Smart Dividend Portfolio Edition #91: Yield Circuit

Shrilekha Pethe on December 15, 2025

Dear Investor,

Welcome to the 91^stedition of TipRanks’ Smart Dividend Portfolio & Newsletter.

Market-Moving News: Dec 15, 2025

U.S. stocks ended the week lower as investors pulled back from mega-cap technology names after mixed results from Broadcom (AVGO) and Oracle (ORCL). The S&P 500 (SPX) fell 1.07%, the Nasdaq 100 (NDX) dropped 1.91%, and the Dow Jones Industrial Average (DJIA) lost 0.51%. The 10-year Treasury yield rose to 4.19%, while gold (XAUUSD) gained 1.87% to a record $4,333.30. Oil (CL) slipped 0.24% to $57.47 per barrel, and Bitcoin (BTC) traded near $90,348, almost unchanged for the week.

Gold’s new high showed a move toward safety, while rising yields pointed to lingering caution about inflation and policy.

Technology stocks led the market decline this week. Shares of Broadcom fell 11% even after the company beat forecasts and said its AI chip sales will double next year. Investors focused instead on slimmer margins and signs of heavy spending. Oracle also fell by over 4% as concerns grew about its large data center buildout for OpenAI (PC:OPAIQ) and rising debt costs.

The sell-off quickly spread across the AI sector. Nvidia (NVDA) and Advanced Micro Devices (AMD) both fell more than 3%, while Arista Networks (ANET) , Micron (MU) , and Western Digital (WDC) each dropped between 5% and 7%. Vertiv (VRT) slid nearly 10%. A Goldman Sachs (GS) basket of AI data center shares had its worst day since April, when new tariffs hit tech and semiconductor stocks.

At the same time, President Trump’s new executive order on AI drew attention. The order aims to establish a single national AI policy and prevent states from setting their own rules. Analysts said the move could help companies such as OpenAI, Google (GOOGL), Microsoft (MSFT), and Meta (META) by creating a clearer legal path for future projects.

Away from technology, policy headlines also shaped market sentiment. Reports said President Trump may choose former Federal Reserve governor Kevin Warsh as his next Fed chair, replacing Jerome Powell. The President repeated that the Fed should work closely with the White House on rate decisions.

In crypto, several major firms received conditional approval to become national trust banks. Circle, Ripple, Fidelity Digital Assets, BitGo, and Paxos can now move closer to federal oversight, a step that could make stablecoins more mainstream.

Meanwhile, cannabis stocks jumped after reports that the White House plans to reclassify marijuana as a Schedule III drug. Tilray (TLRY) rose 44%, Canopy Growth (CGC) gained 54%, and SNDL (SNDL) climbed 25% as investors bet on easier banking and lower taxes for the industry.

Shares of Rivian (RIVN)rose 12% after the company introduced its new Autonomy+ package for $2,500 and announced a custom AI chip for future electric vehicles. The update followed its first Autonomy and AI Day event, where management outlined a roadmap toward Level 4 self-driving features.

Disney (DIS) also made headlines after “Zootopia 2” crossed the $1 billion mark in just 17 days, becoming the fastest-grossing animated film of all time. It is Disney’s second billion-dollar hit of the year, following the live-action “Lilo & Stitch.”

Investors now look ahead to fresh inflation and spending data, along with updates on manufacturing and retail activity. Markets remain sensitive to any signals from the Federal Reserve and the White House on policy and trade.

Despite a weaker close to the week, most analysts see healthy underlying growth and steady earnings trends heading into year-end. However, after this week’s sharp pullback in technology, investors may tread carefully until confidence in AI spending returns.

This Week’s Quality Dividend Stock Idea

Best Buy (BBY) is a leading U.S. consumer electronics retailer focused on the sale of technology products, appliances, and related services. Its operations span a nationwide network of retail stores and a robust e-commerce platform, offering everything from computers and mobile devices to home theater systems and smart appliances. BBY also provides installation, repair, and technical support through its Geek Squad service. The company is one of the largest specialty electronics retailers in North America and a key player in the consumer technology market.

