Dividend Stocks Outperform S&P 500 in 2026
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
- Dividend Stock Performance: The Vanguard Dividend Appreciation ETF (VIG) has risen nearly 4% year-to-date in 2026, significantly outperforming the flat return of the Vanguard S&P 500 ETF, indicating a growing market preference for high-quality, value-oriented stocks.
- Shift in Investment Strategy: As investor caution regarding the U.S. economic outlook increases, dividend ETFs, which typically consist mainly of non-tech stocks, reflect a market shift towards defensive and value-oriented sectors, particularly in a high-valuation environment.
- Changing Market Dynamics: In 2026, tech stocks are no longer leading the market, with multiple major sectors outperforming the S&P 500, suggesting that diverse investment styles and strategies are gaining renewed attention, potentially providing ongoing support for dividend stocks.
- ETF Risk Assessment: While VIG's market cap-weighting strategy results in its largest stocks becoming the fund's primary holdings, its 26% allocation to tech stocks may expose it to greater risks during market pullbacks, prompting investors to carefully consider its investment value.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 398.460
Low
500.00
Averages
631.36
High
678.00
Current: 398.460
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Dividend Stock Performance: The Vanguard Dividend Appreciation ETF (VIG) has risen nearly 4% year-to-date in 2026, significantly outperforming the flat return of the Vanguard S&P 500 ETF, indicating a growing market preference for high-quality, value-oriented stocks.
- Shift in Investment Strategy: As investor caution regarding the U.S. economic outlook increases, dividend ETFs, which typically consist mainly of non-tech stocks, reflect a market shift towards defensive and value-oriented sectors, particularly in a high-valuation environment.
- Changing Market Dynamics: In 2026, tech stocks are no longer leading the market, with multiple major sectors outperforming the S&P 500, suggesting that diverse investment styles and strategies are gaining renewed attention, potentially providing ongoing support for dividend stocks.
- ETF Risk Assessment: While VIG's market cap-weighting strategy results in its largest stocks becoming the fund's primary holdings, its 26% allocation to tech stocks may expose it to greater risks during market pullbacks, prompting investors to carefully consider its investment value.
See More
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- Spending Plan Revision: OpenAI is now targeting a total computing spend of approximately $600 billion by 2030, significantly down from its previous commitment of $1.4 trillion, reflecting a cautious approach towards future growth prospects and aligning spending with expected revenue growth.
- Revenue Projections: The company anticipates total revenue exceeding $280 billion by 2030, with expected equal contributions from consumer and enterprise segments, indicating a strategic focus on diversifying its revenue streams.
- Funding Developments: OpenAI is finalizing a funding round exceeding $100 billion, with about 90% of investments coming from strategic investors such as Nvidia, SoftBank, and Amazon, which will provide robust financial support for its future initiatives.
- User Growth Recovery: Following a slowdown, ChatGPT's weekly active users have surged from 800 million to 900 million, demonstrating strong market demand, particularly in India where users aged 18 to 24 account for about 50%, laying a solid foundation for future product launches.
See More
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- Surging Data Center Revenue: Nvidia's data center revenue grew 66% year-over-year in its fiscal third quarter, reaching $51 billion and accounting for 89% of total business, highlighting the robust demand driven by AI and solidifying its market leadership.
- Continued Capital Expenditure Growth: In 2025, top cloud providers spent $305 billion on capital expenditures, with significant growth expected in 2026, indicating sustained demand for Nvidia's GPUs and driving future revenue growth for the company.
- Innovative Chip Launches: Nvidia's upcoming Rubin chips will deliver superior AI performance compared to the previous Blackwell generation, prompting hyperscalers to invest more in new data center capacity to deploy the latest powerful chips, thereby enhancing their competitive edge.
- Strong Profitability: Nvidia reported $99 billion in profit over the last four quarters with a 53% profit margin, demonstrating a solid competitive position despite intense competition in AI chips, indicating the stock's investment value.
