3 Dividend Stocks to Buy Now That Are Crushing the S&P 500 in 2025

The S&P 500 has rocketed higher in recent weeks but is still down year to date at the time of this writing. Trade tensions have eased somewhat, but there remains a great deal of macroeconomic uncertainty -- not to mention the ongoing "stroke of the pen risk," which refers to the dangers that companies can face from sudden changes in national policy.

In these uncertain times, investors who might be looking for reliable sources of passive income that they'll be able to count on no matter what the economy does may want to take a closer look at Allegion (NYSE: ALLE), Pitney Bowes (NYSE: PBI), and Southern Company (NYSE: SO). All three companies regularly raise their dividends and are outperforming the S&P 500 so far in 2025.

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Here's why they stand out as top buys now.

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Allegion continues to outperform in an uncertain environment

Lee Samaha (Allegion): Allegion is a provider of security products for homes and businesses. Its dividend sports a higher yield than the S&P 500 and an 11-year streak of annual payout increases. Moreover, if management's forecast for long-term double-digit percentage earnings growth is anything to go by, those dividends will likely grow significantly in the coming years.

In addition, during Allegion's recent investor day presentation, management told investors it plans to deploy 30% of its available cash flow toward the dividend, up from just 23% in recent years.

Its growth plans center on the secular growth opportunity in the convergence of mechanical and electronic security products and software. This means locks, electronic panels/readers, door accessories, frames, windows, and automatic closing doors -- a wide range of products.

These higher-tech versions of everyday hardware are becoming increasingly essential in institutional buildings (education, healthcare, etc.), commercial spaces (offices, industrial facilities, etc.), and multifamily residences, as web-enabled technology brings more functionality to its solutions.

For example, with Allegion's security products, access to areas can be monitored and controlled remotely, creating more secure environments and more efficient workplaces.

Organic revenue growth of 4% aligns with management's long-term expectations (which assume mid-single-digit percentage growth plus a few points of growth from consolidating a fragmented market via mergers and acquisitions). Management recently affirmed its guidance for 2025 adjusted earnings per share (EPS) in the $7.65 to $7.85 range. That guidance factors in $80 million in costs associated with tariffs.

The midpoint of that range would put Allegion on a price-to-earnings multiple of slightly more than 18, which is a good value for a company with such excellent long-term growth prospects.

Pitney Bowes is a hidden gem dividend stock to buy now

Scott Levine (Pitney Bowes): Except for some time in the middle of January, shares of Pitney Bowes have traded firmly higher in 2025 than where they ended 2024. As of this writing, shares of the shipping solutions specialist -- best known for its postage meters and other mailing equipment -- have soared by about 30% since the start of the year.

Between this resilience during the market downturn and the fact that its stock offers a forward-dividend yield of about 3% at the current share price, Pitney Bowes is a passive income play that should be on your radar.

One catalyst for the stock's rise came in February, when the company reported its fourth-quarter 2024 results. Illustrating management's commitment to reducing costs, the company announced another $30 million reduction in annualized costs during the quarter, bringing its run rate for annualized savings for the year to $120 million.

Plus, the benefits from the cost-reduction initiative are expected to increase. Management projects that it will achieve $170 million to $190 million in annualized cost savings as a result of the plan.

With its expenses coming down, Pitney Bowes is in a stronger position to reward shareholders. In addition to authorizing $150 million in stock buybacks, the company recently hiked its quarterly dividend from $0.06 per share to $0.07 per share. Lest investors fear that the company is being hasty in returning capital to shareholders, it's worth noting that the company currently has a conservative 43% payout ratio.

While its free cash flow had steadily fallen for years, management seems to have righted the ship with the decision to sell its global e-commerce business and implement its cost-cutting initiative. Now, free cash flow is expected to rise from $290 million in 2024 to between $330 million and $370 million in 2025.

Even after the stock's recent rise, this seems like a great time to pick up shares in this shipping specialist.

Southern Company's business model supports dividend growth

Daniel Foelber (Southern Company): The utilities sector is up 5.6% year to date compared to a 3.7% decline in the S&P 500 at the time of this writing. Regulated electric utilities like Southern Company are a big reason the sector has been immune to this year's sell-off. Southern operates traditional electric companies in the Southeast U.S., and wind, solar, and natural gas generation facilities across the country.

Thanks to economic and population growth, it's benefiting from the gradual increase in demand for electricity and natural gas. Southern works with regulators and government agencies to set prices so that customers have manageable utility bills. In exchange, the company enjoys steady cash flows, some of which it reinvests in new infrastructure, and some of which it distributes to shareholders through dividends.

Management has embraced the clean energy transition by reducing its dependence on fossil fuels and investing in renewable energy sources. Last year, Southern completed Unit 4 of its Vogtle Electric Generating Plant in Waynesboro, Georgia -- which is now the largest nuclear plant in the country. Vogtle will provide Southern's customers with reliable power -- and the company with steady cash flows -- for decades to come.

On May 7, Southern Company announced that construction was underway on four new battery energy storage systems (BESS) across Georgia. -- and more BESS investments are planned for the coming years.

Investing in a diverse mix of projects is all well and good, but shareholders want to see that utilities are managing their projects well and getting good returns on their invested capital. Among its peer group, Southern Company consistently has a high return on invested capital and return on equity -- demonstrating its effective project development and operational efficiency.

SO Return on Invested Capital data by YCharts.

In April, Southern raised its dividend for the 24th consecutive year -- boosting the payout to an annualized rate of $2.96 per share, giving it a forward yield of 3.2% at the current share price. Southern Company's business model and growing payouts make it a relatively recession-proof dividend stock ideally suited for risk-averse investors.

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Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Dominion Energy and Duke Energy. The Motley Fool has a disclosure policy.