Consumer Discretionary Sector Benefits from U.S. Market Recovery

Recently, the consumer discretionary sector has emerged as a top performer amid the recovery of U.S. stocks. Following the close on April 21, the Consumer Discretionary Select Sector SPDR Fund (NYSEARCA: XLY) had fallen around 19% in 2025, marking it as the worst-performing among the 11 SPDR S&P 500 sector ETFs. By May 16, its decline had improved to approximately 3%, slightly outperforming the healthcare sector. Notably, on May 12, the consumer discretionary sector recorded a remarkable 5% increase, responding positively to developments regarding the United States—China trade deal.

This uptick aligns with the nature of consumer discretionary products. These items are considered “wants” rather than “needs.” The implementation of significant tariffs would lead to increased prices, thereby constraining consumers’ discretionary spending. Consequently, the suspension of these tariffs holds positive implications for the sector as a whole.

While the consumer discretionary sector may not appeal to income-focused investors, there are still attractive investment opportunities available amid the sector’s recovery.

Best Buy: A Dividend Powerhouse

Best Buy (NYSE: BBY) stands out as one of the sector’s leading dividend payers. By May 16, the stock had an indicated dividend yield of nearly 5.2%, which significantly surpasses the XLY’s yield of just under 0.7%. The stock has shown a substantial rebound, climbing around 21% over the month ending May 16.

Analysts at D.A. Davidson recently updated their price target for Best Buy to $95, suggesting an upside of nearly 29% from its closing price on May 16. They anticipate favorable trends in the product cycles of the company’s computer and television offerings. Investors will be watching closely to see if tariffs had any implications for the company’s financial performance in Q1, with earnings scheduled for release on May 29.

Las Vegas Sands: A Stellar Performer

Another solid dividend payer in the consumer discretionary space is Las Vegas Sands (NYSE: LVS). As of May 16, the stock offered an indicated dividend yield of just under 2.4% and has surged over 33% in the past month. The company runs large integrated resorts that include casinos and renowned dining options.

Despite its name, Las Vegas Sands has shifted focus away from Las Vegas, concentrating operations in Macao and Singapore, which are among the wealthiest countries globally on a per capita basis. Analysts remain optimistic about the stock, with recent price target updates indicating an average target of $52, reflecting potential for an additional 23% increase from the May 16 closing price.

Tapestry: Above-Average Yield with Growth Potential

Finally, Tapestry (NYSE: TPR) has demonstrated a commendable performance, climbing around 32% in the month leading up to May 16. Over the past year, shares have garnered a total return of approximately 100%. Tapestry specializes in luxury handbags and accessories, with well-known brands like Coach, Kate Spade, and Stuart Weitzman. The growth has been particularly driven by increased sales of Coach products, which comprised about 82% of the last quarter’s total revenue.

With an indicated dividend yield of 1.7%, Tapestry may not offer the highest yield in the sector, but it still surpasses the S&P 500 Index’s 1.2% yield, making it a noteworthy option. Analysts maintain a favorable outlook on the stock, with an average price target of nearly $91. This projection implies an upside potential of over 9% from its current levels.

In summary, these three stocks represent viable options for investors seeking exposure to the recovering consumer discretionary sector while also aiming for dividend income. This combination offers both growth and a reliable source of returns.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.