See More
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- Market Style Shift: In 2026, technology stocks are no longer leading, with the Vanguard Dividend Appreciation ETF (VIG) up nearly 4% year-to-date compared to a flat return for the S&P 500 ETF, indicating a renewed focus on high-quality and value stocks.
- Portfolio Construction: This ETF invests in over 300 U.S. stocks with a track record of annual dividend growth for over 10 years, excluding real estate investment trusts and the top 25% highest yielding stocks, thus creating a portfolio of mature, cash-rich companies.
- Defensive Investment Trend: As investors grow more cautious about the U.S. economic outlook, interest in high-valuation tech stocks diminishes, leading to a shift towards more defensive and value-oriented sectors, enhancing the appeal of dividend stocks.
- Risk Warning: Although the Vanguard Dividend Appreciation ETF's holdings are built to withstand challenging environments, its market cap-weighting strategy results in a 26% allocation to large tech stocks, which may face greater pullback risks in the current unfavorable tech sector climate.
See More
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- Valuation Comparison: Meta Platforms has a forward P/E ratio of 21.1, which is lower than the S&P 500's 21.9, indicating its relative affordability among the Magnificent Seven, thus attracting investor interest for potential buying opportunities.
- Advertising Revenue Growth: In Q4 2025, Meta generated $59.9 billion in revenue, a 24% year-over-year increase, with $58.1 billion coming from social media advertising, showcasing the strong profitability of its advertising business despite a $6 billion loss in its Reality Labs division.
- AI Investment Plans: Meta plans to increase capital expenditures to between $115 billion and $135 billion in 2026, primarily directed towards AI projects, although the market remains cautious about the potential returns on these investments, fearing that AI spending may not yield expected profits.
- Market Concerns: The market expresses concerns over Meta's future profitability due to a lack of confidence in its AI spending, as CEO Mark Zuckerberg's substantial investments in the metaverse have not materialized as expected, leading investors to be skeptical about the future returns from AI initiatives.
See More
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- Declining Valuation: Meta Platforms has a forward P/E ratio of 21.1, which is lower than the S&P 500's 21.9, indicating that its stock is trading at a discount compared to the overall market, potentially attracting investor interest while reflecting concerns about future profitability.
- Strong Advertising Revenue: In Q4 2025, Meta generated $59.9 billion in total revenue, a 24% year-over-year increase, with $58.1 billion coming from its advertising business, showcasing the profitability of its core operations, although the Reality Labs division reported a $6 billion loss, highlighting the risks associated with its AI investments.
- AI Investment Plans: Meta plans to increase capital expenditures to between $115 billion and $135 billion in 2026, primarily directed towards AI projects, and despite growing market concerns about the returns on its AI spending, the company still expects higher operating income in 2026 than in 2025, indicating some growth potential.
- Lack of Market Confidence: Due to CEO Mark Zuckerberg's significant investments in the metaverse that failed to meet expectations, market sentiment regarding Meta's AI investments is cautious, and investors will need to be patient for tangible results from its AI strategy before deciding on investment.
See More
Dividend Stocks Outperform S&P 500 in 2026
- Dividend Stock Performance: The Vanguard Dividend Appreciation ETF (VIG) has risen nearly 4% year-to-date in 2026, significantly outperforming the flat return of the Vanguard S&P 500 ETF, indicating a growing market preference for high-quality, value-oriented stocks.
- Shift in Investment Strategy: As investor caution regarding the U.S. economic outlook increases, dividend ETFs, which typically consist mainly of non-tech stocks, reflect a market shift towards defensive and value-oriented sectors, particularly in a high-valuation environment.
- Changing Market Dynamics: In 2026, tech stocks are no longer leading the market, with multiple major sectors outperforming the S&P 500, suggesting that diverse investment styles and strategies are gaining renewed attention, potentially providing ongoing support for dividend stocks.
- ETF Risk Assessment: While VIG's market cap-weighting strategy results in its largest stocks becoming the fund's primary holdings, its 26% allocation to tech stocks may expose it to greater risks during market pullbacks, prompting investors to carefully consider its investment value.
See More
