In this article, we will take a look at some of the best dividend stocks in the Dow.
The Dow is a highly recognized and influential stock market index that tracks the performance of 30 publicly traded companies listed on US stock exchanges, representing a wide range of industries. In the past 12 months, the index has surged by nearly 16%, and it has delivered a return of over 5% since the start of 2025.
Almost all of the companies in the index distribute dividends to their shareholders, with some having stronger dividend records than others. While there is a lot of focus on AI-driven capital gains, it’s important to keep in mind that dividends have consistently been a key component of total returns. Over the long term, their importance grows. From 1987 to the end of 2023, about 55% of market returns have been generated from reinvested dividends.
In 2024, dividend stocks lagged behind as the AI boom and growing interest in tech stocks shifted investor focus elsewhere. The Dividend Aristocrats index, which tracks companies with at least 25 years of consecutive dividend growth, underperformed relative to the broader market. However, analysts remain optimistic about the long-term potential of dividend stocks. This confidence is driven by the substantial cash reserves many US companies hold, which provide a strong foundation for sustaining or increasing dividend payouts. The Wells Fargo Investment Institute reports that large-cap US companies collectively hold over $2.4 trillion in cash, creating significant opportunities to start or enhance dividends.
Also read: 12 Best 5% Dividend Stocks To Buy According To Hedge Funds
Dividends are a strategy that requires patience, with rewards unfolding over time. For instance, if you had invested a dollar in the broader market in 1927 and didn’t reinvest any dividends, it would now be worth $243. However, if dividends had been reinvested, that same dollar would have grown to $3,737. The good news is that you don’t need to wait a century to see the growth potential of dividend stocks, as the near-term outlook is positive. A report from AGF Investments notes that global monetary easing in the latter half of 2024 has driven bond yields lower, making them less appealing compared to dividend-paying stocks. Moreover, companies that distribute higher dividends tend to have more financial leverage, and with lower bond yields, they can better manage their interest expenses, enhancing their financial performance and supporting continued dividend growth.
Chris Senyek, Chief Investment Strategist at Wolfe Research, offers an alternative approach to investing in dividend stocks. While most investors focus on companies with growing dividends and high yields, Senyek recommends also considering companies that are starting to pay dividends or those that have recently cut their payouts. A new dividend often signals that management is confident in its ability to sustain earnings and cash flow, while also appealing to a broader group of investors.
Senyek also pointed out that stocks of companies that reduce their dividends typically underperform before the cut, align with the broader market afterward, and then start to outperform about six months later. The strategy is to identify companies that might be at risk of cutting their dividends and reassess those that have already made cuts in recent months. To predict potential dividend cuts, Senyek looks for companies with high dividend yields, significant debt, and high payout ratios. For companies that might begin paying dividends, he focuses on those with strong free cash flow yields, active share buybacks, and manageable debt levels. With this in mind, we will now take a look at some of the best Dow dividend stocks according to analysts.
Our Methodology:
For this article, we examined the companies within the Dow Jones index and identified companies that pay dividends to shareholders. From that group, we further refined our selection criteria by identifying stocks with a projected upside potential of over 10% based on analyst price targets, as of February 6. The stocks are ranked according to their upside potential. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Visa Inc. (NYSE:V)
Upside Potential as of February 6: 10.6%
Visa Inc. (NYSE:V) is a California-based multinational payment card services company. Its expansion is largely driven by the global transition to digital payments, which has been accelerated by technological advancements. While electronic transactions have made significant progress, cash remains the dominant payment method in many developing regions, leaving substantial room for growth. According to the Federal Reserve, cash usage fell to 16% of transactions in 2024, reflecting a growing preference for digital payments. Younger consumers, particularly Gen Z and Millennials, are at the forefront of this shift, favoring contactless and mobile payment options. Demographic trends and evolving technology continue to support the increasing adoption of digital wallets and other cashless solutions.
In fiscal Q1 2025, Visa Inc. (NYSE:V) reported revenue of $9.5 billion, which showed a 10% growth from the same period last year. The company processed a total of 63.8 billion transactions in the three months ending December 31, 2024, reflecting an 11% increase compared to the same period the previous year. During this timeframe, the company’s payment volume also saw a 9% year-over-year rise on a constant-dollar basis.
