Over the past month or so, the consumer discretionary sector has been one of the biggest beneficiaries of the overall recovery in U.S. stocks. After the April 21 close, the Consumer Discretionary Select Sector SPDR Fund (NYSEARCA: XLY) was down around 19% in 2025. It was the worst-performing of the 11 SPDR S&P 500 sector ETFs at that point.
As of the May 16 close, it was down only around 3%, barely outperforming healthcare. The consumer discretionary sector notched the largest gain of any sector on May 12, 5%, as markets reacted to the United States—China trade deal.
This makes sense, and the reasoning is in the name. The products these companies sell are discretionary–things people want rather than what they need. The enactment of massive tariffs would raise prices, causing people to be able to spend less on what they want and prioritize what they need. Thus, the suspension of these tariffs is great news for the sector.
However, the consumer discretionary sector offers little for investors motivated by income. But, there are pockets where investors can find strong sources of investment income in this recovering area of the stock market.
+5% Yield Makes Best Buy One of the Kings of Consumer Discretionary Income
One of the biggest payers of dividends in the consumer discretionary sector is electronics store Best Buy (NYSE: BBY). As of the May 16 close, the stock has an indicated dividend yield of nearly 5.2%. That is around nine times higher than the just under 0.7% yield offered by XLY. Best Buy has recovered big time recently, up around 21% in the one-month period ended May 16.
A recent price target update from analysts at D.A. Davidson signals that the share recovery may be far from over. The firm places a $95 price target on the stock, indicating upside of nearly 29% from the May 16 closing price. The analysts see favorable product cycles in the company’s computer and television offerings benefiting the stock. It will be interesting to see if tariffs impacted the company’s financial performance in Q1 when it reports on May 29.
Recent Gambles on Las Vegas Sands Are Paying Off, Analysts See More to Come
Another solid dividend payer in consumer discretionary is Las Vegas Sands (NYSE: LVS). The stock has an indicated dividend yield of just under 2.4% as of the May 16 close. Over the past one-month period, shares are up over 33%. The company operates large integrated resorts that include casinos and celebrity chefs.
Despite its name, the company no longer operates in Las Vegas. It instead concentrates its operations in Macao and Singapore, which both rank in the top five richest countries in the world per capita.
Despite the stock’s strong recent uptick, analysts continue to see upside in shares. Analyst price target updates tracked by MarketBeat since the company’s latest earnings release on April 23 indicate an average target of $52. This implies shares could rise another 23% from their May 16 closing price.
TPR: Above-Market Yield With Upside Remaining
Last up is Tapestry (NYSE: TPR). The stock is up around 32% over the month ended May 16. Additionally, shares have provided a total return of around 100% over the past 52 weeks. Tapestry is a maker of luxury handbags and accessories, owning brands like Coach, Kate Spade, and Stuart Weitzman. The stock has been gaining as sales of the company’s Coach products have accelerated. Coach made up around 82% of the company’s total revenue last quarter.
The company has also been improving its adjusted operating margins.
Tapestry has an indicated dividend yield of 1.7%. Although this is lower than the other two names, it is substantially higher than the 1.2% yield of the S&P 500 Index. For consumer discretionary stocks, this alone is impressive. Analysts continue to like this stock. Among MarketBeat-tracked price targets after the company’s May 8 earnings, the average target is nearly $91. This implies upside in shares of over 9%.
Overall, these stocks could offer a way to capitalize on the recovering consumer discretionary sector while achieving the dividend income goal. This key combination can provide upside and a steady source of income return.
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