Dividends should matter more in 2026. Bank of America forecasts dividend growth of about 8 percent in 2026. That forecast is up from roughly 7 percent in 2025. The firm noted that dividend growth usually trails earnings growth by about three quarters. The S&P 500 payout ratio sits near 30 percent. That level leaves room for companies to boost payouts. Investors who want income should watch names that can lift dividends from rising earnings and not from stressed balance sheets.
Our list follows strict rules. We screened for companies with strong dividend records. Each company has a net profit margin above 20 percent. Each company reported trailing twelve-month net income above $1 billion. The five picks are ranked from number five to number one by net profit margin.
Union Pacific Corporation UNP
The stock is trading at $232.02, up 0.49%. The company has a high net profit margin of 28.73 that it has sustained with the help of about 7.05 billion trailing-twelve-month net income. On January 19, the U S surface transportation board sent back the planned merger with Norfolk Southern without prejudice. It was termed as an incomplete filing. The STB demanded additional estimates of market share and competitive effects. On December 19, Union Pacific and Norfolk Southern submitted a 7,000-page application. There were reports of the suggested price of the deal at $85 billion. Susquehanna continued to hold a buy rating and indicated that the deal would pass through in the future. Union Pacific operates a vast rail system in over 23 states in the western two-thirds of the country.
M&T Bank Corporation MTB
The stock is trading at $216.31, up 0.96%. The company records a good net profit margin of 29.02, which is backed by a trailing-twelve-month net income of about 2.63 billion dollars. Truist increased its price target to $230 on January 20, upgrading it by one point, to $217 after earnings beat in the fourth quarter. On January 16, M and T indicated increased profit for the fourth quarter. The quarterly net interest income increased by close to 3 percent to become $1.78 billion. The Net interest margin increased to 3.69 percent as compared to 3.58 percent in the previous year. The net interest income is projected to be $ 7.2 billion to 7.35 billion in 2026 at the bank. The non-interest income increased by approximately 6 percent to reach 696 million. The mortgage banking revenue increased 32 percent. The bank had loan loss provisions amounting to $125 million, against 140 million a year ago. M&T is a publisher with a wide network of branches and ATMs in the eastern states of the United States.
Texas Instruments Incorporated TXN
The stock is trading at $197.50, up 0.46%. As indicated by the company, it has a robust net profit margin of 29.21, which is abetted by nearly $5.02billion in trailing twelve-month net income. Susquehanna analyst Christopher Rolland increased his target price by one dollar to $225 after it was at 200 and retained a positive rating on January 22. According to the analyst, the semiconductor industry seems to be transitioning into a more stable recovery. Construction of AI infrastructure is expanding and is raising sections of the chip supply chain. Texas Instruments is a producer of analog and embedded processing units. Those chips are used in industrial markets, automotive electronics, personal devices, communications equipment, and enterprise systems. The chips aid networking, power delivery, and thermal management within bigger systems.
Moody’s Corporation MCO
The stock is trading at $521.92, down 0.67%. The company has a favorable net profit margin of 29.94 with an estimated trailing twelve months of net income of $2.24 billion. Morgan Stanley analyst Toni Kaplan increased her price target to 526 on January 22, 2010, out of 520, and maintained an equal weight rating following a better-than-expected quarter. The company reported a sound issuance in December. Moody has been paying and growing its dividend for 15 consecutive years. The dividend is close to one quarter of the projected 2025 profits. In 2024, Moody purchased Numerated Growth Technologies in an effort to enlarge lending technology. In the first half of the year, Moody’s acquired CAPE Analytics in order to introduce geospatial AI to model property risk. Moody has a data and analytics company to serve credit and insurance markets.
Abbott Laboratories ABT
The stock is trading at $107.23, down 1.42%. The company also has a healthy net profit margin of 31.88, which is anchored by an estimated trailing twelve months net income of about 13.98 billion. January 23 In January 23, Evercore ISI reduced its price target to $138 (down from 144) and maintained an outperform rating. Abbott stock dropped approximately 7 percent as the organization failed to collect revenues as anticipated and forecasted the profit of the present quarter at a lower value than projected. The deficit was primarily caused by the nutrition and diagnostics. The sales of nutrition dropped by approximately 8.9 percent to 1.94 billion. Diagnostics revenue dropped to 2.5 percent to 2.46 billion. The management claimed that increased costs of production necessitated price increments and that burdened demand. The four segments of the business proved to be below expectations in that quarter. Abbott enjoys a vast range of businesses with diagnostics, medical equipment, foodstuffs, and branded generic drugs.
The Bottom Line
Bank of America expects higher dividends in 2026. The S&P 500 payout ratio near 30 percent gives companies room to raise payouts. Each name on this list meets strict profit and income thresholds. Each company faces its own risks. Union Pacific faces regulatory scrutiny on a major merger. M&T depend on net interest income and credit trends. Texas Instruments is tied to cycles in chip demand. Moody’s depends on issuance volumes in capital markets. Abbott must manage cost and demand in nutrition and diagnostics.
How to Use This List
Add these five stocks to your watch list. Read the latest company profit reports and dividend history. Confirm dividend increases come from rising earnings and not from balance sheet strain. Check analyst notes for near term drivers and risks. Consider your tax situation and portfolio balance before buying.
