hybrid clouds and AI. The results? Finally, a return to revenue growth, and a respectable compound annual growth rate (CAGR) of 3% from 2021 to 2024. Analysts are now predicting that IBM’s revenue and adjusted EPS will continue to grow at CAGRs of 5% and 8%, respectively, from 2024 to 2026.

At $138, IBM’s stock still looks fairly priced at 23 times its forward earnings. And the 2.5% forward dividend yield is as reliable as an old watch you inherited from your grandfather (the kind that still tells the time, just a little too slowly). It’s been raising its dividend for 30 years, and its projected EPS of $11.94 in 2026 should easily cover the $6.72 per share dividend. So, while IBM might not be the next big thing to disrupt the tech world, it’s certainly the stable, grumpy uncle who still makes enough money to buy everyone dinner without complaint.

Should You Buy Either of These Market-Beating Dividend Stocks?

It seems like Altria and IBM have found their niche, and for the time being, they’re doing a commendable job of staying ahead of the S&P 500’s increasingly inflated gains. Altria’s investments in e-cigarettes and nicotine pouches are keeping it relevant, while IBM’s expansion into hybrid cloud and AI services gives it something to hold onto for the next few years.

Neither of these companies may turn into the next tech unicorn or blow your socks off with explosive growth. But if you’re looking for a reasonably priced, high-yield place to park your money while the stock market cools off, both Altria and IBM could be your ticket to avoiding the increasingly inflated S&P 500. Think of them as the dependable relatives who won’t cause a scene at Thanksgiving-but they’ll still leave you with a decent portion of leftovers. 🍂

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2025-09-29 14:28