New Fed Chair Kevin Warsh Just Delivered 29 Words on AI. 2 Dividend Stocks That Are Well Positioned to Thrive in This Changing Landscape.

New Federal Reserve Board Chairman Kevin Warsh presided over his first meeting of the Federal Open Market Committee (FOMC), and the headlines for the meeting were about how the Fed kept rates in check.

But often the more interesting stories lie in the press conference the Fed chair holds after the meeting. In the latest Q&A with the press on June 17, Warsh made an interesting observation about artificial intelligence (AI) that put into perspective the massive, far-reaching impact of the technology.

"Artificial intelligence, the latest generation of general purpose technology, is perhaps as important a change in the economy and business and households that we've had in my adult lifetime," Warsh said.

Within that statement lies the double-edged sword that is AI. The last disruptive technology, the internet, created so much buzz that the market got overheated and led to a two-year bear market. After three-plus years of a bull market driven by AI, valuations are near those dot-com era highs, so investors should be cautious about a potential reset or pullback with AI stocks.

Image source: Getty Images.

Dividend stocks are one of the best ways to fortify a portfolio against a market downturn, because the added income can be reinvested to boost returns. Also, dividend stocks typically come from sturdy, well-capitalized companies that tend to perform well in various market cycles.

As AI companies mature, more of them are offering hearty dividends, which can help boost their returns if there is a market downturn. Here are two dividend-paying AI stocks that are well positioned to navigate this changing landscape.

1. IBM

International Business Machines (NYSE: IBM), or IBM, has embraced AI in its cloud computing and IT consulting business through its watsonX software, which helps organizations integrate AI into their systems.

IBM stock is down about 15% year to date, with most of the losses coming in June after the stock soared to near an all-time high of $329 per share on June 2. Since then, it has dropped 25% to $245 per share as part of a larger tech sell-off following a meteoric two-month surge for tech stocks.

Now IBM is trading at just 22 times earnings, down from 50 a year ago. It is also trading at just 20 times forward earnings, making it a bargain right now.

Add to that a stellar and consistent dividend. IBM pays out a yield of 2.71%, which is far better than the average S&P 500 yield of 1.05%. Also, IBM has increased its dividend for 26 straight years, an incredible record of consistency.

To illustrate the impact of the reinvested dividend, IBM stock has averaged about a 12% return over the past five years. But with the dividend reinvested, the average annualized five-year return jumps to almost 17%.

2. Accenture

Accenture (NYSE: ACN) is another consulting firm that helps companies and organizations integrate and deploy technology and AI throughout their systems and enterprises.

Accenture has one of the absolute best dividends, not just among AI stocks, but on the entire stock market right now. It pays out a yield of 5.1%, which is one of the highest yields you'll find. It has also been consistent, raising its dividend for 15 consecutive years.

The stock has crashed about 38% since late May, falling from about $196 per share to the current $122 per share. Part of it stems from the larger tech sell-off related to valuation concerns, but for Accenture, the sell-off was exacerbated by a weak earnings report that saw Accenture miss revenue estimates and cut its revenue outlook due in part to headwinds from U.S. government cost-cutting.

Accenture stock is dirt cheap right now, trading at 10 times earnings and 8 times forward earnings.

Accenture has struggled to generate returns in recent years, with a five-year annualized total return of negative 13%, but it also hasn't been this cheap in more than 10 years. The rock-bottom valuation and reliable dividend make Accenture a stock that could outperform in the upcoming cycle.

Wall Street analysts have a median price target of $180 per share for Accenture stock, which would suggest 47% upside.

Unlike most AI stocks, these two are cheap and have great dividends -- a combination that could serve them well in the upcoming market cycle.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc and International Business Machines. The Motley Fool recommends the following options: long January 2028 $260 calls on Accenture Plc and short January 2028 $280 calls on Accenture Plc. The Motley Fool has a disclosure policy.