Tech Trek

Best Buy traces its origins to 1966, when Richard Schulze opened Sound of Music, a single audio-equipment store in St. Paul, Minnesota. The business grew steadily through the 1970s and early 1980s, but the pivotal shift came in 1983, when it rebranded as Best Buy and adopted a superstore format centered on consumer electronics. Its non-commissioned sales model and warehouse-style layout helped fuel rapid expansion as personal computing, video, and home entertainment took off. Throughout the 1990s and early 2000s, Best Buy accelerated its national footprint and entered Canada through its acquisition of Future Shop, while expanding its assortment to include appliances, mobile phones, entertainment software, and services. A major milestone came in 2002 with the acquisition of Geek Squad, integrating technical support and in-home services that strengthened customer loyalty and boosted margins.

As e-commerce transformed retail, Best Buy invested heavily in omni-channel capabilities, including price-matching, ship-from-store fulfillment, and enhanced digital platforms. These moves stabilized sales and supported a return to profitable growth in the mid-2010s. At the same time, the company refined its store base, modernized operations, and began closing underperforming banners, including the closure of the Future Shop chain in Canada in 2015 and the complete shutdown of its 250 U.S. Best Buy Mobile stores by 2018.

In the late 2010s and early 2020s, Best Buy pursued a major push into health technology and services to diversify beyond traditional retail. Key acquisitions included GreatCall in 2018, Critical Signal Technologies in 2019, and Current Health in 2021 to expand into remote patient monitoring and in-home care. Scaling challenges later emerged, and by 2025, Best Buy divested Current Health back to its co-founder after absorbing a restructuring charge tied to health-segment impairments. These exits marked a retrenchment from underperforming health assets even as Best Buy continued to focus on higher-value services and membership programs.

Taken together, Best Buy’s evolution spans its origins as a regional audio retailer to its rise as one of North America’s largest specialty electronics chains, strengthened by its omni-channel model, service ecosystem, and long-standing role in delivering consumer technology to households across the U.S. and Canada.

Tech Ties

Best Buy’s business model centers on selling consumer technology products supported by a high-margin services ecosystem that deepens customer engagement and drives recurring revenue. Its core operations include the retail sale of electronics, appliances, mobile devices, home theater equipment, and accessories through an omni-channel platform that integrates more than 1,000 North American stores with a scaled e-commerce business. This structure allows customers to research, purchase, and receive products through flexible fulfillment options such as in-store pickup, home delivery, and ship-from-store. Vendor-funded promotions, exclusive assortments, and shelf-space partnerships with major brands strengthen merchandising economics and support profitability.

The company has two reportable segments: Domestic and International. The Domestic segment comprises of operations in all states, districts, and territories of the U.S. and its Best Buy Health business. The International segment comprises of all its operations in Canada.

A defining part of Best Buy’s model is Geek Squad, which provides installation, repair, protection plans, and technical support. These services carry higher margins than product sales and create deeper household integration. Best Buy has increasingly linked these capabilities to membership programs such as My Best Buy and My Best Buy Total, which offer tech support, enhanced benefits, and savings for an annual fee. These programs reinforce repeat purchasing behavior and generate predictable revenue streams. Strong vendor partnerships further support the business, as manufacturers rely on Best Buy as a key showroom and distribution channel, often funding marketing programs and store-within-a-store experiences that lower operating costs and help the company adapt to product cycles across its technology categories.

Operationally, Best Buy continues to refine its store footprint, optimize inventory, and streamline fulfillment to match shifting consumer habits. These efforts, combined with disciplined cost controls, contribute to a more flexible cost structure and help protect margins in varying demand environments. As technology remains an essential and frequently upgraded part of daily life, the company’s mix of broad product offerings, service attachment, membership economics, and vendor partnerships supports steady earnings generation and long-term financial stability.

