We recently identified the Top 10 Stocks for Dividend Capture Strategy in March 2025. In this article, we will explore where American Eagle Outfitters, Inc. (NYSE:AEO) stands among these top picks and why it could be a best pick for dividend capture strategy in March 2025.
We are navigating a sea of uncertainty in the current financial environment, which has emerged due to recent policy decisions by the new U.S. presidency. According to CNBC, as of March 14, 2025, in a period of three weeks, the U.S. stock market recorded historical turbulences, reporting a loss of approximately $5 trillion in value. The decline is attributed to aggressive trade policies and escalating tariffs. According to Barclays strategist Emmanuel Cau, this has heightened investor fears.
“Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the ‘uncertainty tax’ hitting growth expectations.”
Proper investment strategies are required to attain stability and reliable returns amid such market volatility.
In this context, dividend-paying stocks have risen as a haven for investors looking to mitigate risk without compromising a steady income stream. Consistent dividend-distributing companies have often exhibited financial robustness with the aim of upholding their commitment to shareholder value. In other words, dividend stocks are relied upon for stable income during turbulent market periods when investors cannot be certain of capital gains. The current market environment reflects such turbulent periods, diverting income-seeking investors toward dividend-paying stocks.
Additionally, when compared against the non-dividend paying stocks, the dividend equities tend to be less volatile. For investors, the consistency in the income offered by these stocks is a cushion, safeguarding them from market downturns. In this regard, these stocks can introduce stability to a portfolio, which would otherwise be heavily affected by market fluctuations. As a result, investors can preserve capital and still participate in the equity markets.
The dividend season is closing up. Among the strategies that enhance the investment value in dividend-paying stocks, the dividend capture strategy is often preferred, which involves purchasing dividend-paying stocks just before the ex-dividend date and selling shortly after. The strategy is especially attractive now, as concerns over tariffs and their impact on the U.S. economy continue to rise.
Also, companies with a history of growing dividends have often delivered higher returns with less volatility. Such performance raises the benefits of incorporating dividend-paying stocks into our investment strategy, especially during the current period when market value has declined to $46.78 trillion.
Our curated list of 10 stocks for dividend capture strategy in March 2025 offers a few choices that could potentially strengthen the portfolio of investors interested in dividend-paying stocks and looking to restructure their portfolios.
Our Methodology
We compiled our list based on a few criteria to maximize the benefits for the investors interested in employing the dividend capture strategy. The primary criterion was the minimum dividend yield. We did not include stocks with a dividend yield of less than 3% in our list, as this ensures that our list is comprised of only high-dividend stocks. In addition to this, we included stocks with a recovery period of no more than two days, meaning that the share price typically rebounds quickly after the ex-dividend date, thereby reducing downside risk. We ranked the stocks based on their yield to prioritize those with the highest returns for the investors. This approach ensures investors can focus on stocks that provide the best potential income. We have also taken into account the number of hedge funds backing the stocks to cover the institutional interests.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
American Eagle Outfitters, Inc. (AEO): The Best Stock for Dividend Capture Strategy in March 2025
A close-up of a customer trying on a stylish Aerie item, smiling with satisfaction.
American Eagle Outfitters, Inc. (NYSE:AEO), headquartered in Pittsburgh, Pennsylvania, is a leading apparel and accessories retailer. The company tends to taste the young adults through its American Eagle and Aerie brands. It pushes sales by focusing on quality denim and body-positive marketing. The company differentiates itself from competitors like Abercrombie & Fitch and H&M through inclusive and digital-first retail strategies. Regions served by the company include the United States, Canada, Mexico, and Asia.
American Eagle Outfitters, Inc. (NYSE:AEO)’s dividend yield of 4.22% indicates the company’s commitment to returning capital. The company’s full-year cash flow from operations crosses $470 million, as reported in the fourth quarter earnings call of 2024. It was supported by a 4% comparable sales growth, which drove the revenue for 2024 to $5.3 billion. Specifically, Aerie’s sub-brand recorded high performance in soft apparel and activewear collections. The earnings returned to shareholders through buybacks and dividends in 2024 amounted to $280 million, suggesting the company’s strong commitment to creating shareholder value.
American Eagle Outfitters, Inc. (NYSE:AEO) takes approximately 1.8 days to recover, suggesting balanced investor sentiment for the stock. Hedge fund interest is notable, with 33 funds from the Insider Monkey Q4 2024 database holding stakes. Investors aiming to benefit from the upcoming dividend should acquire shares before the ex-dividend date of April 11, 2025.
Overall, AEO ranks 7th on our list of top 10 stocks for dividend capture strategy in March 2025. While we acknowledge the potential for AEO as an investment, our conviction lies in the belief that some AI stocks hold more significant promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AEO but that trades at less than 5 times its earnings check out our report about the cheapest AI stock.