Visa Inc. (NYSE:V) also demonstrated a strong cash position. The company ended the quarter with over $16 billion available in cash and cash equivalents. Its operating cash flow for the quarter came in at $5.4 billion, up from $3.6 billion in the prior-year period. The company returned $5.1 billion to shareholders through dividends and share repurchases. It currently offers a quarterly dividend of $0.59 per share and has a dividend yield of 0.68%, as of February 6. V is one of the best dividend stocks on our list as the company has been growing its payouts for 16 consecutive years.
At the end of Q3 2024, 165 hedge funds tracked by Insider Monkey reported having stakes in Visa Inc. (NYSE:V), up from 163 in the previous quarter. The consolidated value of these stakes is nearly $27 billion. With over 16.7 million shares, TCI Fund Management was the company’s leading stakeholder in Q3.
9. The Travelers Companies, Inc. (NYSE:TRV)
Upside Potential as of February 6: 11.22%
The Travelers Companies, Inc. (NYSE:TRV) is an American insurance company that offers property and casualty insurance for both personal and commercial purposes. In the fourth quarter of 2024, the company’s core income reached a record $2.1 billion, driven by solid growth in earned premiums and strong profitability. Net earned premiums rose by 9% to $10.9 billion, while the combined ratio improved by 2.6 points to 83.2%. This improvement was attributed to strong underlying profitability and higher net favorable reserve development from prior years.
In the past 12 months, The Travelers Companies, Inc. (NYSE:TRV) delivered a nearly 16% return to shareholders. The company’s cash position was also stable, which makes it a reliable dividend payer. In FY24, it reported an operating cash flow of over $9 billion. The company also returned $2.1 billion to shareholders through dividends and share repurchases during the year.
On January 22, The Travelers Companies, Inc. (NYSE:TRV) declared a quarterly dividend of $1.05 per share, which was in line with its previous dividend. Overall, the company has been growing its payouts for 11 consecutive years, which makes TRV one of the best dividend stocks on our list. The stock supports a dividend yield of 1.70%, as of February 6.
Firebird Management LLC made the following comment about TRV in its Q3 2024 investor letter:
“The Travelers Companies, Inc. (NYSE:TRV), a part of our portfolio since 2013, is a traditional regulated insurer. It stands out in the market by selling commercial and personal property/casualty insurance through a network of independent agents and brokers. While this approach may seem outdated to consumers accustomed to online comparison sites, it remains a dominant form of distribution for most insurance lines.
Commercial, workers’ compensation, and other lines are an area of strength for Travelers, which is 80%+ reliant on independent agents primarily because small and middle market businesses rely on the agents to understand each company’s unique situation and tailor the insurance offering to the needs…” (Click here to read the full text)
As of the close of Q3 2024, 37 hedge funds tracked by Insider Monkey held stakes in The Travelers Companies, Inc. (NYSE:TRV), compared with 38 in the previous quarter. The collective value of these stakes is more than $1 billion.
8. McDonald’s Corporation (NYSE:MCD)
Upside Potential as of February 6: 11.81%
McDonald’s Corporation (NYSE:MCD) is an American multinational fast-food company. It encountered some difficulties last year, but these setbacks were largely due to temporary challenges rather than fundamental threats to its core business. The company is actively addressing these short-term obstacles while continuing to expand its global loyalty program, which reported 150 million active members by the end of 2023. It aims to increase this number to 250 million by 2027.
As it strengthens customer engagement, McDonald’s Corporation (NYSE:MCD) is enhancing its digital platform with personalized promotions and automating more locations to manage labor costs. Additionally, since the majority of its restaurants are franchised, the company primarily benefits from high-margin royalties and fees rather than direct earnings from company-owned stores.
McDonald’s Corporation (NYSE:MCD) boasts a resilient portfolio capable of withstanding different economic cycles. With over 40,000 restaurants across more than 100 countries, it remains a leading player in the fast-food industry. Renowned for its signature menu and emphasis on quality, convenience, and affordability, the brand has achieved global recognition. By embracing innovation—such as digital ordering, delivery services, and sustainability initiatives—the company continues to adapt to evolving consumer preferences, further reinforcing its position in the growing fast-food market.
McDonald’s Corporation (NYSE:MCD) is one of the best dividend stocks on our list as the company has raised its payouts for 48 consecutive years. It currently pays a quarterly dividend of $1.77 per share and has a dividend yield of 2.41%, as of February 6.
