After years of underperformance, the tide could be starting to shift for dividend stocks — and they may have artificial intelligence to thank for it. The S & P 500 Dividend Aristocrats Index has been experiencing its biggest underperformance compared to the S & P 500 in decades, Raymond James recently said in its 2026 outlook. Dividend aristocrats are companies that have a track record of lifting dividends annually for at least 25 consecutive years. They tend to be household names like Clorox or PepsiCo . Raymond James subsidiary, Eagle Asset Management, tracked the trailing 12-month relative performance of the S & P 500 Dividend Aristocrats Index and the broad market benchmark from 1991 through Jan. 31, 2026. The most recent underperformance began in May 2023. Last month, dividend aristocrats’ 12-month trailing returns underperformed by 7.3%, compared to the performance gap of 10.6% in December. “The market is always going through these natural waves of concentration and broadening of styles coming in and out of favor,” said John Lagowski, portfolio manager at Eagle Asset Management. It’s not that dividend-paying stocks haven’t performed well, he said. Since the beginning of 2022, dividend aristocrats and “above-median payers,” a broader segment of the dividend universe, have seen about a 9% annualized return, he noted. They’ve just been overshadowed by the very concentrated AI-driven cohort of the S & P 500, thanks to the “extraordinary” earnings profile of the Magnificent Seven, he added. Yet that earnings gap, which was once wide, is starting to narrow substantially, Lagowski said. “We certainly expect that underperformance, per se, to start to stabilize and get closer to neutral,” he said. “There has been a broadening out in terms of the companies that we see leading the market.” NOBL 1Y mountain S & P 500 Dividend Aristocrats ETF one-year performance In addition to a positive macroeconomic landscape and easier comparables this year for downtrodden companies, the benefit of artificial intelligence is going to filter down to companies outside of big tech, he explained. “If you believe AI is everything we hope, then the benefits of this technological advancement will need to start flowing through to other industries and companies besides the hyperscalers and companies adjacent to the build out,” Lagowski said. “So as AI starts to benefit companies more broadly from a cost savings and productivity perspective, as investors we’re excited to take advantage of that by investing in companies that have strong track records of allowing shareholders to participate in those benefits via growing dividends,” he added. Lagowski focuses on companies that pay above-median dividends. The fund he co-manages, RJ Eagle Vertical Income ETF (RJVI) , had about 14% of its assets in common stocks , as of Sept 30. The fund also holds corporate bonds and preferred securities. “We want to hit that sweet spot in terms of still getting a robust or meaningful enough dividend income generation, but we’re also not going after the highest dividend payers because there’s no growth associated with those names,” he explained. He sees opportunity in financial stocks, thanks to the deregulation expected in the industry. He also believes they will benefit from an accelerating economy. In addition, he likes transports and industrials.
