💸 2025’s Top S&P 500 Stocks
Today is Dividend Day.
The series where I teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Royal Shareholder Returns
Consistency a sign of quality.
We love a company that can raise its dividend year after year, regardless of what the economy is doing.
This image is a very creative idea: a family tree of dividend royalty, raking companies based on their reign of consecutive increases:
2️⃣ 2025’s Top S&P 500 Stocks
2025’s top performing stocks were all about the physical hardware that powers AI.
Data storage giants like Western Digital and Seagate are shot up as AI models demand massive amounts of memory.
Companies providing essential infrastructure often capture the most significant gains during a technological shift.
Before you can build the future, you need the physical infrastructure to support it.
3️⃣ An Investing Quote
It is easy to look at a the charts of massive gainers and wish you had owned them from the start.
But the reality is rarely a straight line up.
Even the world-class winners we just highlighted often experience gut-wrenching drawdowns on their way to the top.
Warren Buffett reminds us that to capture those 200% or 500% returns, you have to be willing to sit through the periods where the market moves against you.
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”
— Warren Buffett
4️⃣ The Power of Cloning
You don’t need to be a genius to be a great investor, you just need to be a great cloner.
Warren Buffett once admitted that he has very few original ideas, he simply applies the best of what he sees from others.
Here’s a thread all about why cloning successful strategies is one of the most underutilized tools in investing.
From Mohnish Pabrai to Charlie Munger, the greats have always stood on the shoulders of giants.
5️⃣ Example of a Dividend Stock
For our example of a dividend stock (it barely qualifies), we’re going to use a company that perfectly illustrates Warren Buffett’s lesson on volatility and the power of the AI infrastructure trade.
Western Digital ($WDC) is one of the world’s leading producers of data storage solutions.
While it was the #2 performer in the S&P 500 this year, it also had one of those gut-wrenching 50% drawdowns on the way.
Profit Margin: 25.5%
Forward P/E: 21x
Dividend Yield: 0.3%
Payout Ratio: 2.7%
Source: Fiscal.ai
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One Dividend At A Time
TJ
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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Good breakdown of how the infrastructure play is quietly outperforming the headline AI names. The memory and storage angle makes sense when you think about it - all these models need somewhere to live and that capacity isnt going away. I rememer missing a similiar setup during the cloud buildout phase and the regret still stings. What makes WDC especially intresting is that 50% drawdown you mentioned, most retail would have bailed way before it recovered. The dividend is tiny now but if theyre genuinely positioned for this cycle the yield on cost could look totally different in a few years.