Important Points
- Represented by XLE, the energy sector of the S&P 500 is gaining in leaps and bounds in 2026.
- VZ’s turnaround strategy is getting the markets on its side while its +5% dividend yield provides income over time.
- Berkshire holdings STZ rose sharply from lows as beer margins remained tight.
Within most parts of the stock market, investors have had a hard time so far in 2026. The S&P 500 is down more than 5% for the year, and the index is not far from down 10% from its 52-week high. Exceeding this barrier will put the market in a “correction zone.”
Meanwhile, some segments of the market are showing great potential and are offering reasonable returns to match their valuation. Let’s dive into three such investments and get an idea about the market’s ability to recover from a major downturn.
XLE Goes Along With Oil
By 2026, the leading sector in the market is overexposure to energy. The most widely used proxy for energy sector performance is the Energy Select Sector SPDR Fund (NYSEARCA: XLE ). For the year, the XLE is up nearly 40%. The fund also has an average dividend yield of 2.4%, more than double the S&P 500’s yield of 1.1%.
This comes as the energy sector is similar to the oil industry. With the price of crude higher in 2026, oil stocks are having a field day. A large amount of the increase in oil during the year was due to the conflicts in Iran. Iran has successfully closed the Strait of Hormuz, through which about 20 percent of the world’s oil normally flows. Reports indicate that the number of vehicles involved in this problem has decreased by 90% to 95% since the start of the war.
How long the Strait stays put will be key to the XLE’s outlook. S&P Global Ratings recently said it believes West Texas Intermediate crude will rise in March and April. It sees prices drop to $65 in the fourth quarter, compared to around $100 now. However, due to very high levels of uncertainty, its confidence in this prediction is low.
New Look Verizon Wins Over Investors
Verizon Communications (NYSE: VZ )’s 2026 performance has been among the best in the telecommunications industry. In fact, Verizon’s total return of nearly 25% is the highest among all telecommunications stocks in the S&P 500 Index. Verizon shares surged after the company’s latest earnings report and have continued to climb higher and higher.
With its new CEO, Dan Schulman, the company is making a major shift in strategy. This includes much less reliance on price increases to drive revenue growth. This, should help increase customer loyalty and new customer acquisition.
The drastic cuts cost $5 billion in Q4 2025, reducing its workforce by 13,000 employees. Verizon is also leaning heavily on rival AT&T (NYSE: T )’s successful “merger” strategy. The goal is to enable customers to combine home fiber Internet and wireless coverage, increasing both revenue and reliability. Overall, the market clearly seems to be buying the new Verizon.
Analysts remain optimistic, with revised targets reflecting a strong outlook. The target was revised to a March estimate of about $55.40, which is higher than the MarketBeat consensus target of $50.32. This target rating review suggests the stock could rise 10% over the next 12 months to match VZ’s 5.5% upside.
Analyst Eye Continues Acquisitions at Beer Giant STZ
Last but not least is Constellation Brands (NYSE: STZ ), maker of various Mexican beers such as Modelo, Corona, and Pacifico. The stock has delivered a total return of nearly 10% in 2026 and is up nearly 20% from lows reached in late 2025. This is despite the stock taking a major hit in mid-February as the company appointed a new CEO.
The company’s latest earnings report was better than expected, with the company posting a big beat in adjusted earnings per share. Despite the decline in beer volume, Constellation has been doing a good job of protecting its borders.
Analysts are bullish on STZ. The MarketBeat consensus price near $179 implies an upside of more than 15%. The target estimate was revised after the company’s last financial report was slightly lower, near $176.
paid a dividend of 2.7 %. Additionally, Berkshire Hathaway (NYSE: BRK.B), founded by the great Warren Buffett, continues to hold a large stake in STZ. Despite reducing its shares held by 3% in Q4 2025, Berkshire held a $1.8 billion position in Constellation at the end of the year.
Simple but Effective: Don’t Hide the Historical Strength of the S&P
These three investments show resilience in the midst of an overall weak market. Still, it’s important to remember that over time, the S&P 500 has shown resilience as well. Notably, from 1980 to 2025, the S&P 500 experienced an average annual decline of 14%. However, in 35 of those 46 years, or 76% of the time, the index ended up in the green. This shows that selling an index during a decline can often lead to missing a major recovery.
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Companies mentioned in this article:
Company
Current Price
Price Changes
Dividend Yield
The P/E ratio
Consensus ratio
Consensus Price Target
Energy Select Sector SPDR Fund (XLE)
$61.98
-0.9%
2.40%
15.59
Buy Medium
$62.40
Star Products (STZ)
$150.97
-0.3%
2.70%
23.85
Buy Medium
$177.55
Verizon Communications (VZ)
$50.27
-0.1%
5.49%
12.42
Buy Medium
$50.32
| Company | Current Price | Price Changes | Dividend Yield | The P/E ratio | Consensus ratio | Consensus Price Target |
|---|---|---|---|---|---|---|
| Energy Select Sector SPDR Fund (XLE) | $61.98 | -0.9% | 2.40% | 15.59 | Buy Medium | $62.40 |
| Star Products (STZ) | $150.97 | -0.3% | 2.70% | 23.85 | Buy Medium | $177.55 |
| Verizon Communications (VZ) | $50.27 | -0.1% | 5.49% | 12.42 | Buy Medium | $50.32 |
About Leo Miller
Experience
Leo Miller has been a contributing writer for DividendStocks.com since 2024.
- Professional Background: Leo Miller is a financial writer with a background in investment research and market analysis. He held roles as an investment research partner at Laird Norton Wetherby and as a research analyst at Sungarden Investment Publishing, where he gained extensive experience in valuation and portfolio strategies.
- Confirmation: He holds a Bachelor of Business Administration in Finance from the University of Washington’s Foster School of Business, a top-ranked public business school. Passed the CFA Level II exam.
- Financial Experience: Leo started researching and investing in gold mining stocks in 2019 and started writing about finance and investing in 2021. He joined DividendStocks.com as a contributing writer in 2024, where he covers both stocks and ETFs. A strong research base and direct exposure to the financial markets shape his opinions.
- Writing Focus: He specializes in technology stocks, dividend-paying companies, ETFs, and value-oriented opportunities. His work emphasizes clarity, practical understanding, and education for investors at all levels.
- How to Invest: Leo follows a disciplined, long-term investment strategy based on fundamental analysis, with a strong focus on economics, industry and sector research, and passive investment principles.
- Motivation: Leo finds the stock market endlessly compelling and enjoys the challenge of separating meaningful data from the noise. He is passionate about analyzing what makes businesses stand out—and sharing that insight to guide informed investment decisions. As he puts it, “Strong analysis requires separating the wheat from the chaff.”
- Fun fact: Leo credits his grandfather with sparking his interest in investing and is a lifelong animal lover.
- Areas of Expertise: Fundamental analysis, economics, industry and sector analysis
Education
Bachelor in Business Administration, Finance, Foster School of Business at the University of Washington