Insider Monkey’s database of Q3 2024 indicated that 60 hedge funds held stakes in McDonald’s Corporation (NYSE:MCD), compared with 67 in the previous quarter. The overall value of these stakes is more than $2.37 billion. Among these hedge funds, Adage Capital Management was the company’s leading stakeholder in Q3.
7. The Coca-Cola Company (NYSE:KO)
Upside Potential as of February 6: 13.11%
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) ranks seventh on our list of the best dividend stocks according to analysts. The company’s greatest competitive edge lies in its globally recognized brand, which reinforces its market dominance. By consistently delivering a familiar and trusted product, the company has built strong brand loyalty that many competitors aim to achieve. This loyalty allows for strategic pricing adjustments without significantly impacting demand. Although unit sales declined by 1% in the latest quarter, the company effectively countered this with well-executed pricing strategies, demonstrating the strength of its customer base. This adaptability supports Coca-Cola’s long-term stability and continued success.
As a dominant player in its industry, The Coca-Cola Company (NYSE:KO) maintains strong profitability, with operating margins consistently surpassing 20%, reflecting its efficiency and financial strength. Investors face minimal financial risk, as the company continues to generate solid earnings even in challenging economic conditions. In the most recent quarter, revenue reached nearly $12 billion, surpassing analysts’ forecasts by $290 million. The company also demonstrated robust cash flow, reporting $2.9 billion in operating cash flow and $1.6 billion in free cash flow. In addition, it posted an impressive adjusted operating margin of 30.7%, highlighting its strong profitability.
The Coca-Cola Company (NYSE:KO) has been grabbing the attention of income investors because of its long streak of dividend growth, spanning over 62 years. The company’s quarterly dividend comes in at $0.485 per share for a dividend yield of 3.07%, as of February 6.
According to Insider Monkey’s database of Q3 2024, 69 hedge funds held stakes in The Coca-Cola Company (NYSE:KO), up from 68 in the previous quarter. The total value of these stakes is roughly $35 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
6. NIKE, Inc. (NYSE:NKE)
Upside Potential as of February 6: 15.4%
NIKE, Inc. (NYSE:NKE) is an American apparel and footwear company, headquartered in Oregon. The company has faced slowing sales growth in recent years, with market share declines and lower profits even leading to negative growth. However, the company’s running segment showed signs of recovery in the second quarter, driven by the success of the Pegasus franchise, despite an overall 8% revenue decline. In addition, Nike remains a dominant force in basketball, backed by an unrivaled lineup of athletes who help promote the brand and introduce new signature footwear. One notable rising star in its roster is Caitlin Clark, for whom Nike has yet to release a dedicated shoe or marketing campaign.
NIKE, Inc. (NYSE:NKE) also remains financially strong, attracting investors who prioritize steady income. The company closed the quarter with $7.9 billion in cash and cash equivalents, marking a 1% increase from the prior year. It also rewarded shareholders by distributing $1.6 billion through dividends and stock buybacks. With a track record of 23 consecutive years of dividend growth, NKE is one of the best dividend stocks on our list.
NIKE, Inc. (NYSE:NKE) currently offers a quarterly dividend of $0.40 per share, having raised it by 8.1% in November 2024. The stock offers a dividend yield of 2.20%, as of February 6.
The number of hedge funds tracked by Insider Monkey owning stakes in NIKE, Inc. (NYSE:NKE) at the end of Q3 2024 jumped to 75, from 66 in the previous quarter. These stakes have a collective value of over $5 billion. With over 16.2 million shares, Pershing Square was the company’s leading stakeholder in Q3.
5. Verizon Communications Inc. (NYSE:VZ)
Upside Potential as of February 6: 16.23%
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company that provides a wide range of communication services to its consumers. The company continued to benefit from strong wireless growth as seen in its recent quarterly earnings. Its wireless segment remains its primary revenue driver, posting a 3.1% year-over-year increase to $20 billion. Notably, this marked the 18th consecutive quarter of revenue growth. The company reported 568,000 total postpaid net additions during the quarter, including 426,000 net additions for wireless retail postpaid phones. Verizon also highlighted that Q4 saw its highest postpaid phone gross additions in five years.
