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3 High-Yield Dividend Stocks to Weather Market Volatility in 2025

Cyrus ColeFriday, May 16, 2025 9:55 am ET

105min read

Amid market turbulence and economic uncertainty, income investors face a critical question: Where can you find dividends that are both sustainable and undervalued? This article analyzes three companies—UPS (UPS), APA Corporation (APA), and Robert Half (RHI)—that offer compelling yield, cash flow resilience, and catalysts for recovery. Unlike the "Dogs of the Dow" trap (high-yield stocks with deteriorating fundamentals), these picks combine dividend safety with undervaluation, making them safer bets for income portfolios.

1. UPS: The Dividend Champion with a Cost-Cutting Engine

Dividend Yield: 5.2% (as of June 2025)
Payout Ratio: 82.4% in Q1, projected to drop to 74.8% by year-end

UPS’s 26-year streak of dividend growth is no accident. The company has restructured its network to slash costs, targeting $3.5 billion in annual savings by 2025. Q1 free cash flow hit $1.487 billion, fueling its recent dividend hike to $1.64 per share quarterly. Key catalysts include:
- Margin Resilience: U.S. Domestic segment margins rose to 7.0%, while International margins hit 15.0%.
- Strategic Acquisitions: The $1.6 billion Andlauer acquisition expands its high-margin healthcare logistics business, a recession-resistant sector.
- Debt Management: Net debt-to-EBITDA is under 2.0x, a conservative metric for its industry.

Why It’s Safer Than Dogs of the Dow: Unlike many high-yield stocks with shaky balance sheets, UPS’s cash flow and margin discipline ensure dividend safety.

2. APA Corporation: Energy’s Undervalued Dividend Machine

Dividend Yield: 6.8%
P/E Ratio: 7.11 (vs. sector average of 15–20)

APA’s valuation is a screaming buy signal. The oil and gas producer is trading at a discount despite:
- Strong Free Cash Flow: Generated $126 million in Q1, with $608 million from asset sales earmarked for debt reduction.
- Cost Efficiency: Permian Basin drilling costs fell by $800,000 per well, and annual run-rate savings hit $225 million by year-end.
- Production Stability: U.S. oil output remains on track at 125,000–127,000 barrels per day despite rig count cuts.

Why It’s Safer Than Dogs of the Dow: APA’s low P/E and focus on debt reduction contrast sharply with high-yield energy stocks that lack cost discipline.

3. Robert Half: Staffing’s Contrarian Opportunity

Dividend Yield: 5.08%
Cash Reserves: $342.5 million (despite a 8.4% revenue decline)

Robert Half’s 109% payout ratio raises eyebrows, but the reality is this staffing giant is undervalued and adapting:
- Cash Flow Cushion: Generated $46.6 million in free cash flow in Q1, with $80 million in annualized cost cuts (layoffs and restructuring) boosting margins.
- Sector Niche: Protiviti’s consulting arm grew 5%, outperforming its Talent Solutions division, which faces macroeconomic headwinds.
- Dividend Safety: The $0.59 quarterly payout is covered by a $342.5 million cash buffer, and management has prioritized shareholder returns over expansion.

Why It’s Safer Than Dogs of the Dow: Unlike "dogs" with structurally declining industries, Robert Half’s niche in high-demand skills (e.g., cybersecurity, AI) positions it for recovery.

Why These Stocks Beat the "Dogs of the Dow"

The Dogs of the Dow strategy—buying the 10 highest-yielding Dow stocks—often backfires in volatile markets. Many "dogs" have:
- Weak Balance Sheets: High debt loads or poor liquidity.
- Declining Earnings: Revenue erosion without cost controls.
- No Catalysts: No strategic moves to justify their yields.

In contrast, UPS, APA, and Robert Half offer:
- Cash Flow Dominance: All three generate free cash flow exceeding dividend payouts.
- Valuation Discounts: P/E ratios below industry averages (APA’s 7.11 vs. sector’s 15–20).
- Structural Tailwinds: UPS’s healthcare pivot, APA’s Permian efficiency, and Robert Half’s niche consulting.

Final Call to Action

The market’s pessimism has created a rare opportunity: high yields without the "dog" risks. UPS, APA, and Robert Half offer dividends backed by:
- Sustainable Payouts: Falling payout ratios (UPS/APA) and cash reserves (RHI).
- Undervaluation: APA’s P/E and UPS’s balance sheet stand out.
- Catalysts for Growth: Strategic moves to expand margins and reduce costs.

Investors should act now: These stocks are poised to outperform as markets stabilize.

Invest wisely—these three stocks are dividends you can bank on.

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