UBS reveals tech and financial sectors as dividend growth champions

In the United States, UBS Asset Management has emphasized that investors should consider dividend stocks as a means to achieve a balanced investment strategy, particularly in the current market environment. Jeremy Zirin, a representative of UBS, pointed out that their U.S. Dividend Ruler Fund is currently yielding 1.83%, surpassing the broad market index yield of approximately 1.3%. According to the research findings, companies that consistently increase their dividends tend to produce superior risk-adjusted returns compared to those with the highest yields, highlighting a critical focus on sustainable dividend growth. Zirin elaborated that the technology and financial sectors represent the 'unsung heroes' of the dividend growth universe. With more than 29% of the UBS U.S. Dividend Ruler Fund's allocation in information technology stocks and nearly 19% in financials, Zirin noted that these sectors demonstrate the best earnings momentum and favorable forward-looking fundamentals in the market today. Recent first-quarter earnings results indicated that technology companies, especially those associated with artificial intelligence infrastructure, have shown resilience despite broader economic challenges. Moreover, Zirin mentioned that the financial sector is poised to benefit from potential deregulation, which may shift policy focus away from trade issues and tariffs towards tax reform efforts and the extension of existing legislative measures like the Tax Cuts and Jobs Act. Since financials have minimal exposure to tariffs, they could present a safer investment avenue during uncertain economic times. Notable companies highlighted in the UBS U.S. Dividend Ruler Fund include Microsoft, Oracle, and JPMorgan, each with distinct dividend yields and consistent growth in payouts. In particular, Microsoft, which has been paying dividends for over 20 years, recently increased its dividend following positive earnings and revenue reports. With a yield of 0.74%, it has seen a year-to-date increase in stock value. Oracle also stands out, with a significant 25% dividend increase despite facing a slight decline in stock this year. Meanwhile, JPMorgan, with a 2.2% dividend yield, has been recognized as one of the leading financial companies underlining its robust operational management. The overall message from UBS is to highlight the importance of focusing on dividend growth as a strategic approach for investors in a fluctuating market environment.