Dividend stocks are poised to outperform, says Bank of America. Here are names on its list

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History shows in this economic environment, dividend stocks have led the way higher a majority of the time, Bank of America's Savita Subramanian said.

The U.S. economy is flashing a sign that's favorable for dividend stocks, according to Bank of America. In March, the firm's U.S. Regime Indicator — an economic metric — showed the largest increase since July 2021, after it moved into a recovery phase in February, equity and quant strategist Savita Subramanian wrote in a note Wednesday. In this environment, investors want to own dividend stocks with above-market yields, she said.

While they have lagged the overall market this year, there have been some gains in recent months. The Utilities Select Sector SPDR Fund has gained 5% so far this year, and it's up 4.9% in the past month. In late February, Sempra CEO Jeffrey Martin told CNBC's Jim Cramer that the company increased its capital plan to $48 billion to fund initiatives such as grid modernization and moving renewables onto grid at a faster pace.

 

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