Verizon Communications Inc. (NYSE:VZ) also demonstrated a solid cash position in FY24. The company generated $37 billion in operating cash flow during the year and reported a free cash flow of $19.8 billion, an increase from $18.7 billion the previous year. Analysts remain positive about its growth prospects, especially after its collaboration with NVIDIA to create an AI-powered enterprise solution aimed at optimizing AI applications on its secure 5G private networks with private Mobile Edge Computing. In addition, the company is advancing other AI-driven initiatives, including network slicing and satellite connectivity, to expand revenue opportunities and strengthen its market position.
Verizon Communications Inc. (NYSE:VZ), one of the best dividend stocks on our list, currently offers a quarterly dividend of $0.6775 per share. The company has been rewarding shareholders with growing dividends for the past 18 years. As of February 6, the stock has a dividend yield of 6.80%.
With a collective stake value of over $3.2 billion, 57 hedge funds tracked by Insider Monkey held positions in Verizon Communications Inc. (NYSE:VZ) at the end of Q3 2024. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
4. Chevron Corporation (NYSE:CVX)
Upside Potential as of February 6: 16.28%
Chevron Corporation (NYSE:CVX) is a California-based multinational energy company that manufactures and sells a range of high-quality refined products. The company had a standout year in 2024, achieving record-breaking performance. The energy giant boosted its global production by 7%, while US output surged by 19% to new highs. Positioned for continued growth in 2025, the company benefited from a full year of its PDC Energy acquisition, completed in August 2023. In addition, key project startups in the Gulf of Mexico and ongoing expansion in the Permian Basin—where production climbed 18%—further contributed to its strong performance.
Chevron Corporation (NYSE:CVX) recently unveiled plans to collaborate on developing scalable power solutions utilizing natural gas-fired turbines, designed to integrate carbon capture and storage to meet the increasing energy needs of US data centers. In addition, it successfully commenced gas production from the Sanha Lean Gas Connection project, ensuring a steady supply of natural gas to the Angola Liquefied Natural Gas facility.
Chevron Corporation (NYSE:CVX)’s cash position remained solid. The company reported an operating cash flow of $31.5 billion in FY24 and its free cash flow came in at $15 billion. It also returned nearly $12 billion to shareholders through dividends. Moreover, the company bought back more than $15 billion worth of its shares in 2024, continuing its history of share repurchases, which it has carried out in 17 of the past 21 years.
On January 31, Chevron Corporation (NYSE:CVX) declared a 4.9% increase in its quarterly dividend to $1.71 per share. Through this increase, the company stretched its dividend growth streak to 38 years, which makes CVX one of the best dividend stocks on our list. The stock supports a dividend yield of 4.51%, as of February 6.
At the end of Q3 2023, 63 hedge funds tracked by Insider Monkey owned stakes in Chevron Corporation (NYSE:CVX), compared with 64 in the previous quarter. These stakes have a consolidated value of over $21 billion.
3. UnitedHealth Group Incorporated (NYSE:UNH)
Upside Potential as of February 6: 20.9%
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based health insurance company. It operates through two main divisions: UnitedHealthcare, one of the largest health insurance providers in the industry, and Optum, which offers patient care, provider services, analytics, and prescription benefit management. This extensive presence makes UnitedHealth Group a dominant force in the sector. Its vast scale provides significant bargaining power and competitive advantage, which has been a key driver of its long-term growth. Since the start of 2025, the stock has surged by over 4.5%.
UnitedHealth Group Incorporated (NYSE:UNH) recently announced its fiscal year 2024 earnings, surpassing investor expectations with strong results. The company reported $400 billion in revenue, marking an 8% increase from the previous year, fueled by growth across its various services. Operating earnings for the year totaled $32.3 billion. However, after adjusting for costs associated with a cyberattack response and difficulties in South America, adjusted operating earnings reached $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) delivered strong cash flow results that also met investor expectations. The company generated $24.2 billion in operating cash flow for the year, amounting to 1.6 times its net income. Over the course of 2024, it returned more than $16 billion to shareholders through dividends and share repurchases. In the fourth quarter, its return on equity stood at 23.7%, reflecting robust earnings and effective capital management.
Due to this solid cash position, UnitedHealth Group Incorporated (NYSE:UNH) holds a strong dividend history. The company started paying annual dividends in 1990 and shifted to quarterly payouts in 2010. Since then, it has raised its dividend regularly, which makes UNH one of the best dividend stocks on our list. The company offers a quarterly dividend of $2.10 per share and has a dividend yield of 1.59%, as of February 6.
As per Insider Monkey’s database of Q3 2024, 112 hedge funds owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), compared with 114 in the previous quarter. The overall value of these stakes is more than $15 billion.
