Market volatility returned with force as the Trump administration’s announcement of steep tariffs against South Korea, Japan, and five other nations sent the Dow Jones Industrial Average plummeting more than 500 points and pushed the S&P 500 down 1% at session lows. With new duties set to take effect on August 1, investors are once again reminded of the value of defensive positions during uncertain times.
Even as the broad market has seen sharp recovery from April lows, income-paying stocks continue offering portfolio protection through steady dividends and reduced volatility. This environment makes dividend aristocrats – companies that have raised dividends for at least 25 consecutive years – particularly attractive for defensive positioning.
However, today’s dividend aristocrats weren’t always elite income generators. They earned their status through decades of consistent dividend increases, and a new generation of companies is following the same path. Wolfe Research has identified “emerging dividend aristocrats” – companies with at least 15 years of consecutive dividend increases – that could join the elite ranks within the next decade.
Duke Energy (DUK): Utility Strength With Strategic Advantages
Duke Energy stands out among emerging dividend aristocrats with an impressive track record of dividend increases since 2007. The utility currently offers a 3.6% dividend yield while posting gains of almost 9% in 2025, demonstrating the combination of income and capital appreciation that attracts defensive investors.
While Wall Street maintains a largely neutral stance on Duke Energy – with 12 of 21 analysts rating it a hold – the company recently earned recognition on Goldman Sachs’ conviction list. Analyst Carly Davenport highlighted Duke’s strategic partnership with GE Vernova, which positions the utility to meet growing regional energy demands through natural gas turbine acquisitions.
This partnership addresses a critical industry challenge: building new electrical generation capacity has become both expensive and time-consuming due to supply chain constraints. Duke’s ability to build at scale through its GE Vernova partnership provides a competitive advantage, enabling the company to bring gas generation online more quickly and cost-effectively than peers.
Consensus price targets suggest 8.5% upside potential, with the average target at $127.15 compared to current levels around $119. For income investors, Duke Energy offers the dual appeal of a utility’s defensive characteristics and a management team executing strategic initiatives to maintain competitive positioning.
Texas Instruments (TXN): Semiconductor Resilience
Texas Instruments demonstrates how companies can maintain dividend growth even in cyclical industries. The semiconductor leader raised its dividend for the 21st consecutive year last fall, implementing a 5% increase to $1.30 per share quarterly. The stock currently yields approximately 2.6% while posting gains of more than 13% in 2025.
Recent analysis from UBS highlights Texas Instruments as among semiconductor names that “screen well” for current market conditions. The company’s strategic approach to inventory management positions it advantageously for industry upcycles, maintaining elevated inventory levels in preparation for demand recovery that appears to be materializing.
Additionally, Texas Instruments benefits from its substantial U.S. manufacturing footprint amid Section 232 tariffs – duties that may be imposed on goods considered threats to national security. This domestic production capability provides both operational advantages and potential market share gains as supply chain considerations become increasingly important for customers.
While analysts maintain largely neutral ratings on Texas Instruments, the company’s dividend consistency and strategic positioning suggest continued appeal for income investors seeking exposure to technology sector growth with defensive characteristics.
Prudential Financial (PRU): Insurance Income With Challenges
Prudential Financial rounds out our emerging dividend aristocrat analysis with 17 consecutive years of dividend increases. The insurance company announced a 4% dividend increase in February, bringing its quarterly payment to $1.35 per share and creating a compelling 5% dividend yield.
However, Prudential faces near-term headwinds that have pressured share performance, with the stock down nearly 10% in 2025. Recent analyst commentary from Piper Sandler’s John Barnidge highlights challenges facing life insurers, including continued fee and spread headwinds affecting profitability.
Barnidge reduced earnings estimates for Prudential, lowering current-quarter expectations to $3.25 per share from a previous $3.42 estimate. The revision reflects broader industry challenges as equity market volatility and expectations for lower interest rates affect variable investment income for life insurance companies.
Despite these near-term challenges, Prudential’s 17-year dividend increase streak demonstrates management’s commitment to shareholder income even during difficult operating environments. Wall Street maintains neutral positioning with 14 of 17 analysts rating the stock a hold, while consensus price targets suggest nearly 6% upside potential from current levels.
The Broader Opportunity
Wolfe Research’s emerging dividend aristocrat list extends beyond these three companies, including Costco Wholesale (0.5% yield, up 8.2% in 2025), BlackRock (1.9% yield, up 4.9%), Unum Group (2.1% yield, up 11.6%), Kroger (1.9% yield, up 16.4%), and Lockheed Martin (2.8% yield, down 3.9%). This diverse group spans utilities, technology, financial services, retail, asset management, and defense sectors.
The appeal of emerging dividend aristocrats lies in their proven commitment to shareholder income combined with potential for eventual inclusion in the exclusive dividend aristocrat category. Companies approaching the 25-year threshold often receive increased attention from income-focused investors and funds, potentially creating additional demand for shares.
Investment Considerations
As Wolfe Research chief investment strategist Chris Senyek noted, “Our favorite defensive dividend strategy, Dividend Aristocrats, is a good place to ‘hide’ in the event of an economic slowdown or recessionary environment.” This defensive positioning becomes particularly valuable during periods of market uncertainty and geopolitical tension.
Emerging dividend aristocrats offer similar defensive characteristics while potentially providing additional upside as they approach elite status. However, investors should recognize that maintaining dividend growth becomes increasingly challenging over time, particularly during economic downturns or industry-specific pressures.
For Duke Energy, key considerations include regulatory environment changes and energy transition impacts. Texas Instruments faces semiconductor cycle volatility and technology shifts. Prudential Financial must navigate insurance industry headwinds and interest rate sensitivity.
The current market environment – characterized by tariff uncertainties, geopolitical tensions, and varying sector performance – reinforces the value of steady dividend growth companies. These emerging aristocrats provide both current income and the potential for continued dividend increases that help portfolios maintain purchasing power over time.
Investors seeking defensive positioning while maintaining growth exposure may find emerging dividend aristocrats particularly attractive, as they combine proven management commitment to shareholder income with the business quality necessary to sustain long-term dividend growth.
