Dividend growth stocks can help you manage through all market environments.
The markets had a seemingly great run for the last two years. That got upended for various reasons in 2025, including the chaotic tariff strategy implemented by the Trump administration against virtually every country around the world, especially China. The S&P 500 index sank this year, while the volatility index shot up to highs not seen since early in the pandemic and (before that) the Great Recession in 2008-09.
Chaos is becoming the theme of 2025, and many short-term investors are spooked. But chaos can also present buying opportunities for investors focused on the long term. If you’ve got $1,000 available the invest, here are three dividend growth stocks that scream buying opportunity right now.
1. American Express: Steady growth in credit card spending
Wall Street gets concerned about loan performance from lenders during economic recessions. When wallets get tight, more people are unable to pay back loans, which can put a dent in the earnings of these financial companies. American Express (AXP 3.30%) is better shielded from these types of economic calamity.
American Express’ credit card business caters to wealthier customers, global travelers, and those with high credit scores. Its net write-off rate in Q1 of 2025 was at an industry low of 2.1%. This figure is likely to rise during a recession, but not nearly as much as other credit card issuers or banks.
American Express’ business includes more than just lending. Over half of its revenue comes from credit card swipe fees, with 14% coming from the annual fees customers pay on credit cards such as the Amex Platinum card. Even if the loan book sours, these diverse revenue streams can support American Express during a recession.
Today, you can buy American Express stock at around $252, and it sports a dividend yield of 1.16%. It’s an admittedly low dividend yield, but the company is a serial grower of its dividend per share, with management authorizing a 17% increase in the dividend earlier this year, making American Express a great dividend growth stock to buy and hold perpetually in your portfolio.
2. Alphabet: A technology stalwart finally returning cash to shareholders
The second dividend payer with strong dividend growth potential is Alphabet (GOOG 2.63%) (GOOGL 2.75%). The owner of Google Search and YouTube just started to pay a dividend last year and already has a yield of 0.52%. At a share price around $152, the stock is cheap given its long-term growth potential in artificial intelligence (AI) and cloud computing.
Google Search revenue grew 12.5% year over year last quarter to $54 billion. Contrary to the narrative that AI is disrupting Alphabet’s business, Google Search is doing just fine at the moment, even with heightened competition from the likes of OpenAI and other AI start-ups. Its cloud division grew revenue by 30% year over year, propelled by huge investments in AI computing power from companies around the world. On a consolidated basis, operating income grew 33% year over year to $112 billion in 2024.
Today, Alphabet’s annual dividend per share is $0.80, a figure significantly below its free cash flow per share of $5.74. Even if Alphabet doesn’t grow its earnings over the next five years — which I think it will — the company has plenty of capacity to keep growing its dividend payout to shareholders. This makes the stock an easy buy at today’s levels.
Data by YCharts.
3. Ally Financial: Writing a comeback story
My last dividend stock is at the lowest price on a per-share basis and trades at the highest dividend yield of the three: Ally Financial (ALLY 2.23%). At a price of $31.60 and a dividend yield of 3.8%, this security can provide investors strong and growing dividend income if they hold for the long haul.
Ally operates a digital online-only bank and makes loans mainly in the consumer automotive sector. The company got hit with a double-whammy of earnings headwinds when the Federal Reserve started aggressively raising interest rates to combat inflation. It had to start paying higher interest rates to depositors, which increased its funding costs. However, its automotive loans sitting on the balance sheet had fixed interest rates, which compresses the interest spread earned on loans versus what is paid to depositors, known as the net interest margin (NIM).
Today, with the Federal Reserve starting to unwind its interest rate hikes and the cycling through of new loans on the Ally balance sheet, its NIM has begun to expand again. It was 3.31% last quarter compared to 3.16% in the same quarter a year ago. Investors are worried about how tariffs will impact the automotive sector, but Ally should have the flexibility to weather any storm. It can transition to more used car loans or simply make fewer loans if supply dries up. Plus, if used car prices rise, that helps with the residual value when it takes on delinquent loans and sells the vehicle it made a loan for.
Ally Financial is a strong financials business with the strength to now grow its dividend per share again (it has been stuck at $0.30 a quarter for the last 10 quarters). As this grows, your dividend income from owning Ally stock will grow, which makes it a great dividend growth stock to buy right now.
American Express is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Ally is an advertising partner of Motley Fool Money. Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
