Hot Picks: Blackstone, Otis and Unilever stand out for dividends

Dividend-paying stocks are drawing renewed attention from investors seeking more predictable returns in a volatile and uncertain market environment. Dividend growth can also help offset inflation and support long-term purchasing power.

BNN Bloomberg spoke with Michael Clarfeld, portfolio manager at ClearBridge Investments, about opportunities in dividend-paying stocks and why he sees value in Blackstone, Otis and Unilever amid growing investor focus on AI and big technology companies.

Key Takeaways

• Dividend-paying stocks can help provide more predictable returns and cushion downside volatility during uncertain market periods.
• Dividend growth may help investors offset inflation and support long-term income needs, particularly in retirement.
• Alternative asset managers could benefit from growing investment in private credit, infrastructure and data centre development.
• Companies with recurring service revenue and defensive cash flows may offer greater resilience during economic slowdowns.
• Investors focused heavily on AI and big technology may be overlooking dividend opportunities across industrials, financials and consumer staples sectors.

Read the full transcript below:

LINDSAY: It’s time now for Hot Picks, and today we are looking at three dividend-paying stocks to keep on your radar. For more, let’s bring in Michael Clarfeld, portfolio manager at ClearBridge Investments. It’s great to have you join us. Thanks so much.

MICHAEL: Thanks. It’s a pleasure to be here.

LINDSAY: Before we get into the stock picks you have, on a broader scale, are dividend stocks becoming more attractive to investors recently?

MICHAEL: Yeah, this is a good time to be looking at dividend-paying stocks, and really, there are three reasons. First, with returns prospectively looking more uncertain and possibly lower, dividends give you a predictable upfront return and upfront yield.

The second thing is we’ve been experiencing a lot of volatility in the markets, and that could persist going forward. Dividends tend to insulate portfolios from downside volatility as stocks decline. Investors gravitate toward companies with strong dividend profiles because dividends give a very clear marker of value.

The last piece would be dividend growth and the benefits that can play in terms of offsetting inflation. Obviously, inflation is higher and stickier than we would like, and as people think about income and their need for cash flow going forward, particularly in retirement, dividends provide a growing stream of cash flows, which helps offset inflation.

LINDSAY: Okay, so let’s get into it then. Blackstone is your first pick, offering about a four per cent dividend at the moment. Tell us more about this one and why you like it.

MICHAEL: Yeah, so Blackstone is obviously the marquee name among alternative asset managers. The stock, along with many others in the group, sold off in recent months on concerns over software and what AI is going to do to software, and also concerns around private credit. In both cases, we think those concerns are overdone.

Blackstone, like all asset managers, has some exposure to software, but it’s not that significant, and we think they’ll be able to manage through it. On the private credit side, there will inevitably be companies that suffer credit losses, and a large company like Blackstone will have some exposure. But these are very savvy investors who really have the pick of investments they get to make. So while we expect there will be some losses, we don’t think they’ll be that significant.

On the flip side, the underlying fundamentals in the business are phenomenal. Blackstone raised more than US$60 billion in the first quarter, which puts them on track to raise more than US$200 billion in new money in 2026. That’s a fabulous growth rate.

Given what we’re seeing across the economy in terms of the need to invest in data centres and the capital that requires, alternative asset managers like Blackstone are very well positioned to invest in that and benefit from that growth.

LINDSAY: Next up is Otis. This is in the industrial sector. Tell us more about Otis.

MICHAEL: Yeah, so Otis is Otis Elevators. In one sense, it’s a very boring business, but what makes Otis such a great business is that it has a large recurring aftermarket business.

Otis makes 80 to 90 per cent of its money not from selling new elevators, but from the routine required maintenance of millions of elevators around the world. Those elevators have to be serviced whether the economy is good or bad, and whether every floor in the building is occupied or not.

The stock sold off earlier this year on concerns around weaker earnings in the first half of the year. We think this sets up an opportunity to buy a terrific franchise. One of the monikers going around Wall Street these days is HALO — hard asset, low obsolescence.

As we think about businesses that are at risk of being disintermediated by AI, Otis Elevator stands out as one that’s very well insulated. In a world with tremendous uncertainty, you can buy this stock at about 16.5 to 17 times earnings with a very predictable revenue stream that should grow over time.

It’s not the sexiest in terms of upside growth, but we think about it as an inflation-protected bond that will be very safe and secure in a world that is increasingly uncertain.

LINDSAY: Last up is Unilever. I hope I’m saying that one right. This is a U.K.-based company. Tell us more about why you picked this one.

MICHAEL: Yeah, so Unilever is one of the largest consumer products companies in the world, making household cleaners and Dove soap and the like, and it is a terrific company.

They have a phenomenal collection of globally leading brands and a terrific management team led by a CEO who has come in over the last two years and really increased the cadence of execution. They have a great balance sheet, and the stock trades at a very attractive price, about 15.5 to 16 times earnings.

That’s a pretty big discount to where Procter & Gamble and its U.S. peers trade, which is north of 20 times earnings. We don’t think there’s a good reason for the discount to be that wide.

The dividend is almost four per cent, and we see a company with a four per cent dividend trading at 15.5 to 16 times earnings, with a great balance sheet and, importantly, volume growth, which is something many companies in the consumer space are not seeing. We think it’s a very compelling long-term opportunity.

LINDSAY: I’m curious, with this topic, are you seeing investors prioritizing one over the other when it comes to dividend growth or yield?

MICHAEL: No, I think it’s important to understand that dividend investing is really always about the balance between upfront yield and dividend growth, and also total return considerations.

With dividend stocks, you’re still buying stocks, which are inherently more volatile than bonds, so it can’t just be about the income. But when it is about the income analysis, it’s about both the upfront yield and, over the longer term, the more powerful component, which is dividend growth.

Dividend growers can increase their dividends eight, nine or 10 per cent a year in perpetuity. Some of the best dividend companies have done that, and if you think about it, it’s a fabulous ability to compound cash flow and wealth.

LINDSAY: Are there certain sectors currently offering the strongest combination of yield and stability?

MICHAEL: I think what we’re seeing, which is so interesting, is that because investors are so myopically focused on everything going on in AI and big tech, they are ignoring some of the opportunities in other parts of the market.

Today we’ve talked about industrials, financials and consumer staples, and I think that echoes what people are seeing more broadly. With everybody focused on AI, there are overlooked opportunities across the market.

LINDSAY: Are we seeing more companies initiating dividends in this kind of environment, or pausing increases? Are you seeing any trends in that sense?

MICHAEL: Dividend growth continues to be healthy, and broadly speaking, we think that can continue. The dividend growth story has been a good one over a long period of time.

If I were on this show 20 years ago, there would have been a lot of sectors that were tough to invest in, namely technology. Most large tech companies did not pay dividends, and the only ones that did were seen as yesterday’s technology.

Today, most of the largest technology companies do pay dividends. Microsoft, Apple, Meta, Alphabet and Oracle are all meaningful dividend payers. One of the great things now is that it used to be a limitation if you were looking for companies that paid dividends, and that’s much less true today.

LINDSAY: Okay, we’ll leave it there. Michael Clarfeld, portfolio manager at ClearBridge Investments. Thanks for your time. Appreciate it.

MICHAEL: Thank you.

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This BNN Bloomberg summary and transcript of the May 20, 2026 interview with Michael Clarfeld are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.