We recently published a list of Dividend Challengers 2025: Top 25. In this article, we are going to take a look at where Entergy Corporation (NYSE:ETR) stands against other dividend challenger stocks.
Dividend Challengers refers to US-listed companies that have raised their dividends every year for a minimum of five, and less than ten, consecutive years. These companies have demonstrated a relatively recent commitment to sharing profits with shareholders through dividends. Investors usually gravitate towards such firms because historically, dividend growers outperform the returns of the broader market. Moreover, most of these firms have a track record of exhibiting lower price volatility, which makes them favorable to those looking for stable income.
Investor interest in stocks with reliable dividend growth remains strong due to long-term investment potential. As a result, many of these financially sound firms become targets for investors looking to manage risk without sacrificing growth. The Fidelity Equity-Income Fund and the Fidelity Global Equity Income Fund portfolios, managed by Ramona Persaud, seek stable dividend-paying firms with attractive valuations. She pointed out that declining interest rates tend to make dividend stocks more appealing than bonds due to relatively attractive yields. Indeed, Persaud argued lower rates could foster a more broad-based rally for stocks beyond the market gains, which have been largely concentrated on a handful of large-cap growth names. Her focus is on well-performing firms with reliable cash flows and strong, growing dividends.
According to analysts, investors can adopt a strategy that balances both income and growth by focusing on dividend growers. Historically, they have shown less volatility and often outperformed the broader market, including benchmarks like the S&P Equal Weight Index. A report from Guggenheim found that between May 2005 and December 2024, companies that initiated or raised their dividends achieved an average annual return of 10.5%, compared to just 5.5% for those that reduced or suspended payouts. By contrast, the overall market averaged a 10.4% return during the same period, slightly lagging behind the dividend growers. The report also emphasized that dividend growth strategies tend to perform well across different market environments, both bullish and bearish. This makes them a compelling option for investors seeking long-term returns while aiming to protect their portfolios during downturns.
Bank of America also noted that dividend-paying stocks helped stabilize portfolios during the turbulent month of March. As trade policy uncertainty under President Donald Trump rattled markets, value and dividend-oriented names held up better. In an April 11 report, BofA’s quant strategist Nigel Tupper highlighted these trends and pointed to several top-performing dividend stocks during the market’s choppy period.
“In March, as global equities fell -4.1% on concerns tariffs could increase and slow growth, the best performing global styles were Value and Dividends.”
As investor interest in dividend-paying stocks continues to climb, many companies have responded by steadily boosting their payouts. According to a report from Janus Henderson, global dividend distributions hit a record $1.75 trillion in 2024, marking a 6.6% increase on an underlying basis. The total headline growth stood at 5.2%, slightly tempered by a decline in special one-time dividends and the impact of a stronger US dollar. Of the 49 countries tracked in the report, 17—including key markets like the US, Canada, France, Japan, and China—achieved new highs in dividend payments. Overall, 88% of companies either raised or maintained their dividends during the year. Looking ahead, Janus Henderson expects global dividend payouts to grow by 5.0% on a headline basis in the coming year, reaching another record of $1.83 trillion. Despite ongoing currency pressures from a strong dollar, the firm projects underlying growth to edge slightly higher to about 5.1%.
A high power electrical transformer station with transmission lines connecting to a power grid.
Our Methodology
For this list, we looked at a group of dividend challengers, recognized for consistently increasing dividends for 5 consecutive years, but for less than 10 years. From this list, we chose companies with the highest dividend yields as of April 29 and arranged them in order from lowest to highest yield.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Entergy Corporation (NYSE:ETR)
Dividend Yield as of April 29: 2.87%
Entergy Corporation (NYSE:ETR) is an American integrated energy company that specializes in electric power production and retail distribution operations in the Deep South of the US. The company recently reported its Q1 2025 earnings and posted revenue of $2.85 billion, which grew by nearly 2% from the same period last year. However, the revenue missed analysts’ estimates by $202.3 million. Its EPS of 0.82% beat the consensus by $0.13. The Utility segment posted earnings of $490 million attributable to Entergy Corporation, translating to $1.11 per share on both a reported and adjusted basis.
The US Energy Information Administration projects that national electricity demand will hit all-time highs in 2025 and 2026, fueled by the fast growth of AI and cryptocurrency-focused data centers, along with increased electricity use in homes and businesses for heating and transportation. During the first quarter, Entergy Corporation (NYSE:ETR) saw its residential electricity sales jump 13.2% to 8,784 gigawatt-hours, while industrial sales grew by 9% to 13,833 GWh.
Entergy Corporation (NYSE:ETR)’s cash position came in strong during the quarter. At the end of Q1, it had over $1.5 billion available in cash and cash equivalents. Its operating cash flow came in at $4.5 billion, up from $2.8 billion in the prior-year period. The company is a solid dividend payer due to its cash position. It has been rewarding shareholders with growing dividends for the past 9 consecutive years. Currently, it offers a quarterly dividend of $0.60 per share and has a dividend yield of 2.87%, as of April 29.
Overall, ETR ranks 13th on our dividend challengers list. While we acknowledge the potential of ETR as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than ETR but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