2. Microsoft Corporation (NASDAQ:MSFT)
Upside Potential as of February 6: 22.5%
An American multinational tech giant, Microsoft Corporation (NASDAQ:MSFT) has fallen by over 6% in the past five days. The introduction of DeepSeek’s R1 model has sparked concerns for Microsoft, given its significant investments in OpenAI, the creator of the O1 series. In addition, although the company exceeded Wall Street’s expectations with its second-quarter earnings, it wasn’t enough to convince investors to drive the stock price to new highs.
That said, regarding the controversy surrounding DeepSeek, Microsoft Corporation (NASDAQ:MSFT)’s CEO, Satya Nadella, who is known for his strategic adaptability, said that the management could potentially turn this challenge into an opportunity. Nadella has previously embraced open-source strategies, such as incorporating Chromium into Edge and expanding GitHub Copilot to support various AI models. With AI becoming more commoditized, Microsoft’s Azure cloud platform could adjust by offering open-source models as APIs and integrating more affordable models like R1, ensuring it remains attractive to enterprise customers. While short-term challenges may arise if OpenAI faces setbacks, the company’s flexibility could help position Azure as a leading player in the long term, even in a market with reduced margins.
In addition, Microsoft Corporation (NASDAQ:MSFT) posted strong earnings on many fronts in fiscal Q2 2025. The company’s revenue reached $69.6 billion, which showed a 12% growth from the same period last year. The company’s net income of $24.1 billion saw a 10% year-over-year rise. A significant driver of this growth was the 15% increase in revenue from Microsoft 365 Commercial products and cloud services, bolstered by a 16% rise in Microsoft 365 Commercial cloud revenue.
Microsoft Corporation (NASDAQ:MSFT) ended the quarter with a robust cash position, holding more than $17.4 billion in cash and cash equivalents. The company generated $22.2 billion in operating cash flow, an increase from $18.8 billion in the same period last year. Moreover, the company returned $9.5 billion to its investors through dividends and share buybacks. It currently offers a quarterly dividend of $0.83 per share and has a dividend yield of 0.80%, as of February 6. MSFT is one of the best dividend stocks on our list as the company maintains a 19-year streak of consistent dividend growth.
At the end of Q3 2024, 279 hedge funds tracked by Insider Monkey held stakes in Microsoft Corporation (NASDAQ:MSFT), the same as in the previous quarter. These stakes have a total value of more than $91 billion. Among these hedge funds, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q3.
1. Merck & Co., Inc. (NYSE:MRK)
Upside Potential as of February 6: 32.18%
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based pharmaceutical company that offers innovative health solutions to its consumers. In the fourth quarter of 2024, the company posted revenue of $15.6 billion, marking a 7% increase from the same quarter the previous year. The company has solidified its position as a leader in specialty pharmaceuticals and oncology, particularly with its flagship cancer drug, Keytruda, which has revolutionized treatment methods and driven notable revenue growth. The company’s strong market presence generates significant cash flow, allowing it to provide returns to shareholders. In FY24, Keytruda’s sales grew 18% year-over-year, reaching $29.5 billion.
Merck & Co., Inc. (NYSE:MRK) has made significant strides in expanding its drug pipeline. Initially, it expected its new drug portfolio to generate an additional $35 billion in revenue by the start of 2024, but this estimate has now been revised to $50 billion. This growth is largely attributed to a substantial increase in its clinical trials, with 26 phase III trials currently in progress, compared to just nine in 2021. Several of these trials have the potential to develop into blockbuster drugs, especially in the HIV treatment sector. Moreover, the company has partnered with Gilead Sciences on a combination therapy that could revolutionize HIV care.
Merck & Co., Inc. (NYSE:MRK), one of the best dividend stocks on our list, has been rewarding shareholders with growing dividends for the past 14 consecutive years. Its quarterly dividend comes in at $0.81 per share and has a dividend yield of 3.67%, as of February 6.
Merck & Co., Inc. (NYSE:MRK) was included in 86 hedge fund portfolios at the end of Q3 2024, according to Insider Monkey’s database. The stakes owned by these funds are worth over $7.1 billion in total. With over 14.6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
Overall Merck & Co., Inc. (NYSE:MRK) ranks first on our list of the best dividend stocks according to analysts. While we acknowledge the potential for MRK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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