After a solid rebound in 2024, major U.S. indexes lack shine due to displeasing domestic macroeconomic conditions. Rising inflation, and the impact of President Donald Trump's fiscal, trade, and immigration policies have led investors to adopt a cautious approach. However, the labor market remains resilient. The Federal Reserve announced a pause in interest rate cuts to gauge the impact of new government policies. Analysts expect the Fed to slow down rate cuts or consider interest rate hikes to bring back inflation close to 2%.

Inflation continues to climb to its current level after a 3.5-year low of 2.4% in September 2024. The Consumer Price Index (CPI) for January was up 3% from 2.9% in December 2024. An increase in the Producer Price Index (PPI) to 3.5% year on year in January from a 3.3% increase in December indicates a pickup in inflation once again.

Analysts expect inflation to go higher as mass deportations could cause labor shortages which will eventually raise wages and prices of goods. A report from the Labor Department indicates stability in the labor market. Initial claims for state unemployment benefits fell by 7,000 to 213,000 for the week ended Feb. 8, nonfarm payrolls have increased by 143,000 in January, while the unemployment rate was at 4.0% over the same period.

Amid such volatile market conditions, investors who wish to diversify their portfolio can invest in dividend-paying stocks. Some of the prominent names are Essent Group ESNT, Magna International MGA, Barclays BCS, RLI RLI and PHINIA Inc. PHIN. Companies that pay out dividends consistently indicate a healthy business model. Stocks that have raised dividends recently exhibit a sound financial structure and can counter market upheavals. Stocks that tend to reward investors with a high dividend payout outperform non-dividend-paying stocks in a highly volatile market.

Essent Group

Essent Group operates as a private mortgage insurance company. This Hamilton, Bermuda-based company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

On Feb. 14, ESNT declared that its shareholders would receive a dividend of 31 cents a share on March 24, 2025. ESNT has a dividend yield of 2%.

Over the past five years, ESNT has increased its dividend 11 times, and its payout ratio presently sits at 16% of earnings. Check Essent Group’s dividend history here.

Magna International

Magna International is headquartered in Aurora, Canada. This Zacks Rank #3 company is a mobility technology company and global automotive supplier that offers comprehensive vehicle engineering and contract manufacturing expertise.

On Feb. 14, MGA declared that its shareholders would receive a dividend of 49 cents a share on March 14, 2025. MGA has a dividend yield of 5%.

In the past five years, MGA has increased its dividend eight times. Its payout ratio is currently 35% of earnings. Check Magna International’s dividend history here.

Barclays

Barclaysis a major global banking and financial services company. The Zacks Rank #2 (Buy) company is headquartered in London.                 

On Feb. 13, BCS announced that its shareholders would receive a dividend of 27 cents a share on April 4, 2025. BCS has a dividend yield of 2%.

Over the past five years, BCS has increased its dividend six times. Its payout ratio now sits at 16% of earnings. Check Barclays' dividend history here.

RLI

RLI is a specialty property-casualty underwriter that caters primarily to niche markets. This Peoria, IL-based company currently carries a Zacks Rank #3.

On Feb. 13, RLI declared that its shareholders would receive a dividend of 15 cents a share on March 20, 2025. RLI has a dividend yield of 0.8%.

Over the past five years, RLI has increased its dividend 11 times, and its payout ratio presently sits at 20% of earnings. Check RLI’s dividend history here.

PHINIA

PHIN is a premium solutions and components provider of manufacturing expertise. The Zacks Rank #2 company is headquartered in Auburn Hills, MI.                

On Feb. 13, PHIN announced that its shareholders would receive a dividend of 26 cents a share on March 14, 2025. PHIN has a dividend yield of 0.3%.

Over the past five years, PHIN has increased its dividend one time. Its payout ratio now sits at 26% of earnings. Check PHINIA's dividend history here.

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