Tech Surge

Best Buy’s third quarter reflected strengthening momentum across its core technology categories, giving investors renewed confidence in the company’s demand trends and earnings outlook. Computing remained the clear standout, marking its seventh consecutive quarter of growth as consumers upgraded PCs ahead of Windows 10’s end-of-support and shifted toward higher-performance hardware. Desktop sales were particularly strong, rising roughly 30% year-over-year. Gaming also delivered solid gains, supported by excitement surrounding Nintendo Switch 2, growing interest in handheld consoles, and increasing adoption of augmented-reality glasses. Mobile phones benefited from improved carrier partnerships and better in-store experience. These gains helped offset softer results in home theaters and appliances, where demand remained muted.

The company continued to benefit from its omni-channel strategy, recording its fastest shipping speeds to date and seeing improvement in both digital engagement and in-store execution. Consumers were value-conscious but still willing to spend on meaningful upgrades, particularly during back-to-school and Techtober. Best Buy enhanced its store and digital environments through expanded vendor-supported displays, improved online TV-shopping tools, rising app engagement, and early IKEA shop-in-shop pilots, reinforcing its competitive position across channels.

Newer profit streams are also becoming increasingly important. The Marketplace platform, launched only a few months ago, has quickly expanded to more than 1,000 third-party sellers and now offers a product assortment more than ten times larger than Best Buy’s own. This model allows the company to attract more online traffic without carrying additional inventory, generating fee-based revenue with lower return rates. The advertising business advanced simultaneously, as more brands paid for visibility across Best Buy’s website, app, emails, and stores. The company also hosted its “We Got Next” advertiser event and plans to introduce a new in-store takeover format in January, broadening opportunities for marketers, including non-endemic advertisers such as financial services. Advertising is a high-margin business, and despite near-term investment keeping operating income neutral, it is already contributing to gross profit.

Marketplace and advertising are still early in their development, but both are lifting gross profit in the second half of the year. These businesses tend to scale in a non-linear way, meaning profitability accelerates as they grow. Management expects their contribution to become more visible next year as both businesses mature.

Operational improvements also contributed meaningfully to performance. Best Buy continued to deploy artificial intelligence to streamline customer service, reducing support contacts by 17% in Q3 and lowering related expenses. The company has also improved several behind-the-scenes processes. Better fulfillment planning ships products from the most efficient locations, reducing delivery times and costs. Enhanced fraud detection reduced losses, while improved website search and recommendation tools increased conversion and strengthened online productivity.

Another important advantage comes from vendor-funded labor. Many manufacturers, such as TV, appliance, and device brands, pay for their own specialists to work inside Best Buy stores. These employees help customers understand products while reducing the labor costs for the company. Vendor-funded labor is expected to increase about 20% in the second half of the year, giving stores more staffing support at little cost.

Looking ahead, management noted that holiday demand may follow a different cadence than last year, with tougher November comparisons but easier trends in December. Strong promotional events and better product supply, particularly for high-demand items like the Nintendo Switch 2, position the company to capture holiday spending despite a cautious consumer backdrop. Longer term, ongoing innovation cycles in computing, gaming, and emerging device categories should sustain upgrade activity. Best Buy also expects AI-driven efficiencies and high-margin growth drivers such as Marketplace and advertising to become increasingly important contributors to profitability heading into FY2027.

Earnings Upswing

Over the past five years, Best Buy’s revenues have dipped 1.7% from pandemic-era highs, reflecting a normalization of consumer tech demand rather than any structural weakness. Shifts toward experience-driven spending and cautious consumer behavior have moderated growth, but strong performance in computing and mobile categories has helped offset broader softness. Earnings per share have declined 14.4% over the period, though recent trends suggest performance is beginning to stabilize.

