In 1965 animator Chuck Jones adapted a short picture book called The Dot and The Line: a romance in lower mathematics as a 9-minute cartoon. It follows a rigid blue line who adores a carefree red dot; she, however, swoons for a swaggering squiggle.

Rejected, the line enrolls in self-improvement boot camp, bending, flexing and inventing dazzling angles until he can sketch cathedrals with a single stroke. When the squiggle tries to match the precision, his chaotic scribbles collapse, and the dot chooses discipline over disorder.

Narrated with champagne-dry wit by Robert Morley, the film unfolds on spare backgrounds that feel lifted from a Mondrian canvas, while the squiggle’s jittery form was drawn on rice paper so the ink could literally misbehave. Norton Juster, author of the 1963 book, adapted his own text, seasoning math jokes with romantic wisdom: “To the vector belong the spoils.”

The short captured the 1965 Oscar for Best Animated Short, one of MGM’s final cartoons and proof that Jones could do more than torment coyotes. Decades later, its crisp pop-art minimalism still inspires.

Previously:
• Chuck Jones’ 9 rules for writing Road Runner stories
• Chuck Jones directed this Oscar-winning government-funded cartoon promoting universal health care (1949)
• WATCH: How Looney Tunes’ Chuck Jones evolved as an artist
• Video of Chuck Jones drawing Wile E. Coyote
• Dr. Seuss, Chuck Jones, and Mel Blanc’s US Army cartoon warning against loose lips (1943)
• That’s all folks! Warner Bros CEO murders Bugs Bunny for fun and profit
• This 70-year-old cartoon made a hell of an argument for single-payer healthcare

JPMorgan Chase just issued a market update, warning sentiment and macroeconomic data do not support a sustained recovery for stocks.

Mislav Matejka, the head of global and European equity strategy at JPMorgan, says investors appear to be overly bullish on US equities despite elevated recession risks and trade uncertainty, reports Investing.com.

Last month, JPMorgan raised the odds of a global recession from 40% to 60% amid President Trump’s trade war.

Matejka says that, unlike in the past, US stocks are no longer a “good place to hide in” during an economic downturn.

“The actual recession could still be avoided, but if one were to come through, the views by many that it is already in the price could prove to be too optimistic.”

Matejka supports his bearish stance on the S&P 500 by pointing out that US equities are expensive, trading at 21x forward earnings, while growth expectations are too high to account for a potential recession. He also warns the Fed is poised to hold interest rates steady amid mounting inflation expectations, even as the economy shows signs of cracking.

Billionaire Paul Tudor Jones appears to echo JPMorgan’s outlook. In a new CNBC interview, Tudor Jones warns that Trump’s tariffs and a hawkish Fed could drag the stock market below its 2025 low of 4,835 points.

“For me, it’s pretty clear. You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates. That’s not good for the stock market. We’ll probably go down to new lows…

There are taxes, like the largest tax increase since the [1960s]. So you can take 2 to 3% off growth and then you got the Fed who’s, unless they got really dovish and really, really cut, you’re probably going to new lows. And then when we’re at new lows, the hard data will start to follow and it will probably create the Fed to move, create Trump to move and then we’ll get some kind of rally after.”

As of Friday’s close, the S&P 500 is trading at 5,659.

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After UnitedHealth Group (UNH 0.25%) delivered a surprisingly weak first-quarter report last Thursday, its stock price crashed more than 22% on Friday — the insurer’s worst single-session drop since August 1998. Prior to that sell-off, UnitedHealth was the largest component in the price-weighted Dow Jones Industrial Average (^DJI 1.07%). Now, the baton has been passed to Goldman Sachs.

Numerous top Dow holdings have sold off considerably this year, pushing the index into correction territory — defined as a decline of at least 10% from a recent high. In fact, the Dow, S&P 500, and Nasdaq Composite are all currently in correction territory.

Despite UnitedHealth’s dramatic sell-off, there are arguably better Dow dividend stocks to buy now. In particular, Visa (V 1.05%), Chevron (CVX -0.36%), and Procter & Gamble (PG -1.27%) are worth a closer look.

Image source: Getty Images.

Visa’s competitive advantages shine no matter the economic backdrop

Payment processor Visa collects fees every time credit or debit cards issued through its network are swiped, tapped, or digitally utilized. Like Mastercard, Visa partners with financial institutions that bear the credit risk in exchange for generating interest income on borrowers’ outstanding balances.

