Democrats Take Congress: 4 Dividend Stocks From Oil to Telecom Worth Buying
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Democrats now control both the House and the Senate, and a Republican still holds the White House. That divided government usually means legislative gridlock, and for income investors, that has a clear result: the businesses that stand out are the ones whose cash flows hold up no matter which bills stall. The four names below come from energy, defense, real estate, and telecom. Each must clear a high bar for income, with the 10-year Treasury paying 4.86%.
Exxon Mobil: 44 Straight Years of Raises Funded by Massive Free Cash Flow
Exxon Mobil (NYSE: XOM) | XOM Price Prediction yields 2.56% at a share price of $163.99. That yield is lower than the other three, but the payout behind it is the toughest to break.
What a Democratic Congress means: Exxon’s exposure to policy covers LNG permitting and exports, refinery and fuel regulations, emissions rules, and tax credits tied to carbon capture and hydrogen. Expect more oversight hearings. Broad energy laws still need a presidential signature, though, and that keeps the rules Exxon operates under largely as they are. Management has already said where it stands on regulation: “Sound policy must work in practice. It should reduce emissions without sacrificing affordability, reliability, or energy security.”
Dividend safety: Third-quarter free cash flow came in at $19.1 billion on $25.7 billion of operating cash flow. Exxon returned $9.4 billion in the quarter, and $5.1 billion of that went to buybacks. On those figures, free cash flow covered the dividend about 4.4 times. Exxon’s balance sheet remains strong. Net debt fell to $22.1 billion, net debt/EBITDA is 0.55x, and interest coverage is 56.3x. The new quarterly dividend of $1.07, up from $1.03, marks the company’s 44th consecutive year of annual dividend-per-share growth. Darren Woods, who was chairman and CEO on the third-quarter call, put it: “We’re not going ever to cut our dividend.”
Bull case: Exxon plans $20 billion in buybacks in 2027, and it has delivered $16.9 billion in total structural cost savings since 2019. Fewer shares and lower costs leave more cash for each dividend dollar.
Risk: Commodity prices. Upstream earnings this year improved on higher prices, so a slide in oil would reduce the cash surplus. The stock fell 8.73% over the past week.
Lockheed Martin: A Record Backlog Built to Outlast Budget Fights
Lockheed Martin (NYSE: LMT) yields 2.43% at $589.72 per share and pays a forward annualized dividend of $13.80.
What a Democratic Congress means: Congress controls appropriations. A split government raises the odds of continuing resolutions that delay new program starts. The Pentagon’s FY 2027 request totals $1,450,000 million, including $52.9 billion for critical munitions using multiyear procurement contracts. Lockheed’s exposure there is significant. Multiyear awards already signed buffer against annual budget battles.
Dividend safety: Backlog reached a record $292.0 billion, up 27% sequentially, after a $52.5 billion multiyear PAC-3 MSE award. Third-quarter free cash flow was $2.999 billion, and management raised full-year free cash flow guidance to $7.8 billion to $8.0 billion. The forward dividend works out to roughly 45% of the low end of the $30.35 to $30.75 diluted EPS guidance. Lockheed also announced its 24th consecutive annual dividend increase. The quarterly payout has risen from $0.11 in 2000 to $3.45.
Bull case: Missiles and Fire Control revenue grew 24% as PAC-3, THAAD, and GMLRS production increased. Guidance has been raised for the second consecutive quarter. Shares trade at 17 times forward earnings, against a trailing multiple of 21.
Risk: F-35 Lot 20 costs have begun exceeding current contractual authorization without additional government funding, which could weigh on future results.
Realty Income: Monthly Checks Covered by Rising AFFO
Realty Income (NYSE: O) offers a high yield of 5.16%, with shares at $59.50. It pays $0.2715 per share monthly, or $3.258 annualized.
What a Democratic Congress means: A net-lease REIT has little direct exposure to legislation. Gridlock makes tax-code changes less likely, and REIT income depends on that code. The bigger swing factor is interest rates. The 10-year yield has fallen from a 5.31% high, and Realty Income shares gained 10.35% over the past month.
Dividend safety: For a REIT, coverage is measured on AFFO. Third-quarter AFFO per share rose 3.7% to $1.12, versus $0.813 in dividends, putting the payout ratio near 73%. The annualized dividend uses about 73% of the low end of the raised $4.45 to $4.46 full-year AFFO guidance. Occupancy is 98.8% across 15,536 properties, with a weighted average remaining lease term of about 8.5 years. Management has declared 676 consecutive monthly dividends and announced its 116th consecutive quarterly dividend increase. It is also a member of the S&P 500 Dividend Aristocrats index.
If a quarterly check feels too infrequent, Realty Income is one of several names that pay monthly. We rounded up seven of our favorite monthly payers in a free report here: The 7 Monthly Dividend Stocks That Pay You Every 30 Days.
Bull case: Realty Income invested $2.6 billion at a 6.8% initial cash yield, a spread of roughly 170 basis points. Roughly 11.7% of new property investments went into data centers, adding a growth engine to a portfolio built mostly for steady income.
Risk: The cost of capital. Interest expense rose to $333.6M from $294.5M, and the quarter carried $111.6M in impairment provisions.
Verizon: Ultra-High-Yield Income Backed by Accelerating Free Cash Flow
Verizon (NYSE: VZ) is the ultra-high-yield name in this group at 6.16%, with shares at $46.18. Its quarterly dividend is $0.7075.
What a Democratic Congress means: Verizon’s business covers wireless, broadband, managed networks, data, voice, and infrastructure. All of those draw congressional oversight. Hearings on pricing and broadband policy can produce headlines, and major telecom legislation runs into the same gridlock as everything else. That benefits a carrier whose economics are already set.
Dividend safety: Third-quarter free cash flow rose 13.9% to $7.80 billion, and management now expects full-year free cash flow growth to approach 12%. The forward dividend of $2.83 represents about 56% of the low end of the raised $5.04 to $5.06 adjusted EPS guidance. Verizon also completed $4.0B of buybacks against a target of up to $4.5B. The quarterly payout has risen from $0.405 in 2007 to today’s level.
Bull case: Verizon added 406,000 postpaid phone subscribers and lifted adjusted EBITDA margin to 40.2% from 37.8%. It has raised guidance for the third consecutive quarter, and the stock trades at 9 times forward earnings.
Risk: Leverage. Outstanding debt stands at $166.2B, and interest expense rose 17.2% year over year.
Gridlock-Proof Income Across Four Sectors
Divided government tends to block big policy changes. That leaves cash generation as the main driver of dividend growth. Exxon covers its payout several times over, Lockheed has a record backlog, Realty Income’s AFFO well tops its monthly checks, and Verizon’s free cash flow is speeding up. Together, they offer four independent income streams, each backed by a long record of dividend increases.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
