ISS Stoxx Flags Dividend Stocks as Midterm Volatility Hedge
Investors are searching for defensive equity ideas ahead of the US midterm elections, which could lead to divided government. ISS Stoxx has identified high-profit, low-risk companies in the Russell 1000 that have historically outperformed after similar election setups.
The firm uses its Economic Value Added framework to screen the Russell 1000 for cash-generating stocks with strong profitability and lower risk. This approach has generated the most alpha in the 12 months following a midterm election when a Republican president loses full control of Congress, with high-profit and low-risk themes among the strongest performers.
PepsiCo, Bank of New York Mellon, and Visa are among the names identified by ISS Stoxx's screen. PepsiCo has maintained its Dividend King status with a 4% dividend hike in February 2026 and a 4.2% yield, despite a nearly 2% year-to-date stock decline.
Analysts point to earnings resilience and rate support for these companies. Piper Sandler analyst Michael Lavery says US organic growth recovery remains slow, but international momentum stays strong and supports margins in the second half of 2026.