Several key risks raise concerns that losses could deepen.
In this context, dividend-paying stocks offer several key advantages that should not be overlooked.
Last week, the and the both reached new record highs, while the briefly moved above the 50,000-point level.
However, market sentiment has weakened since then. On Monday, the S&P 500 fell 0.07%, marking its second straight day of losses, while the Nasdaq dropped 0.51% as technology stocks came under pressure. The decline followed a sharper sell-off on Friday, when the S&P 500 lost 1.2%, the Nasdaq fell 1.5%, and the Dow Jones dropped 1.1%.
Several factors are driving this market nervousness, and many of them are likely to remain important in the near term.
1. Inflation
One major concern is inflation. rose 3.8% year over year in April, marking its fastest pace since May 2023. On a monthly basis, CPI increased 0.6%, largely because of a 17.9% jump in energy prices. also came in stronger than expected. April PPI rose 6% from a year earlier, the biggest increase since December 2022, while monthly PPI climbed 1.4%.
These inflation figures have sharply changed expectations for US monetary policy. According to the CME FedWatch Tool, markets now see a 50% chance of another this year, compared with just 1% a month ago.
2. Rising Yields
Another major issue is rising long-term bond yields. The yield on the reached 4.631% on Monday, its highest level since February 2025. Morgan Stanley has previously identified the 4.5% level as an important point where higher yields begin putting serious pressure on stock valuations, and the market has now moved above that threshold.
3. Iran War
The war in Iran is another major source of uncertainty for markets. The conflict, which has continued since late February, is keeping elevated and adding pressure to consumer inflation. Economists believe that even if the conflict ends soon, global supply chains could still take between two and six months to fully recover.
4. Earnings
Another immediate risk for markets is approaching this week. NVIDIA () is set to report earnings on Wednesday evening. The results are expected to be an important test for AI-related stocks.
Technology stocks have driven much of the market rally this year, and Nvidia has been one of the biggest contributors. If the company disappoints investors with weaker earnings or cautious guidance, it could trigger profit-taking across the tech sector and put pressure on the broader market indices.
Dividend Stocks: A Solid Anchor in an Uncertain Market
In this environment, one group of stocks stands out: US companies with strong and consistent dividend payments. These stocks are not protected from market declines, but they offer two important advantages that many expensive growth stocks currently lack.
The first advantage is a stable income. In a market where future capital gains are becoming less predictable, dividend yields above 5% can provide investors with a steady return regardless of short-term stock price movements.
The second advantage is financial resilience. Companies that have continued paying dividends for more than 15 years have already survived major crises, including the 2008 financial crisis, the Covid pandemic, and multiple periods of rising interest rates. This gives investors a proven record of stability that many AI-driven growth stocks still do not have.
At the same time, dividend yield alone is not enough. Investors also need to focus on companies that appear undervalued and still offer meaningful upside potential based on valuation models.
To find these opportunities, we used the Investing.com stock screener and filtered US stocks using the following criteria:
Market: United States
Minimum market cap: $5 billion
Dividend yield: greater than 5%
Payout history: more than 15 consecutive years
Upside potential: over 20% according to InvestingPro Fair Value, which synthesizes several recognized valuation models
Financial health score above 2.5/5
This research has allowed us to identify 7 stocks:
Specifically, these US dividend stocks offer yields ranging from 5.1% to 6.8% and are undervalued by 21.9% to 68.1% according to InvestingPro Fair Value.
Among these stocks are:
1. COLB: Columbia Banking System Inc () is the largest regional bank in the northwestern US. The company offers one of the strongest dividend profiles among regional banks. Its annual dividend yield is close to 5.1%, and it recently confirmed a quarterly dividend of $0.37 per share through June 2026.
The bank also has solid financial strength, including a CET1 ratio above regulatory requirements, an improving net interest margin of 3.84%, and a $700 million share buyback program. These factors support the long-term stability of its dividend payments.
The stock currently trades at around 9.55 times forward earnings, which is lower than many companies in the financial sector and the broader S&P 500. This gives income-focused investors a mix of strong dividend income and relatively attractive valuation.
2. TROW: T. Rowe Price Group Inc () is one of the world’s largest independent asset managers, with about $1.7 trillion in assets under management.
The company is especially attractive for dividend investors because it has increased its dividend for 40 straight years. Its annual dividend now stands at $5.20 per share, giving the stock a yield above 5.4% at current prices.
During Q1 2026, the company returned $629 million to shareholders through dividends and share buybacks. At the same time, it maintained stable assets under management at $1.7 trillion, showing strong cash generation even in a more cautious investment environment.
However, all other stocks on the list show higher potential according to Fair Value!
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of any assets and does not constitute an offer, solicitation, recommendation, or advice to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky; therefore, any investment decision and the associated risk are the sole responsibility of the investor. Additionally, we do not provide any investment advisory services.
