As AI-related investments continue to dominate major indexes and investor attention, dividend-paying stocks may offer a source of diversification, income and stability. Investors seeking balance in increasingly concentrated portfolios may find opportunities across defensive, value-oriented and dividend-growth strategies.
BNN Bloomberg spoke with Josh Stevens, chief investment officer at CresAlta Investment Management, about his dividend-investing framework and why he sees opportunities in Verizon, Huntington Bancshares and Cactus.
Key Takeaways
- Dividend-paying stocks can provide diversification for portfolios that have become heavily exposed to AI-related investments and market concentration.
- Defensive dividend payers may act as bond-like holdings by generating reliable income and helping cushion portfolios during market volatility.
- Dividend value opportunities can emerge when acquisitions, restructurings or other corporate changes create temporary uncertainty and depressed valuations.
- Companies focused on capital discipline, shareholder returns and earnings growth can support long-term dividend-growth strategies.
- A balanced dividend framework can combine income generation, value opportunities and growth potential to support long-term wealth accumulation.
Read the full transcript below:
LINDSAY: It’s time now for Hot Picks, and today we are looking at three dividend-paying stocks. Here to walk us through his top options is Josh Stevens, chief investment officer at CresAlta Investment Management. It’s great to have you join us.
JOSH: Thanks for having me.
LINDSAY: Do you think investors are paying more attention to dividend-paying stocks right now, or should they be?
JOSH: I think it’s more of a “should they be” question. If we look at the way markets are positioned and what’s happened recently, obviously the focus is on AI, and it should be, as it will play a material role in the global economy over the next few years. But we think there’s quite a bit of room for dividend-paying stocks. They offer balance to a portfolio, and for a lot of passive investors who have significant exposure to AI, dividend-paying stocks can create a counterbalance if something goes wrong with the AI trade.
LINDSAY: So, before we — yeah, sorry, continue.
JOSH: No, no.
LINDSAY: Okay. Before we get into your Hot Picks, I wanted to ask about CresAlta’s approach to dividend-paying stocks, because I think it can be tricky sometimes for investors to determine whether a dividend yield is actually sustainable.
JOSH: At CresAlta, we’re really trying to build portfolios that offer considerable balance and ballast to an overall equity allocation. We tend to be high conviction in what we do, and we’re employing a rather unique dividend framework that looks at a combination of dividend-paying stocks, which you can think of as bond proxies. These are companies that generally do well in rough market environments, provide consistent dividend payments and offer relatively high, bond-like dividend yields.
Dividend-growth stocks provide high returns on capital, strong total shareholder return profiles and solid earnings growth. Those tend to be the ballast of most of our portfolios.
The third category is dividend value, where we look for companies that are a little out of favour, may have some unique issues affecting sentiment and are unduly depressed in terms of valuation. We think those companies will recover over time.
So, there are three different categories of dividend stocks, and I thought I’d bring one stock from each category for you today.
LINDSAY: Okay, great. Let’s get into it then. Verizon is your first pick, with a dividend yield of just over six per cent. Which category does Verizon fit into, and why do you like it?
JOSH: This is one of our dividend payer stocks, certainly a bond proxy. The dividend yield is over six per cent, and the company has increased its dividend consistently for the last 20 years. We think that’s likely to continue.
The company is in the middle of a turnaround that began under the previous CEO, and the new CEO has now been in the role for about eight months. We think that turnaround is continuing and beginning to bear fruit.
The focus has been on improving margins and driving subscriber growth, and we think they’ll be successful. Already this year, they’ve raised earnings-per-share guidance. We think they’ll achieve record EBITDA, and free cash flow has also increased and is roughly two times the dividend payment.
We think the dividend is safe and likely to grow over time. It’s a good defensive play and provides that bond-like coupon return within a portfolio.
LINDSAY: Huntington Bancshares is your next pick. It has a dividend yield of about 3.6 per cent, and you say you expect that to grow. Tell us more.
JOSH: This is a dividend value option. Huntington has engaged in a number of acquisitions over the last 12 months or so. It acquired Cadence and Veritex community banks, which expanded its geographic footprint from the Midwest into Texas and the broader Sun Belt.
Additionally, it bought several units from Janney Montgomery Scott to expand its capital-markets operations, including Huntington Securities and Capstone.
We think the market has put the stock in a holding pattern. It has traded more or less sideways for the last 12 to 15 months while it completed and integrated these acquisitions.
As those acquisitions are digested and begin to produce improved returns on capital, we would expect both the stock and its valuation multiple to move higher. We also expect dividend growth and stronger share repurchases.
We think a stock trading around 1.6 to 1.7 times tangible book value should move closer to two times tangible book value as the acquisitions begin to bear fruit and improve the company’s fundamentals.
LINDSAY: All right, your last one is Cactus Inc. Tell us more about this one.
JOSH: This one is a little unusual because it’s a dividend-growth stock in the energy sector.
Cactus operates in two primary divisions: pressure control and spoolable technologies. The company recently entered into a joint venture with Baker Hughes that adds complementary businesses and expands its overseas revenue base.
Before the joint venture, it was largely a U.S.-focused company, although it did have some exposure to Canada. The joint venture broadens and diversifies its revenue stream globally.
We think management has demonstrated strong capital discipline over the long term, and that’s reflected in its ability to grow earnings over time. The balance sheet remains extremely strong. The stock trades at a relatively inexpensive valuation and generates significant free cash flow.
Management places a strong emphasis on return on invested capital, and that combination of factors leads us to believe the dividend will grow alongside earnings. We also expect opportunistic share buybacks.
The fundamental outlook for Cactus remains strong over the next few years, regardless of how volatile oil prices may be.
LINDSAY: Okay, we’ll have to leave it there. Josh Stevens, chief investment officer at CresAlta Investment Management. Really appreciate your time. Thanks for joining us.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| VZ NYSE | N | N | Y |
| HBAN NASDAQ | N | N | Y |
| WHD NYSE | N | N | Y |
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This BNN Bloomberg summary and transcript of the June 19, 2026 interview with Josh Stevens 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.
