Dividend Growth Resilience in a Low-Growth Macro Environment: PGIM Jennison Rising Dividend Fund's Q3 2025 Strategy

In a macroeconomic climate marked by subdued growth and shifting investor priorities, dividend resilience has emerged as a critical factor for long-term portfolio stability. The PGIM Jennison Rising Dividend Fund (PDRDX), designed to capitalize on companies with a track record of increasing dividends, faced a challenging Q3 2025. Despite advancing for the quarter, the fund underperformed the S&P 500 Index, , according to a . This underperformance highlights broader struggles for dividend-focused strategies in a market where growth-oriented assets have outpaced traditional income generators.

Navigating a Low-Growth Environment

The Q3 2025 results underscore the tension between dividend resilience and macroeconomic headwinds. According to the fund's commentary, dividend-paying stocks generally lagged the broader market during the period. This trend reflects a shift in investor sentiment toward high-growth equities, even as central banks signaled cautious monetary policy. For PGIM Jennison, the challenge lies in balancing exposure to resilient dividend payers with the need to adapt to a low-growth environment where earnings expansion is elusive.

The fund's performance was notably influenced by stock selection. While the strategy emphasizes companies with strong balance sheets and consistent payout histories, Q3 2025 saw mixed results. For instance, underweight positions in sectors like utilities and consumer staples-typically defensive in nature-may have contributed to the gap relative to the S&P 500. Conversely, overexposure to sectors facing margin pressures, such as industrials or energy, likely amplified the drag.

Macroeconomic Positioning and Strategic Adjustments

PGIM's broader restructuring efforts provide context for the fund's challenges. As of Q3 2025, , . However, the firm's active equity arm, Jennison, continued to face outflows due to industry-wide "active to passive pressure". This dynamic pressures managers to refine strategies that differentiate active management in a low-growth world.

The fund's macroeconomic positioning reflects a defensive tilt, with a focus on companies that can sustain dividends despite weaker demand. Yet, in Q3 2025, this approach struggled to outperform. The fund's commentary notes that stock selection within its portfolio was a key factor, suggesting that even resilient dividend payers may falter if earnings growth is constrained. This aligns with broader market analysis indicating that dividend resilience is not a guaranteed hedge in a low-growth environment.

Future Outlook and Strategic Implications

PGIM's restructuring initiatives, , aim to address these challenges. By reducing operational costs and enhancing operating efficiencies, the firm seeks to allocate capital more effectively to strategies that can thrive in a low-growth landscape. For the Rising Dividend Fund, this may involve recalibrating sector allocations or integrating alternative metrics-such as free cash flow sustainability-to refine stock selection.

However, the Q3 2025 experience underscores the need for agility. As data from Seeking Alpha indicates, dividend-focused strategies must evolve to account for macroeconomic shifts. This could mean increasing exposure to sectors with structural growth tailwinds, such as healthcare or technology, while maintaining a disciplined approach to payout ratios and debt management.

Conclusion

The PGIM Jennison Rising Dividend Fund's Q3 2025 performance serves as a case study in the complexities of dividend resilience. While the fund's core thesis remains valid, the quarter highlights the importance of dynamic stock selection and macroeconomic adaptability. As PGIM navigates its restructuring and the broader market grapples with low-growth realities, the fund's ability to innovate within its dividend-focused framework will be critical to outperforming in the years ahead.