Equity markets have been bouncing all over the place to kick off the new year. Some folks may be concerned that valuations are stretched thin after back-to-back years of over 20% gains in the S&P 500 in 2023 and 2024.
If you're in that camp, it's important not to overhaul your investment strategy on a hunch. Still, you can ensure you are invested in companies and exchange-traded funds (ETFs) that can endure a sell-off and maintain or even raise their dividends.
Here's why these three Motley Fool contributors think ExxonMobil (NYSE: XOM), Illinois Tool Works (NYSE: ITW), and the JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) stand out as reliable candidates to buy no matter what the market brings in 2025.
Scott Levine (ExxonMobil): Ripping more than 23% higher in 2024, the S&P 500 has continued climbing to start 2025. Many investors, however, are less than confident that the market's rise will extend throughout the year.
In fact, many investors are fortifying their portfolios, believing that a market sell-off is on the horizon. For those in this camp, ExxonMobil, along with its 3.6% forward-yielding dividend, represents a smart way to grease the wheels of your passive income stream with a resilient dividend payer.
Whether it happens next week, in several months, or next year, a market sell-off is certain to occur. And when it does, ExxonMobil stock can help ground your portfolio with a reliable source of dividend income.
For 42 consecutive years, this oil supermajor has maintained a streak of hiking its dividend -- a period during which there have been numerous market downturns. While this track record doesn't guarantee that the company will be able to extend its streak during future market sell-offs, it's certainly an encouraging sign.
Looking at the past five years, investors will find that ExxonMobil has been well-positioned to support its distributions. During this period, the company averaged a payout ratio of 86%, generating consistent free cash flow per share in excess of the dividend payments.
XOM free cash flow per share (annual); data by YCharts.Over the next several years, the company sees steady growth. From 2024 to 2030, it expects earnings and operating cash flow to rise at compound annual growth rates of 10% and 8%, respectively, thanks in part to greater production from its Permian Basin assets. Should it achieve these projections, it will be poised to continue boosting its dividends.
With extensive operations up and down the energy value chain, ExxonMobil is one of the leading oil dividend stocks -- a distinction it should retain for more years to come.