The Zacks Analyst Blog Highlights International Business Machines, Analog Devices, Johnson & Johnson's, The Gap and Hewlett Packard Enterprise

For Immediate ReleaseChicago, IL – December 30, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: International Business Machines Corp. IBM, Analog Devices, Inc. ADI, Johnson & Johnson’s JNJ, The Gap, Inc. GAP and Hewlett Packard Enterprise HPE.Here are highlights from Monday’s Analyst Blog:Top 5 High-Yield S&P 500 Stock to Buy for 2026The U.S. stock market has experienced significant volatility at the beginning of 2025 owing to a multitude of factors. The trade policy framework undertaken in the new Trump administration has reshaped market sentiment. The aggressive tariff measures imposed by Washington on its major trading partners have left several businesses in a state of uncertainty. The growing Sino-U.S. trade tension was a concerning factor for investors. The U.S. government aims to limit Beijing’s access to high-end technologies. It has imposed restrictions on the export of advanced semiconductor tech to China.The tariff-related uncertainties have significantly affected companies with a strong presence in the emerging markets of Asia and Latin America. Moreover, the war in Europe and the Middle East has further aggravated the market uncertainty. These developments have led to rising manufacturing costs and supply chain issues, putting pressure on margins. However, there were some positive macroeconomic developments as well in 2025. The federal reserve rate cuts have lowered borrowing costs and improved corporate profitability.Trade-related risks and changes in monetary policy led to frequent stock price fluctuations. However, broader market momentum remained positive with tech stocks largely leading the bull run. Growing spending on AI infrastructure and digital transformation is driving growth in the tech sector. Despite a hike in energy prices, the overall annual inflation rate was lower than expected in 2025.Key Growth Drivers for 2026Rapid AI buildouts are expected to be a key driver for businesses in 2026. Businesses in several industries such as manufacturing, healthcare, energy, social ecommerce, telecom and others are rapidly incorporating AI across the portfolio to gain a competitive edge. However, this rapid AI build-out requires substantial computing infrastructure, data centers to support these AI workloads, as well as energy optimization and cooling technologies.AI integration has become capex-heavy. There is a gap between investing in AI infrastructure and realizing gains from this investment. The growth in AI capex is expected to put pressure on the balance sheet and can create margin pressure in the short term. The companies with stable earnings and robust cash flow are expected to be the gainers amid such emerging market trends.China is a major supplier of rare earth materials that many major tech companies rely on. This can force the United States to avoid imposing high tariffs and maintain a cordial relationship with the Communist nation, at least in the near term. However, the U.S. government’s effort to reduce the widening trade deficit with other nations indicates that tariff-related uncertainties will remain a concern for investors in the upcoming quarters. After three rate cuts in 2025, the chances of another rate cut remain low, at least at the beginning of 2026.Amid such macroeconomic uncertainties and persistent geopolitical volatility, there is a growing interest in S&P 500 stocks with high dividend yield. So far in 2025, the average dividend yield of S&P 500 stocks stands at 1.07%. Based on above average dividend yields, strong fundamentals and growing AI-related investment, we have shortlisted five stocks that have strong growth potential in 2026.Key PicksInternational Business Machines Corp.: Headquartered in Armonk, NY, IBM is a leading provider of cloud and data platforms. In addition, the company provides advanced information technology solutions, computer systems, quantum computing and supercomputing solutions, enterprise software, storage systems and microelectronics.The company has positioned itself as a major player in the expanding AI landscape worldwide. Its breakthrough innovations, hybrid cloud and AI are utilized by clients across 175 countries to streamline business processes, optimize cost and gain a competitive edge. The company boasts a vast client base across multiple industries, including financial services, telecommunications, healthcare, retail and more. In the third quarter, IBM’s free cash flow improved to $2.37 billion, up from $2.06 billion a year ago.IBM pays out a quarterly dividend of $1.68 per share ($6.72 annualized), with a 2.2% yield at the current stock price. IBM’s payout ratio is 61%, with a five-year dividend growth rate of 0.62%. The company currently carries a Zacks Rank #2 (Buy). (Check IBM’s dividend history here). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Analog Devices, Inc.: Headquartered in Norwood, MA, Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal and digital signal processing (DSP) integrated circuits. The company’s top line is benefiting from strong growth in its industrial, aerospace and defense businesses, fueled by demand for AI chip infrastructure buildout, automated test equipment, and a rebound in automation and healthcare markets.Analog Devices’ strong operating cash flow has helped it return cash through regular quarterly dividend payments and share repurchases. In fiscal 2025, the company generated operating cash flow of $4.81 billion and free cash flow of $4.28 billion.ADI pays out a quarterly dividend of 99 cents per share ($3.96 annualized), with a 1.43% yield at the current stock price. ADI’s payout ratio is 51%, with a five-year dividend growth rate of 10.31%. The company currently carries a Zacks Rank #2. (Check ADI’s dividend history here)Johnson & Johnson’s: Headquartered in New Brunswick, NJ, Johnson & Johnson is a leading provider of pharmaceuticals and medical devices worldwide. With more than 275 subsidiaries, its business model is extremely well diversified. Its diversification helps it to withstand economic cycles more effectively.In 2026, J&J expects accelerated growth in the Innovative Medicine segment to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and recently launched products, including Tremfya in inflammatory bowel disease, Rybrevant plus Lazcluze in non-small cell lung cancer and the newly approved drug, Inlexzo in bladder cancer. The company reported a $17.22 billion in cash from operating activities.JNJ pays out a quarterly dividend of $1.3 per share ($5.2 annualized), with a 2.5% yield at the current stock price. JNJ’s payout ratio is 50%, with a five-year dividend growth rate of 5.39%. The company currently carries a Zacks Rank #2. (Check JNJ’s dividend history here)The Gap, Inc.: With roughly 3,500 stores worldwide, The Gap, Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. Gap continues to benefit from strong brand performance and rising market share across its largest banners, supported by consistent progress on its brand reinvigoration strategy. Management remains focused on its four strategic priorities: driving financial and operational rigor, reinvigorating its brands, reinforcing its operating platform and supply chain, and energizing its internal culture.The company reported net cash from operating activities of $607 million, with free cash flow of $280 million, underscoring its disciplined approach to business management. Gap pays out a quarterly dividend of 16 cents (66 cents annualized), with a 2.52% yield at the current stock price. GAP’s payout ratio is 29%, with a five-year dividend growth rate of 1.49%. The company currently carries a Zacks Rank of 2. (Check GAP’s dividend history here)Hewlett Packard Enterprise: Headquartered in Spring, TX, Hewlett Packard Enterprise is a leading provider of essential enterprise technology. The company’s top line is benefiting from solid traction in the AI networking market. The acquisition of Juniper Networks underlines Hewlett Packard Enterprise’s relentless focus on fortifying its networking business, aligning with the burgeoning demand for high-growth solutions in the evolving tech landscape.In the fourth quarter, HPE generated $2.5 billion in cash from operating activities and produced $1.9 billion in free cash flow, both increasing meaningfully from the prior-year period. HPE pays out a quarterly dividend of 14 cents (57 cents annualized), with a 2.33% yield at the current stock price. HPE’s payout ratio is 33%, with a five-year dividend growth rate of 2.21%. The company currently carries a Zacks Rank #3 (Hold). (Check HPE’s dividend history here).Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Analog Devices, Inc. (ADI): Free Stock Analysis Report International Business Machines Corporation (IBM): Free Stock Analysis Report Johnson & Johnson (JNJ): Free Stock Analysis Report The Gap, Inc. (GAP): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks