In this article, we will take a look at some of the best DRIP stocks to buy.
Dividend investing is often regarded as a strategy that rewards patience, as it tends to generate stronger returns over the long term. Those who commit to holding their investments for extended periods are typically the ones who reap the greatest benefits. A major factor behind the success of this approach is the power of compounding. By reinvesting dividends—using those payouts to purchase additional shares—investors can enhance the growth of their portfolios. Rather than taking the dividends as cash, reinvesting them allows for a steady increase in share ownership, amplifying potential returns. Over time, this method has proven to be highly effective. In fact, a report from Hartford Funds highlights that since 1960, reinvested dividends and compounding have accounted for 69% of the broader market’s total return.
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Over the years, analysts have closely monitored the impact of dividend reinvestment and have expressed favorable opinions about its benefits. Steven Greiner, Managing Director of Schwab Equity Ratings at the Schwab Center for Financial Research, supports this approach. He shares the following insight:
“Reinvesting dividends is nearly effortless. Once you set it up—which generally involves simply ticking a box—there’s nothing more to do but sit back and let compounding work its magic. Be aware, however, that companies can reduce or stop paying dividends.”
Steven Greiner’s final point touches on a key concern for dividend investors—the risk of a company suddenly cutting or suspending its dividend payments. No investor wants to be caught in that situation. While many tend to measure success primarily by stock price appreciation, a deeper analysis offers a broader perspective. A study of major global indexes over a 25-year period, ending in March 2018, found that reinvested dividends contributed nearly 3% in additional growth, as reported by Forbes. This underscores the vital role that dividends play in enhancing investment returns beyond just price gains. It serves as a strong reminder that evaluating an investment solely based on stock price movements may offer an incomplete picture. By incorporating dividend reinvestment into the assessment, investors gain a more comprehensive and accurate view of overall performance.
A separate analysis from T. Rowe Price found that over the three decades leading up to 2022, reinvested dividends played a crucial role in market returns, contributing a notable 42.5% to overall gains. The report also emphasized that dividend reinvestment had an even greater impact on a select group of high-performing companies—those that consistently increase their dividends at a rate exceeding the broader market. This effect becomes more powerful over time, as reinvesting a steadily growing dividend further accelerates long-term investment returns.
For long-term investors looking for steady returns, focusing on stocks with strong dividend growth can be a strategic approach. Reinvesting dividends from these stocks allows investors to gradually increase their holdings, leveraging the power of compounding to boost overall returns and steadily grow their wealth. Given this, we will take a look at some of the best DRIP stocks to own.
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Our Methodology
To compile this list, we looked through Insider Monkey’s database of over 1,000 hedge funds as of Q4 2024. We specifically chose dividend stocks that provide a dividend reinvestment plan (DRIP) to shareholders. After filtering, we narrowed down the selection to companies with robust and consistent dividend track records. The stocks are ranked in ascending order of the number of hedge funds having stakes in them, as of Q4 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 79
The Procter & Gamble Company (NYSE:PG) is an Ohio-based multinational consumer goods company. It runs a large-scale global consumer goods business, selling products across various segments such as Beauty, Grooming, Health Care, and Home Care. Lately, the company has prioritized maintaining product excellence and strengthening brand messaging. Its success is largely driven by strong partnerships with retailers, a commitment to innovation backed by research, and effective supply chain management. In the past 12 months, the stock has surged by nearly 6%.
The Procter & Gamble Company (NYSE:PG) reported $21.9 billion in revenues in fiscal Q2 2025, which showed a 2% growth from the same period last year and surpassed analysts’ estimates by more than $291 million. Organic sales, which exclude currency fluctuations, divestitures, and acquisitions, rose by 3%. Notably, this growth occurred without price hikes, demonstrating the company’s ability to drive volume growth, which is often considered more valuable than revenue gains driven solely by higher prices. Organic volume increased by 2%, while pricing remained steady. The baby, feminine, and family care segment performed particularly well, with both organic volume and sales rising by 4%.
The Procter & Gamble Company (NYSE:PG) is a strong dividend payer, having raised its payouts for 68 consecutive years. The company’s solid cash reserves have played a key role in reaching this milestone. In the most recent quarter, it generated $4.8 billion in operating cash flow, achieving a free cash flow productivity rate of 84%. In addition, it returned $2.4 billion to shareholders through dividend payments. The company pays a quarterly dividend of $1.0065 per share for a dividend yield of 2.37%, as of February 23. PG is one of the best DRIP stocks to invest in.
9. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 81
NextEra Energy, Inc. (NYSE:NEE) is an American clean energy company that generates, transmits, and sells electricity. Based in Florida, the company owns and operates Florida Power & Light, the largest electric utility in the US. Its power-generation division is the world’s leading producer of energy from wind and solar sources. NextEra’s management projects that US power demand will grow by roughly 55% between 2020 and 2040. In 2024, the company expanded its generation and storage capacity by about 12 gigawatts and maintains a backlog of 25 gigawatts.
NextEra Energy, Inc. (NYSE:NEE), one of the best DRIP stocks, has surged by over 26% in the past 12 months. In the fourth quarter of 2024, the company saw its adjusted earnings per share (EPS) increase by approximately 2% year-over-year, while its full-year EPS climbed 8.2%. Looking forward, the company aims for adjusted EPS growth of 6% to 8% through 2027, positioning itself to reach the higher end of this target in 2024.
On February 14, NextEra Energy, Inc. (NYSE:NEE) declared a 14% hike in its quarterly dividend to $0.5665 per share. This marked the company’s 29th consecutive year of dividend growth. the stock supports a dividend yield of 3.17%, as of February 23. Its strong track record of dividend payments is mainly supported by its robust cash flow. In fiscal year 2024, the company generated over $13.2 billion in operating cash flow. Looking ahead, it plans to increase its dividend per share by approximately 10% annually through at least 2026, based on its 2024 payout level.
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 81
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) ranks eighth on our list of the best DRIP stocks to invest in. In the fourth quarter of 2024, the company reported $11.5 billion in revenues, which showed a 6.5% growth from the same period last year. Organic revenue increased by 14%, driven by a 9% rise in price/mix and a 5% growth in concentrate sales. The company gained market share across its beverage portfolio in 2024, with Coca-Cola Zero Sugar standing out, achieving a 13% increase in unit volume during Q4. Coca-Cola’s innovative marketing strategies have yielded strong results, with retail sales of its flagship brand growing by approximately $40 billion over the past three years. According to Time Magazine, Coca-Cola, Minute Maid, and Fairlife were recognized as the top global brands in their respective beverage categories in 2024.
The Coca-Cola Company (NYSE:KO) benefits from its globally recognized brand, which strengthens its market dominance. By consistently delivering a familiar and trusted product, the company has built strong brand loyalty—an asset that many competitors aim to achieve. This loyalty allows the company to adjust pricing strategically without significantly impacting demand. Although unit sales declined by 1% in the latest quarter, the company effectively compensated for this drop through pricing strategies, demonstrating the resilience of its customer base. This adaptability supports Coca-Cola’s long-term stability and continued success. In the past 12 months, the stock has surged by over 16.5%.
The Coca-Cola Company (NYSE:KO) currently pays a quarterly dividend of $0.485 per share and has a dividend yield of 2.86%, as of February 23. The company showcased solid cash flow in the most recent quarter, generating $2.9 billion in operating cash flow and $1.6 billion in free cash flow. In addition, it maintained a strong adjusted operating margin of 30.7%, highlighting its profitability. The company remains a favorite among income investors, thanks to its impressive track record of over 62 consecutive years of dividend growth, which makes it one of the best DRIP stocks to invest in.
7. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 81
Chevron Corporation (NYSE:CVX) produces and markets a variety of premium refined products, including gasoline, diesel, marine and aviation fuels, high-quality base oils, finished lubricants, and fuel oil additives. The company operates five fully owned refineries in the US, which manufacture fuels, base oils, and other essential petroleum-based products. Since the start of 2025, the stock has surged by nearly 7%.
Last month, Chevron Corporation (NYSE:CVX) announced the completion of a $49 billion expansion at Kazakhstan’s Tengiz oil field, one of the world’s largest. This expansion is set to boost production to nearly one million barrels per day by mid-2025. At an oil price of $60 per barrel, the project is expected to generate $4 billion in free cash flow for Chevron this year and $5 billion in 2026.
Chevron Corporation (NYSE:CVX) maintained a strong financial position in FY24, generating $31.5 billion in operating cash flow and $15 billion in free cash flow. The company returned nearly $12 billion to shareholders through dividend payments and repurchased over $15 billion worth of its own shares, continuing its long-standing buyback strategy, which it has executed in 17 of the past 21 years. In January, Chevron raised its quarterly dividend by 4.9% to $1.71 per share, marking its 38th consecutive year of dividend growth, which makes it one of the best DRIP stocks to invest in. The stock has a dividend yield of 4.36%, as of February 23.
Chevron Corporation (NYSE:CVX) reported Q4 2024 earnings of $2.06 per share, missing analysts’ forecasts due to weak margins, which led to its refining segment posting its first loss since 2020. However, the company recorded $52.23 billion in revenue for the quarter, reflecting a 10.7% year-over-year increase and surpassing Wall Street estimates by over $3.8 billion. This growth was fueled by a 7% rise in global production and a 19% increase in US output, both reaching record highs in 2024. Moreover, Chevron generated nearly $8 billion from asset sales last year and ended the year with a solid financial position, maintaining a net debt ratio of 10%.
6. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 84
Starbucks Corporation (NASDAQ:SBUX) is a leading global specialty coffee company, operating over 32,000 locations across 80 countries as both a roaster and retailer. In fiscal Q1 2025, the company reported consolidated net revenues of $9.4 billion, maintaining the same level as the previous year, even after adjusting for currency fluctuations. During the quarter, the company added 377 new locations, increasing its total store count to 40,576. Of these, 53% were company-operated, while 47% operated under licensing agreements. By the end of the quarter, 61% of Starbucks’ global stores were situated in the US and China, with 17,049 locations in the US and 7,685 in China.
Starbucks Corporation (NASDAQ:SBUX) is actively working to revitalize its brand and reconnect with customers through its “Back to Starbucks” initiative, which aims to enhance operations and elevate the in-store experience. This approach underscores the company’s commitment to strengthening its core identity, with the expectation that these efforts will have a positive impact on its stock performance as it refocuses on its fundamental values.
On January 29, Starbucks Corporation (NASDAQ:SBUX) declared a quarterly dividend of $0.61 per share, which was in line with its previous dividend. The company has sustained 59 consecutive quarters of dividend payments, delivering a compound annual growth rate (CAGR) of nearly 20% over this period, reflecting its commitment to generating long-term value for shareholders. Additionally, it has increased its dividend payouts for 14 straight years. As of February 23, the stock has a dividend yield of 2.18%.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 84
Cisco Systems, Inc. (NASDAQ:CSCO) is a California-based multinational technology company that mainly specializes in networking hardware, software, and telecommunications equipment. The company recently announced solid fiscal Q2 2025 earnings. It posted adjusted earnings per share of $0.94 on revenue of $13.99 billion, surpassing analysts’ expectations of $0.91 per share on $13.87 billion in sales. Revenue grew 9.4% YoY, while AI infrastructure orders reached $350 million. Management noted that total product orders increased by 29% compared to the previous year, or 11% when excluding contributions from Splunk.
Cisco Systems, Inc. (NASDAQ:CSCO) remains the leading company in enterprise networking, maintaining a strong presence in both traditional and modern network infrastructures. The company holds a significant market share in wireless access, switching, and routing, while also securing key positions in security and collaboration tools. With the increasing adoption of hybrid cloud solutions and flexible work models, Cisco is well-positioned to benefit from these trends. In addition, its comprehensive suite of features in integrated security and networking gives it a competitive edge in the industry.
Cisco Systems, Inc. (NASDAQ:CSCO)’s cash position also remained strong in the most recent quarter. The company’s operating cash flow reached $2.2 billion, reflecting a 177% increase from the $0.8 billion reported in the same quarter of fiscal 2024. It ended the quarter with nearly $17 billion available in cash and cash equivalents. On February 12, the company declared a 3% hike in its quarterly dividend to $0.41 per share. Through this increase, the company stretched its dividend growth streak to 18 years. The stock has a dividend yield of 2.56%, as of February 23.
4. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 85
AbbVie Inc. (NYSE:ABBV) is an American multinational biopharmaceutical company that specializes in the development and commercialization of advanced therapies and treatments in various areas of healthcare. The company stands out as a major pharmaceutical company with a broad range of treatments across immunology, oncology, neuroscience, and eye care. It also markets well-known aesthetic brands like Botox and Juvederm for anti-aging skincare. This diverse portfolio, along with its strong track record of innovation, contributes to its status as a blue-chip stock and an attractive investment option. In the past 12 months, the stock has surged by over 13%, which places it on our list of the best DRIP stocks.
AbbVie Inc. (NYSE:ABBV) reported fourth-quarter revenue of $15.1 billion, reflecting a 5.6% YoY increase and surpassing analysts’ expectations of $14.87 billion. On a GAAP basis, the company posted a net loss of $0.02 per share for the quarter. However, its adjusted diluted earnings per share (EPS) came in at $2.16, slightly exceeding the analysts’ forecast of $2.13.
In 2024, sales of Skyrizi and Rinvoq totaled $17.7 billion, marking a 51% increase from the previous year due to rising global demand and sustained market growth. When excluding the Humira platform, AbbVie’s overall revenue saw an 18% year-over-year increase, supported by strong performance in its neuroscience and oncology segments.
AbbVie Inc. (NYSE:ABBV) currently offers a quarterly dividend of $1.64 per share and has a dividend yield of 3.25%, as of February 23. The company has been rewarding shareholders with growing dividends for the past 52 consecutive years.
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) is an American multinational pharmaceutical company, based in New Jersey. The company specializes in a wide range of biotech and medical products and offers related services to consumers. It remains a dominant force across all major healthcare sectors, maintaining a strong competitive edge through robust cash flow, a growing research pipeline, and diverse revenue streams.
In its Q4 2024 earnings report, Johnson & Johnson (NYSE:JNJ) posted $22.5 billion in revenue, marking a 5.2% year-over-year increase. As a leader in healthcare, it continues to advance treatment options for conditions with significant unmet needs, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. The MedTech segment saw a 6.2% increase in global operational sales, with acquisitions and divestitures contributing 1.5% to the growth. The Cardiovascular division benefited from strong demand for electrophysiology products and Abiomed, while the General Surgery segment grew due to increased sales of wound closure products.
Johnson & Johnson (NYSE:JNJ) is reinforcing its commitment to innovation and growth through strategic acquisitions. The company has announced plans to invest more than $14 billion in acquiring Intra-Cellular Therapies, strengthening its focus on treatments for central nervous system disorders. The deal will be financed using a mix of cash reserves and debt, with completion expected later this year. This represents the largest biotech acquisition in over a year, signaling a renewed wave of healthcare mergers and acquisitions after a slower 2024 when major pharmaceutical firms prioritized integrating their previous post-pandemic acquisitions.
Johnson & Johnson (NYSE:JNJ) is one of the best DRIP stocks on our list with 62 consecutive years of dividend growth under its belt. The company’s quarterly dividend comes in at $1.24 per share for a dividend yield of 3.06%, as of February 23.
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is an American multinational investment bank that offers a wide range of related services to its consumers. In fiscal year 2024, the company saw its net income surge by nearly 40% to $12.7 billion, surpassing its annual revenue target. This growth was fueled by solid performance in its Services, Wealth, and US Personal Banking divisions. The company managed to keep expenses within projections, enhanced its efficiency ratio, and successfully carried out a significant restructuring. Total revenue for the year reached $81.1 billion, showing a 3% increase from the prior year.
In the past 12 months, Citigroup Inc. (NYSE:C) surged by over 42% and its YTD returns came in at nearly 14%. The company is undergoing a multi-year restructuring, streamlining its operations by exiting intricate business segments and focusing on areas that generate returns at or above its cost of capital. Over the past three years, it has made notable progress in strengthening risk management, compliance, and overall accountability.
Citigroup Inc. (NYSE:C) distributed $6.7 billion to shareholders through dividends and share repurchases, demonstrating its commitment to returning value to shareholders. In addition, it has paid regular dividends for the past 34 years, which makes it one of the best DRIP stocks to invest in. The company pays a quarterly dividend of $0.56 per share and has a dividend yield of 2.81%, as of February 23.
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 113
Bank of America Corporation (NYSE:BAC) is an American financial services company, based in North Carolina. In the fourth quarter of 2024, the company delivered strong financial results, generating $25.3 billion in revenue, up from $22 billion in the same period the previous year. Net income saw a significant rise, more than doubling to $6.7 billion from $3.1 billion a year earlier. The bank continued to grow its customer base, adding 213,000 new consumer checking accounts, extending its streak of quarterly growth to six consecutive years. Moreover, it returned $2 billion to shareholders through dividend distributions.
Bank of America Corporation (NYSE:BAC) benefits from several advantages that strengthen its market position and set it apart from both traditional banks and fintech competitors. Its broad distribution network, combining a strong digital platform with an extensive branch presence, enables it to grow its low-cost deposit base and attract new customers, driving revenue growth. Additionally, its large scale allows for effective cost management, supporting steady profitability. The bank’s well-established brand further enhances its ability to retain and attract clients. In the past 12 months, the stock has surged by more than 32%.
Bank of America Corporation (NYSE:BAC) currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 2.32%, as of February 23. The company has been making regular dividend payments to shareholders for the past 27 years.
The number of hedge funds tracked by Insider Monkey owning stakes in Bank of America Corporation (NYSE:BAC) grew to 113 in Q4 2024, from 98 in the previous quarter. The consolidated value of these stakes is over $40.2 billion.
Overall Bank of America Corporation (NYSE:BAC) ranks first on our list of the best DRIP stocks to invest in. While we acknowledge the potential for BAC 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 BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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