Visa’s scale is truly unmatched in its space, and it has grown steadily over the years. The higher its transaction volume and frequency, the more fees it collects.

Visa has very low operating expenses. In fact, its operating margin is 66.2% and its profit margin is a staggering 54.3% — it’s converting over half of its revenue into pure profit.

One advantage of Visa’s business model compared to other financial services companies is that it can still generate substantial profits even during an economic slowdown or recession. Growth may slow to a halt, but it can still generate sufficient funds to cover its dividend, repurchase stock, and reinvest in the business. Visa’s payout at the current share price only yields 0.7% because the company spends significantly more on stock buybacks than dividends. Those appear to have been a better use of capital over time, given the stock’s strong performance. If it were to devote its entire capital return program to dividends alone, Visa’s payout would yield over 3%.

American Express has arguably more upside potential, but Visa is an ultra-safe Dow stock that investors can be confident buying even if the stock market’s broad downturn persists.

Chevron combines dividend reliability with a high yield

Chevron’s dividend yield of 5% at the current share price makes it the second-highest yielding Dow component, behind only Verizon Communications. The integrated oil and natural gas major has a track record of 38 consecutive years of payout increases, despite industrywide downturns and economic slowdowns along the way.

Chevron and the broader energy sector have been selling off in 2025 due to falling oil and natural gas prices, which are down due to concerns about President Donald Trump’s trade war, which has forecasters expecting weaker demand growth for oil amid macroeconomic headwinds, even as the OPEC+ group moves ahead with production hikes.

Given these risks, investors may wonder why Chevron is a worthwhile investment at this time. The investment thesis can be boiled down to three factors.

The first is that its dividend offers a sizable incentive to buy and hold the stock over the long term. Second, Chevron has an impeccable balance sheet with low long-term debt and leverage, providing it with a cushion in the event of a prolonged downturn. Finally, Chevron has made improvements to its operating structure over the years by reducing production costs and investing in high-margin plays such as the Permian Basin. Chevron delivered the first oil from its expansion project in Kazakhstan earlier this year and is expanding operations offshore the Gulf of Mexico. Chevron has a geographically diverse production portfolio, as well as a sizable refining business and a growing low-carbon business.

The stock is down by 16% over the last month, and that sell-off is certainly a buying opportunity for income investors.

A safe stock for risk-averse investors

Procter & Gamble and the consumer staples sector have thus far withstood the broader stock market sell-off well. During times of economic uncertainty, investors tend to flock to consumer staples companies for their steady results and reliable dividends. Consumers are less likely to cut their spending on products like toothpaste and dish soap than they are on discretionary goods and services, making companies like P&G safe bets regardless of the economy’s state.

P&G has considerable international exposure due to its complex supply chain and distribution network, which make it somewhat vulnerable to tariffs, trade wars, and foreign currency fluctuations. However, the company has historically been able to pass along its higher costs to consumers via price hikes thanks to its size and product mix, which give it operating leverage compared to competitors.

P&G will report its fiscal 2025 third-quarter earnings on Thursday. Investors should be on the lookout for management commentary on tariffs and China. In fiscal Q2, P&G improved its results in Greater China, but it wouldn’t be surprising if its business in the region has taken a step back due to the intensified trade war.

With 69 consecutive years of dividend increases and a 2.5% yield, P&G is the ultimate safe stock for investors to consider now. However, its valuation is somewhat expensive at 27.2 times earnings, so investors should only buy it if they are willing to pay a premium price.

Home Depot (HD -0.71%) is a retailer that needs no introduction. The company has over 2,300 stores across North America — making it a well-known one-stop-shop for do-it-yourself tasks, professional contractors, and a services segment that can help customers with their home improvement projects.

Home Depot’s expansion has corresponded with a strong stock performance. Its market capitalization has jumped from around $50 billion 15 years ago to over $380 billion today. As an industry leader and a component of both the S&P 500 (SNPINDEX: ^GSPC) and Dow Jones Industrial Average (DJINDICES: ^DJI), Home Depot is about as blue chip as it gets.

Here’s why Home Depot remains a foundational dividend stock that passive income investors can build their portfolio around for 2025 and beyond.

Image source: Getty Images.

Home Depot is holding firm despite challenges

Home Depot’s updated guidance from November (when it reported third-quarter fiscal 2024 results) calls for a 2.5% comparable stores decline for the full fiscal year and diluted earnings per share (EPS) to fall by 1% when adjusted for the company’s 53-week fiscal year. So overall, weak results. Especially when factoring in relatively easy comps.