The company delivered solid results in the third quarter of fiscal 2026, demonstrating steady momentum across its operating segments and outperforming internal expectations. Enterprise revenue rose 2.4% year over year to $9.7 billion, supported by a 2.7% increase in comparable sales. Both domestic and international operations contributed to this growth, with domestic comparable sales up 2.4% and international comps rising 6.3%. Online demand strengthened as well, with domestic e-commerce accounting for 31.8% of total revenue and growing 3.5% on a comparable basis.

Profitability showed clear improvement. The adjusted operating income margin expanded 30 basis points to 4%, driven by disciplined cost management and better expense leverage. Adjusted EPS increased 11% to $1.40, exceeding expectations. Gross margins were mixed: domestic margins fell 30 basis points to 23.3%, impacted by product mix and promotional activity, while international margins rose 30 basis points to 22.8%. Domestic SG&A declined $4 million year over year, narrowing the adjusted SG&A margin from 19.7% to 19.2%. Reported results included a $192 million non-cash impairment charge related to Best Buy Health, which was excluded from adjusted earnings.

Monthly sales trends were stable, with comparable sales up roughly 3% in August, 1% in September, and 5% in October, highlighting improving customer demand across key categories.

Following the strong quarter, Best Buy raised its full-year guidance for fiscal 2026. The company now expects revenue around $42 billion at the midpoint, comparable sales growth of 0.5% to 1.2% (up from prior guidance of a decline of 1% to a 1% increase), an adjusted operating income margin of about 4.2%, and adjusted EPS of $6.30 at the midpoint, above the previous estimate of $6.23. Capital spending is projected at roughly $700 million, with an effective tax rate of approximately 25.4%. Full-year gross margins are expected to decline modestly by 15 basis points, with advertising anticipated to have a neutral net effect after reinvestments.

For the fourth quarter, Best Buy anticipates comparable sales ranging from a 1% decline to a 1% increase and an adjusted operating income margin of 4.8% to 4.9%, slightly below last year’s 4.9%. Gross margins are projected to decline due to elevated promotional activity, partially offset by growth in advertising, Marketplace, and services. SG&A expenses are expected to remain controlled, with higher spending in advertising and Marketplace balanced by cost savings in Best Buy Health and incentive compensation.

Financial strength remains a key attribute. Best Buy maintains a debt-to-EBITDA ratio of 2.28x, below the industry median of 2.5x, and holds long-term credit ratings of “BBB+” from S&P and “A3” from Moody’s, reflecting a stable outlook. The company’s ROE and ROIC rank among the top 10% in the cyclical retail sector, while ROA is in the top 40%. Operating cash flows rose approximately 22% year over year to $684 million, with a free cash flow margin of 3.6%, positioning Best Buy above the industry median.

Yield Boost

Best Buy has a long track record of returning capital to shareholders, having increased its dividends for 18 consecutive years and achieving a 15.6% annual growth rate over the past decade. The company distributes roughly 59% of its adjusted earnings as dividends, yielding 5.16%, nearly five times the consumer cyclical sector average. In its most recent quarter, Best Buy declared a $0.95 per share dividend, and through the first nine months of FY26, it returned $802 million to shareholders, including $602 million in dividends and $200 million in share repurchases.

Building on prior authorizations, including a $5 billion repurchase program authorized in 2022, the company expects to deploy approximately $300 million on share buybacks during FY26, reinforcing its commitment to disciplined capital allocation and shareholder value creation.

Best Buy’s stock has declined by around 17% over the past year, and this is more reflective of a cyclical reset than a structural decline, as management continues to highlight resilient demand in key categories like mobile and stable consumer engagement. With its strong brand, scale advantages, and disciplined cost management, the company is well-positioned to benefit as deferred big-ticket spending returns and broader consumer confidence improves.

