3 Overlooked Dividend Plays for Income in Volatile Times

Key Points

• Stocks combining growth prospects and strong dividend history could offer a double incentive for investors.
• DHT Holdings, Sunoco, and Amcor all fit the bill, although they each have different strengths and some potential disadvantages as well.
• Of these three companies, both DHT and Sunoco have strong share price performance this year, while Amcor may have the most room for upside potential according to analysts.

Though some investors relish market volatility for the potential to win during localized upswings, most retail investors take turbulence as a sign to seek lower-risk opportunities. With even the typically solid U.S. Treasury bond space facing noteworthy challenges this year, some of the traditional safe havens are perhaps not as protected as investors often think. 

Those keen to stay in stocks may find dividend plays that help to provide a steady passive income stream even during volatile periods.

One benefit of many dividend leaders is that they are stable, established firms that are unlikely to be heavily impacted by short-term market fluctuations. On the other hand, many of these dividend stocks are unlikely to see significant share price growth as a result of this stability. 

To seek to balance a strong dividend history with opportunity for capital appreciation, investors might look to stocks with the combination of a high dividend yield, a history of positive analyst ratings, and price targets suggesting upside potential.

Strong Fundamentals and Dividend History for an Underrated Tanker Company

Crude oil tanker company DHT Holdings Inc. NYSE: DHT has so far managed to navigate this year's international geopolitical tensions and oil market news smoothly. In early May, the company announced earnings per share (EPS) of 27 cents, a full 12 cents higher than analyst predictions, for the first quarter of the year. The company also ended the quarter with a healthy $277 million in total liquidity as it announced multiple new charter contracts with top commodity traders.

For dividend investors, DHT has a strong history of more than 15 years of regular dividend payments. With the most recent quarterly dividend being 15 cents per share, DHT has a dividend yield of 5.30% and a reasonable dividend payout ratio of 54.55%.

Moreover, its return on equity (ROE) of 17.4% and its projected earnings growth of 50% are signals that the company has room to grow in the future.

It's perhaps no surprise, then, that four out of six analysts rate DHT shares a Buy, assigning the company a consensus price target more than 14% higher than current levels. This is despite the fact that DHT shares are up more than 17% year-to-date (YTD).

Sunoco's Aggressive Expansion Plan Is Appealing to Analysts

Sunoco LP NYSE: SUN is a major motor fuel retailer across the United States. The company made headlines earlier this year when it agreed to purchase Canadian gas station and convenience store chain Parkland for over $9 billion, although the deal is expected to close later in 2025.

The deal should have a strong positive impact on Sunoco, including 10% accretion to cash flow, as well as a major inroad into energy infrastructure linking the United States and Canada.

The Parkland purchase is also just one of several big acquisitions in Sunoco's recent history, signaling that the company is being aggressive in its expansion efforts.

Despite the focus on growth via acquisition, Sunoco remains committed to its appeal as a dividend standout. With a dividend yield of 6.50% and a payout ratio of 64.88%, the firm provides solid passive income in a way that appears to be sustainable.

Further, all six analyst ratings of SUN shares are a Buy, and the company has a consensus price target more than 16% above current levels after having climbed nearly 7% YTD.

Despite Earnings Disappointment, Amcor Remains a Favorite

Packaging products manufacturer Amcor plc NYSE: AMCR has a foothold in a host of different industries, which may have helped to insulate it somewhat amid tariff uncertainty in recent months.

Still, the company did have an underwhelming earnings period when it last reported, falling short of analyst estimates for both top- and bottom-line performance.

Although the earnings disappointment did contribute to AMCR's decline of nearly 4% YTD, analysts remain broadly optimistic about the company's future prospects. Seven out of 11 analysts rate it a Buy, and the consensus price target of $11.31 suggests more than 25% upside potential.

Investors who subscribe to that optimism may be able to win share price gains on top of a dividend yield of 5.65%. Beware, though, that the company's dividend payout ratio of 91.07% may not be sustainable if it is unable to boost profits.