In fiscal 2023, Home Depot’s comparable sales fell 3.5% while diluted EPS fell 9.5%. Suffice to say, Home Depot is undoubtedly in a multiyear downturn, which is evident when looking at its stagnating sales growth and falling operating margins in recent years.

HD Revenue (TTM) data by YCharts

Despite the poor results, Home Depot stock hasn’t seen significant declines. It’s up around 11% over the last three years and 57% over the last five years. That said, it is underperforming the S&P 500.

Given the negative comparable sales growth, the stock has been resilient, likely because the market cares more about where a company is going than where it is today. Home Depot’s long-term investment thesis hasn’t changed. It’s just that the current macroeconomic backdrop is a major headwind for Home Depot.

Macro woes

High interest rates make it more expensive to finance home improvement projects. Elevated mortgage interest rates dissuade home purchases, which can lead to lower home sales. The Case-Shiller Home Price Index, which measures residential real estate prices in the U.S., is at a 10-year high. Mortgage interest rates are near a 10-year high. And U.S. credit card debt is over $1.2 trillion — a near 50% increase from pre-pandemic levels.

US Credit Card Debt data by YCharts

Meanwhile, U.S. existing home sales are near a 10-year low and down around 20% from pre-pandemic levels — suggesting fewer homes are being sold. And the U.S. fixed housing affordability index is around 100, which means that only a median household income with a 20% down payment can afford a home. Essentially, buyers looking to make a lower down payment or those with a below-median income are somewhat priced out of the market.

US Existing Home Sales data by YCharts

In a perfect world, Home Depot would prefer everyone to have a home and be able to afford home improvement projects. So a strained housing market shows just how difficult the current operating environment is. But there are always two sides to a coin.

The glass-half-empty outlook on Home Depot is that the macro backdrop is bad and shows no signs of improvement. So, near-term growth could remain stalled in the foreseeable future.

The glass-half-full perspective is that Home Depot’s results are barely going down despite so many challenges — a testament to the strength of its brand.

In other words, 2023 and 2024 have acted as a stress test on Home Depot, and the company has passed with flying colors.

Committed to dividend growth

When it comes to sizable dividend raises over the last 15 years, few companies can compete with Home Depot. The company has raised its quarterly dividend from $0.25 per share in 2011 to $2.25 per share in 2024 — with consistent raises every year during that period.

Investors have been able to count on raises like clockwork. Since 2013, Home Depot has announced a dividend raise in February or March (around the same time it reports full-year fiscal earnings). So, investors can expect another raise from Home Depot when it reports earnings on Feb. 25.

Home Depot’s consistent and significant dividend raises and dividend yield of 2.3% make it a solid choice for passive income investors.

Home Depot is cheaper than it looks at first glance

In addition to its strong dividend, Home Depot sports a reasonable valuation. Its price-to-earnings (P/E) ratio is 26.2 and its forward P/E is 24.5 compared to a 22.9 median P/E over the last 10 years. Although Home Depot looks a little overvalued at first glance, it’s important to recognize that the home improvement industry is currently in a slowdown. So, Home Depot’s stock price has been outpacing its earnings growth in recent years.

Home Depot could be a coiled spring for economic growth. The company completed its acquisition of SRS Distribution for $18.25 billion in June 2024. The acquisition gives Home Depot extra exposure to the contractor market, helping diversify the overall business. The full potential of the acquisition has yet to be realized because of the slowdown in the industry.

The ability to make a countercyclical move of this size is a testament to the strength of Home Depot’s balance sheet, management’s focus on long-term strategy rather than short-term results, and Home Depot’s willingness to make a big-time acquisition, even if it takes a while to pay off.

All told, Home Depot looks a little pricey now. But the stock could start to look really cheap during the next expansion period, especially considering the added boost from SRS.

A solid blue chip stock to buy now

Companies that operate in cyclical industries tend to see big ebbs and flows in their sales and earnings. But not Home Depot. Zoom out, and the company’s performance is like a steady climb higher and then a flat line rather than a big downturn.

With fiscal 2025 marking the first full year post-integration of SRS, we could see a slight uptick in sales and earnings, even if interest rates remain high.

Home Depot is an excellent dividend stock to buy if you have a long-term time horizon. The growing dividend provides a worthwhile incentive to hold the stock through slowdowns. And the valuation is reasonable given the factors discussed. However, expect Home Depot’s near-term results to be under pressure until the macro climate improves.