Best Buy’s current valuation suggests the market is pricing in a cautious outlook rather than a deterioration in its long-term fundamentals. The stock is trading at a modest discount to its historical averages across several key measures, including non-GAAP trailing and forward price-to-earnings ratios, trailing price-to-cash flow, and forward EV/EBITDA, indicating more conservative expectations for earnings and cash generation.

Relative to large retail peers such as Amazon, Walmart, and Target, Best Buy sits in the low-to-moderate valuation range based on non-GAAP trailing and forward P/E ratios and forward EV/EBITDA metrics. For investors, this positioning implies limited optimism already embedded in the share price, while still recognizing Best Buy’s established scale, cash-flow profile, and category leadership.

Analysts remain upbeat about BBY stock as the company delivered earnings outperformance with comparable sales and margin upside, supported by an acceleration across total results and key categories. Expanded merchandising partnerships with major TV brands and a steady cadence of product innovation continue to support market share defense and reinforce the strength of Best Buy’s differentiated retail model.

Consensus estimates point to roughly 14% upside from current share levels, with some analysts projecting gains of up to 35%. A discounted cash flow analysis provides additional support for this view, suggesting the stock may be trading at an approximately 56% discount to its intrinsic value.

Investing Takeaway

Best Buy has demonstrated a consistent commitment to returning capital to shareholders, maintaining an 18-year streak of consecutive dividend increases. Its disciplined approach to capital allocation is reflected in a substantial portion of adjusted earnings being directed to dividends, complemented by ongoing share repurchases. Even amid cyclical softness in consumer spending and technology demand, the company has sustained reliable dividend growth, supported by steady cash flows and a robust business model centered on technology products, services, and membership programs. For income-focused investors, Best Buy’s history of growing dividends, combined with strong financial discipline and a resilient operating profile, positions the stock as an attractive option for generating predictable, long-term shareholder returns while participating in the recovery of consumer technology spending.

Dividend Investor Portfolio

Portfolio News

▣ BlackRock’s (BLK) spot Bitcoin ETF remained in focus during the week as it continued to attract strong investor demand. On December 10, for instance, the fund recorded inflows of about $192.9 million, reinforcing its position as one of the most actively traded vehicles in the U.S. Bitcoin ETF market. These additions played a key role in lifting aggregate U.S. Bitcoin ETF inflows to their highest level in roughly three weeks, signaling a renewed pickup in institutional and retail interest in regulated crypto exposure. The sustained momentum highlights BlackRock’s growing footprint in digital assets, where its scale, distribution reach, and brand credibility have helped drive adoption. The continued inflows point to expanding fee-generating opportunities and underscore how crypto-linked products are becoming a more meaningful, though still evolving, component of BlackRock’s broader product portfolio.

▣ ExxonMobil (XOM) refreshed its 2030 Corporate Plan, lifting its projected earnings and cash flow compared with prior expectations, while keeping planned capital spending unchanged. The company now forecasts $25 billion in earnings growth and $35 billion in cash-flow growth from 2024 to 2030. Both of these figures are $5 billion higher than in its previously announced plan and are set to be achieved with no increase in capital spending, highlighting disciplined capital allocation and stronger asset performance. ExxonMobil expects earnings to grow at about 13% annually and cash flow in double digits, underpinned by advantaged operations in the Permian Basin, Guyana, and LNG. The updated plan also projects roughly $145 billion in cumulative surplus cash flow by 2030, assuming $65 Brent oil, and foresees a return on capital employed above 17%, reinforcing its emphasis on shareholder returns. Upstream production is targeted at 5.5 million barrels per day, with advantaged assets making up about 65 % of volumes.

▣ IBM (IBM) announced the acquisition of Confluent, a leading real-time data streaming platform, in an all-cash deal valued at approximately $11 billion. The transaction values Confluent at $31 per share and is aimed at significantly enhancing IBM’s cloud and enterprise AI infrastructure capabilities by integrating Confluent’s real-time data technology into its hybrid cloud and AI software stack. The deal, expected to close by mid-2026, signals IBM’s deeper push into high-growth, high-margin software and AI services and could accelerate recurring revenue streams if successfully integrated.

