Markets are turning increasingly concerned about a recession due to uncertainty related to the new US government’s trade policies.
While equities tend to underperform during economic slowdowns, dividend stocks often remain a great pick as they offer a significant cushion against potential losses amidst challenging times.
That said, here are the top 2 US tech stocks that are in a position to initiate dividend payments in 2025, according to Morgan Stanley strategists.
Twilio Inc (NYSE: TWLO)
Morgan Stanley sees Twilio as incredibly positioned to start paying a dividend this year as its free cash flow yield currently sits at a solid 4.7%.
Twilio shares have lost more than 30% since mid-February amidst a tariffs driven rout in the US tech stocks.
But investors should capitalise on the sell-off as the risk-reward tied to this quality name is rather attractive at current levels, the investment firm told clients in a recent note.
Its analyst, Meta Marshall, now rates TWLO stock at “overweight”. Her recently revised price target of $160 indicates potential upside of more than 55% in shares of the cloud communications company.
Marshall sees “opportunity for both multiple expansion and estimate revision” as Twilio continues to tap on artificial intelligence to drive innovation and attract more customers.
Additionally, she expects improved cross-selling to unlock significant further upside in TWLO shares.
Morgan Stanley dubbed the ongoing weakness in the cloud stock as “overdone” in its recent note, particularly because the company narrowed its loss and improved sales in its latest reported quarter.
Despite the sell-off this year, Twilio stock is up nearly 100% versus its 52-week low at the time of writing.
Okta Inc (NASDAQ: OKTA)
Another tech name that Morgan Stanley sees as well-positioned to initiate dividend payments this year is the San Francisco headquartered Okta Inc.
That’s because the identity and access management company currently boasts an even better free cash flow yield of about 5.4%.
The investment firm expects OKTA to announce its first-ever dividend in 2025 also because it’s doing well financially.
Earlier in March, the Nasdaq-listed firm reported market-beating results for its fourth quarter and issues guidance that surpassed expectations as well.
Morgan Stanley expects Okta to see accelerated growth ahead as “renewal headwinds abate, go to market strategy is further refined and new products continue to gain traction.”
The company’s ability to navigate the new tariffs environment and a potential recession is already evidenced in its year-to-date stock price action.
While the majority of tech stocks have had a hard time in recent weeks, Okta shares are up nearly 45% versus the start of 2025.
Note that a bunch of other Wall Street analysts agree with Morgan Stanley’s positive view, given the consensus rating on Okta Inc currently sits at “overweight”.
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