What Dividend Investors Need to Know for April 2026
The market has given investors lots to chew on so far in 2026. Here are the key viewpoints our team thinks subscribers should digest.
Hello, informed dividend investors!
Many market participants have been flummoxed by the stock market’s performance to date in 2026. I’m happy to report that the picks of our Dividend Informer newsletter performed well in the first quarter as investors flocked to lower-volatility approaches like the one used by our team. Our covered stocks have an average beta around 0.80, which represents significantly less volatility than the broader market as represented by the S&P 500.
What’s more, in Q1 2026, our stocks on aggregate increased while the broad market trembled and sank, providing strong evidence that our methodology is working as intended.
Keep reading for our team’s wrap-up of the most important factors that are impacting investors in the market and economy right now. The good news is that our conviction about the market’s prospects remains high for rational dividend investors like you.
Here’s to continuing investing returns!
DOUG GERLACH
Editor-in-Chief, Dividend Informer
Three Takeways for Dividend Investors
Geopolitical conflict in the Middle East has spiked global energy prices.
The Federal Reserve is maintaining high rates as inflation remains stubborn.
S&P 500 valuations remain high despite slowing AI investment returns.
Overview
It has been a jarring few weeks for investors. The U.S. and Israeli strikes on Iran that began on February 28th have reshaped the outlook for energy prices, inflation, and monetary policy in ways that were hardly on anyone’s radar at the start of the year.
Brent crude has surged to $100 per barrel levels, up more than 40% from levels below $70 before the war, as traffic through the Strait of Hormuz has slowed to a trickle. Gasoline prices climbed nearly a dollar per gallon in a matter of days.
The ripple effects are showing up everywhere: in airline costs, shipping rates, fertilizer markets, and consumer confidence.
Against this backdrop, the S&P 500 has been under pressure, giving back over 5% from its highs before surging back in a recovery that sees the index come close to a new all-time high around 7000.
The Economy
The economic data, even before the war, were painting a complicated picture. Nonfarm payrolls fell by 92,000 in February, a sharp reversal from January’s modest gains and well below expectations.
The unemployment rate ticked up to 4.4%. Inflation, as measured by the February consumer price index, had been trending in the right direction at 2.4% versus the prior year, but the oil shock now threatens to unwind that progress.
The Federal Reserve’s favorite inflation measure, Core PCE, remains stuck around 2.8%, above its 2% target while the energy price surge will only make further progress more difficult.
Consumer spending was already showing signs of fatigue, retail stocks fell more than 5% in February, and higher fuel and food costs will further squeeze household budgets, particularly for families at lower income levels who spend a disproportionate share of their earnings on essentials.
The Federal Reserve finds itself in an unenviable position. The FOMC voted 11 to 1 to hold rates at 3.50% to 3.75%, but the details matter more than the headline. Seven of nineteen participants now see no cuts this year.
The updated dot plot raised the 2026 inflation forecast to 2.7%, and Powell made clear the Fed cannot treat the energy shock as transitory until goods inflation driven by tariffs is under control. The bar for cuts has risen.
Collectively, market participants are now pricing in no rate cuts this year, down from the one to two cuts expected at the start of the year.
Adding to the uncertainty, Powell’s succession remains unresolved. Kevin Warsh’s confirmation is stalled in the Senate Banking Committee, and Powell signaled he has no intention of leaving while the DOJ investigation remains open.
The Stock Market
The S&P 500 forward price-to-earnings ratio sits around 23 times next year’s estimated earnings, above both the five-year average of roughly 20 times and the ten-year average closer to 19 times.
The heaviest AI capital spenders, companies that commanded premium multiples on the promise of infrastructure-driven growth, have been among the laggards in recent months as investors grow more impatient for clear evidence of attractive returns on these AI-related investments.
The market is beginning to ask harder questions about the payback period on that spending. Thus far, demand for computer power has been insatiable without regard for the near-term economics of AI investments.
Rates and Yields
Treasury yields moved up sharply in March. The 10-year yield approached 4.5% at the end of the month while the 2-year yield neared 4%.
The bigger story is the speed of the recent move because both the 10-year and 2-year yields rose by nearly 50 basis points in March before pulling back at the start of April.
The yield curve continues to maintain a normal shape. The 10-year is now yielding about 50 basis points more than the 2-year which is a notable change from the inverted curve investors faced three years ago.
Higher Treasury yields matter because they raise borrowing costs across the economy and offer stronger competition for equities. They also reinforce the market view that policy may stay restrictive for longer than many expected at the start of the year.
The S&P 500 dividend yield, at roughly 1.2%, remains low by historical standards as technology stocks with relatively low payout ratios continue to dominate share of the index.
Conclusion
Our approach, as always, is to resist the temptation to react to any single headline. Markets have a way of resolving uncertainty in directions nobody predicts, and the investors who fare best over time are those who maintain discipline through the noise.
That said, discipline is not the same as indifference. We are paying close attention to the trajectory of oil prices and their downstream effects on inflation expectations, monitoring private credit developments for signs of contagion, and closely watching the Fed’s likely path for interest rates.
As we navigate 2026, from the geopolitical shock in energy markets to the AI infrastructure buildout reshaping capital allocation across industries, our philosophy remains unchanged.
We do not attempt to time the market. Instead, we focus on owning high quality companies with durable competitive advantages, strong balance sheets, and the ability to generate cash flow in various economic climates.
This disciplined approach has served us well, and we believe it remains the most prudent path for preserving and growing wealth in the years ahead.
Our team’s search continues for well-managed companies at fair prices that can grow in any environment, especially when the going gets tough.
Here are some of our recent selections for stocks that meet our rigorous standards for quality, reduced volatility, and reasonable returns:
