These 2 Dividend Stocks Are Finally Rebounding, and There Might Be More Upside Ahead

The S&P 500 sank earlier this year and even flirted with bear market territory. The index was able to rebound, though, and has performed well, all things considered. Some corporations followed a similar trajectory. The list includes Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Walmart (NYSE: WMT).

These two dividend payers have turned the tables (and then some) after seeing their shares fall under the weight of some challenges earlier this year. And the best part is, it's not too late to invest in these companies just yet. Here's the rundown.

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1. Alphabet

Alphabet struggled for the first few months of the year. Like everyone else, it dealt with market volatility and also had to contend with some company-specific issues. However, Alphabet has roared back, with its shares soaring by 58% over the past six months. The tech giant put a significant risk in the rearview mirror when it avoided a worst-case scenario outcome for its antitrust lawsuit.

There is even more upside potential here as the market turns its focus to Alphabet's excellent underlying business. Though it manufactures and sells hardware devices that would be subject to tariffs -- something that could cut into its profits -- the company is less exposed to this threat than some of its tech peers since it generates the lion's share of its revenue from advertising. This business remains healthy despite the rise of artificial intelligence (AI) chatbots.

Alphabet adapted by launching AI overviews and an AI search mode. The company's dominance in search is alive and well and will continue to power its massive ad business for the foreseeable future.

Alphabet has maintained robust revenue and earnings growth over the past few years and continues to have several crucial long-term growth avenues.

GOOGL Revenue (Quarterly) data by YCharts

The company's cloud computing sales are growing faster than the rest of the business and are experiencing an even stronger tailwind due to AI services. Alphabet has some underrated opportunities, including its work in autonomous vehicles, which could eventually become an important source of revenue. Then there is the company's dividend. Alphabet is new to this scene, having initiated a payout just last year.

That means investors can combine solid growth and regular payouts by buying this stock, and reinvesting the dividend will improve what should already be highly competitive returns.

2. Walmart

Walmart saw its shares fall significantly early this year. They bottomed out on April 8, but the stock is up 29% since then.

True, the current climate could be unfriendly to Walmart. In fact, it already is. Tariffs lead to increased prices and decreased consumer spending. However, the company is better equipped than many of its peers -- who are also dealing with this challenge -- to overcome the issue. Walmart has a significant footprint in the U.S., comprising about 5,200 locations.

Most of those are the company's namesake warehouses, but it also owns Sam's Club, which competes with Costco Wholesale in the membership model niche. About 90% of people in the U.S. live within 10 miles of a Walmart location.

Consumers might decrease spending, but when they do need to spend, Walmart remains a terrific option due to its proximity, size (it offers a large variety of products), and competitive prices. Walmart uses its size to negotiate deals with suppliers, which it passes down to its customers. Everyone wins. Walmart has also expertly evolved with changing market dynamics.

While many traditional brick-and-mortar stores went out of business (or are close to doing so) because they failed to launch a significant online presence, Walmart has become the second-largest online retailer in the U.S.

The company is still making moves to evolve. It recently signed a deal with OpenAI to allow consumers to check out for items directly on ChatGPT.

Beyond the precise impact of this partnership on Walmart's financial results, the company is once again showing how it can adapt to new technologies. Here's what all this means. Even if the company encounters some headwinds related to economic troubles, it should survive these, given its rock-solid business, significant footprints, and competitive prices. And Walmart has shown the ability to steer its business in the direction of tech innovations.

Lastly, Walmart is a terrific dividend stock. The company is a member of the Dividend Kings club, made up of corporations that have raised their payouts for at least 50 consecutive years (it has done so for 53). So, Walmart still has plenty of upside after its recent run and is also an excellent pick for income seekers.

Prosper Junior Bakiny has positions in Alphabet and Walmart. The Motley Fool has positions in and recommends Alphabet, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.