▣ JPMorgan Chase (JPM) suffered its steepest decline in eight months on Tuesday after the largest U.S. bank by assets warned that operating expenses would rise sharply next year, unsettling investors focused on cost discipline. Management said the bank expects expenses in 2026 to reach $105 billion, representing an increase of nearly 10% from 2025 and comfortably above analysts’ expectations of about $101 billion. The consumer and community banking division was identified as a major contributor to the higher cost outlook. The increase reflects continued investments in artificial intelligence, higher performance-based compensation for financial advisers, expanded marketing efforts, and increased spending across the credit card business and branch network. Management also cited inflation as an additional pressure on expenses. Despite the cost concerns, JPMorgan noted that investment banking fees were tracking modestly higher year over year in the fourth quarter, while trading revenues were trending up at a low-teens pace.

▣ PepsiCo (PEP) moved decisively on strategic and shareholder-value initiatives following engagements with activist investor Elliott Investment Management, which owns a roughly $4 billion stake in the company. The company outlined a series of commercial and financial priorities designed to enhance long-term shareholder value and provided a preliminary financial outlook for fiscal 2026. The company said it will accelerate organic revenue growth and expand core operating margins through sharper everyday value pricing, a broadened innovation agenda focused on simpler ingredients and functional offerings, and aggressive cost reductions, including reducing nearly 20 % of U.S. product portfolio and closing manufacturing lines. PepsiCo expects organic revenue growth of 2%–4 % in 2026 and core EPS growth of ~5%–7 %.

▣ VICI’s (VICI) ex-dividend date is December 17 with a payment date of January 09, 2026.

Recent Trades

None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.

Portfolio Attributes

Dividend Portfolio Yield	Expected Dividend Growth	Expected Annual Income
3.98%	+5.76%	$5,929.82
Yield-on-Cost Adjusted, Weighted	Average Analyst 12-Month Growth Outlook	10K Per Stock at the Time of Purchase

Current Portfolio

Name	EX-Dividend Date	Payment Date	Yield on Cost	Annual DPS
Automatic Data Processing (ADP)	Mar 17, 2026	Apr 02, 2026	2.46%	$6.80
Amgen (AMGN)	Feb 17, 2026	Mar 10, 2026	3.27%	$9.52
BlackRock (BLK)	Mar 09, 2026	Mar 24, 2026	2.61%	$20.84
Bank of Nova Scotia (BNS)	Jan 07, 2026	Jan 29, 2026	5.98%	$3.21
EOG Resources (EOG)	Jan 16, 2026	Jan 30, 2026	3.06%	$4.08
ExxonMobil (XOM)	Feb 12, 2026	Mar 10, 2026	3.64%	$4.12
IBM (IBM)	Feb 10, 2026	Mar 10, 2026	3.14%	$6.72
JPMorgan Chase (JPM)	Jan 06, 2026	Jan 29, 2026	3.43%	$6.00
Kroger (KR)	Feb 17, 2026	Mar 03, 2026	3.08%	$1.40
Lockheed Martin (LMT)	Mar 03, 2026	Mar 30, 2026	2.85%	$13.80
PepsiCo (PEP)	Mar 10, 2026	Mar 31, 2026	3.8%	$5.69
Philip Morris (PM)	Dec 26, 2025	Jan 13, 2026	6.06%	$5.88
Qualcomm (QCOM)	Mar 05, 2026	Mar 26, 2026	2.36%	$3.56
VICI Properties (VICI)	Mar 27, 2026	Apr 07, 2026	5.22%	$1.8
Verizon (VZ)	Jan 12, 2026	Feb 03, 2026	6.09%	$2.76

NameEX-Dividend DatePayment DateYield on Cost Annual DPS

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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman

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Category: Dividend