2 Dividend Stocks That Could Outperform If the Fed Keeps Cutting
- - 2 Dividend Stocks That Could Outperform If the Fed Keeps Cutting
Joey FrenetteNovember 12, 2025 at 6:13 AM
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AT&T (T) carries significant debt and capital expenditure commitments while maintaining a 4.5% dividend yield.
AT&T trades at 8.1 times trailing earnings after a 16.2% decline.
Crown Castle (CCI) sold its fiber business to reduce interest expenses and refocus on cell towers.
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The U.S. Federal Reserve is in rate-cutting mode, with two 25-bps interest rate reductions already in the books. And while the recent cuts could precede a handful more (there's still more than enough room for a handful of cuts, given easing inflationary pressures and concerns about the state of the economy), the Fed under chairman Jerome Powell has always been data-driven, even though subtle hints are typically more than enough to move markets.
With no guarantee of another rate come the December meeting, however, there's still quite a bit of uncertainty as to whether it's time to buy the dividend stocks that stand to experience relief at the hands of much lower rates.
Are rates still too high? In the right spot? Or perhaps not high enough, given the potential for inflation to make an untimely return? As always, we'll just have to wait and see. With the government shutdown's end now in sight, we'll get a better grasp of the employment picture.
If it's worse than expected and the recent wave of layoffs (caused by AI or not?) keeps happening, the stage may very well be set for more cuts in December and beyond. As it stands, the odds of another 25-bps December rate cut, I think, are higher than not. When you consider AI's impact on the labor market, I certainly wouldn't be surprised if 2026 sees the cuts continue.
At the end of the day, rapidly advancing AI looks like a potential disinflationary force that might give the Fed more wiggle room to keep lowering the bar on rates. Either way, here are two dividend payers that I expect will win if those Fed rate cuts keep coming in the months ahead.
AT&T
When it comes to rate-cut winners, think of the companies that have quite a bit of debt on the balance sheet and hefty capital expenditure requirements. At this juncture, a name like AT&T (NYSE:T) comes to mind as a firm that could really see its shares get a shot in the arm if we are getting a December rate cut and more to follow in the first half of 2026. Of course, the same could be said of just about any telecom. That said, AT&T has more hefty financial commitments to juggle than some of its peers.
Most notably, it's sporting a lofty dividend commitment, while continuing to chip away at its debt load. Add its capital expenditures from its infrastructure modernization into the equation, and it's clear that AT&T is a firm that probably wouldn't be complaining if there are more Fed rate cuts to come. It's a heavy spender, a dividend heavyweight, and could certainly reverse course if the costs of borrowing look to fall drastically through 2026.
Even without more rate cuts, AT&T is a solid bet while it's fresh off a 16.2% drop. Shares trade at 8.1 times trailing price-to-earnings (P/E), making it an affordable way to score a safe 4.5%-yielding dividend. While competitive forces in telecom won't back down, I do think AT&T has a slight advantage as it continues to bring the fight to its peers.
Crown Castle
Crown Castle (NYSE:CCI) shares boast a nice 4.75% dividend yield and could certainly benefit as rates continue their descent. The cell tower REIT made some intriguing moves earlier in the year, including selling the fiber business to remove "long-term drag" on the business, as it looks to narrow its focus to cell towers.
Undoubtedly, such a move will reduce interest expenses while providing more flexibility to pursue other timelier projects. As rates keep falling, I'd look for Crown Castle to get a bit more generous with dividend increases, especially if its return to profitability comes sooner rather than later. Either way, Crown Castle is on the right track, and lower rates could make the transition easier. Still down over 55% from its highs, Crown Castle shares still look interesting, even though the name has been a laggard for quite a few years now. If you've got faith in management and its pivot to towers, I think shares are a must-watch.
Source: “AOL Money”
