After the Fed increased its benchmark interest rate 11 times throughout 2022 and 2023, a lot of investors shifted their funds from dividend stocks to risk-free options like CDs and T-bills to secure better yields. However, the landscape changed dramatically in 2024 and 2025, as the Fed cut rates six consecutive times, prompting many investors to return to dividend stocks.
Looking ahead, there’s speculation that Kevin Warsh, a potential candidate for the Fed chair position in May, may continue this trend of lowering interest rates to stimulate lending and foster economic growth. If this unfolds, it might be beneficial for investors to consider two specific dividend stocks: Energy Transfer (New York Stock Exchange: ET) and Verizon (NYSE: VZ).
Energy Transfer is a significant player in the midstream sector, managing over 140,000 miles of pipeline across 44 states. The company collects “tolls” from upstream mining firms and downstream refiners for the transportation of various energy products, including natural gas and crude oil. This model protects the company from the volatility commonly associated with commodity prices since the flow of resources continues despite market fluctuations. Additionally, as a master limited partnership (MLP), they can combine income and capital return—this helps keep their distributions attractive from a tax standpoint.
With its steady operational framework, favorable tax structure, and a growing demand for energy—especially with the rise of sector innovations like AI—Energy Transfer stands out as a promising investment. It boasts a compelling forward yield of 7.3% and seems affordable, with a price-to-earnings ratio of 12 times projected earnings.
On the telecommunications front, Verizon is one of the leading companies in the U.S., currently supporting around 146.7 million wireless customers. Recently, the company has faced difficulties in attracting new subscribers due to increased competition, leading to a decline in its business wireline segment as more organizations shift towards cloud solutions.
To counter these challenges, Verizon has been expanding its broadband segments, such as Home Internet and FiOS Fiber, and recently added over 2.2 million fiber subscribers through its acquisition of Frontier Communications. They are also bundling more offerings and incorporating AI tools to enhance their enterprise services and improve customer support.
As analysts contemplate the effectiveness of these turnaround strategies, projections indicate that Verizon’s adjusted earnings per share could increase by 4% in 2026 and 7% in 2027. Its valuation remains low, with a forward P/E ratio of just 10x, and it offers an attractive forward dividend yield of 5.7%.
When considering an investment in Energy Transfer, it’s essential to keep an open mind about broader market conditions and the performance of their business strategies. It appears that many investors are looking for opportunities that could yield solid returns in the coming years.
