With U.S. midterm elections on the horizon, market data firm ISS Stoxx has identified “cash cow” stocks that offer portfolio stability amidst potential legislative gridlock. Companies like PepsiCo (PEP), Bank of New York Mellon (BK), and Visa (V) were highlighted for their strong profitability and low-risk profiles.
These dividend-paying stocks are favored for their consistent performance and ability to weather economic uncertainties, making them attractive options for investors seeking to bolster their portfolios.
READ MORE FROM CNBC
As the summer winds down, the approaching U.S. midterm elections present a new catalyst for investors. A report by market data analytics firm ISS Stoxx suggests that certain "cash cow" stocks can offer stability to portfolios amidst potential legislative gridlock. With elections approximately 10 weeks away and Democrats favored to win at least one chamber of Congress, a divided Washington could become a reality.
ISS Stoxx utilized its Economic Value Added (EVA) framework to identify companies within the Russell 1000 that demonstrate high profitability and low risk. "Quality has generated the most alpha in the 12 months following a midterm election where a Republican president loses full control of Congress," noted Casey Lea, global director of quantitative research at ISS Stoxx EVA. "High profit and low risk themes have some of the best performance," he added.
Several notable companies made the cut:
PepsiCo (PEP)
The beverage and snacks giant, PepsiCo, is recognized as a member of the elite Dividend Kings club, having increased its dividend payments for over 50 consecutive years. A recent 4% increase in February marked its 54th consecutive year of dividend hikes. Despite a slight year-to-date decline of nearly 2%, the stock offers a current dividend yield of 4.2%. While U.S. consumers face inflationary pressures, international markets show a willingness to spend more, according to Piper Sandler analyst Michael Lavery. Lavery maintains an overweight rating on PepsiCo, with a price target suggesting approximately 26% upside.
Bank of New York Mellon (BK)
Bank of New York Mellon also appeared on the list, with shares surging nearly 40% year-to-date and offering a dividend yield of about 1.6%. Bank of America recently highlighted BNY Mellon as a stock capable of navigating a "higher-for-longer" interest rate environment, citing its "attractive combination of a capital light, high [return on equity] business with limited credit risk and sticky client relationships." With market expectations leaning towards a potential September rate hike by the Federal Reserve, BNY Mellon's financial stability is a key advantage.
Visa (V)
Payments giant Visa is another strong contender, with shares up nearly 9% in 2026 and a modest dividend yield of 0.7%. Bank of America has reiterated its buy rating on Visa, labeling it a "quality compounder" and raising its price target. Analysts point to Visa's durable business model, diversified network, and lower exposure to the Middle East as factors mitigating potential slowdowns compared to peers.
These selections by ISS Stoxx offer investors potential havens of stability and income generation as the political landscape in Washington remains uncertain.
