In this article, we will take a look at some of the best halal stocks that pay dividends.
Halal stocks are shares in companies that adhere to Shariah law. These companies operate in accordance with Islamic principles, avoiding industries such as alcohol, gambling, tobacco, and non-Islamic finance. They also maintain ethical business practices, ensuring their revenue sources are consistent with Islamic values. The S&P High Yield Dividend Aristocrats Shariah index tracks the performance of Shariah-compliant companies from the Composite 1500 that have a history of consistently raising their dividends for at least 20 years. These companies follow a managed dividend strategy, ensuring steady growth in dividend payouts.
When investing in halal stocks, it’s important for investors to carefully consider a company’s balance sheet. Companies with debt exceeding 33% of their market value are disqualified from halal investing, though this ratio can fluctuate for some businesses. According to a World Bank report, the Islamic finance industry has grown quickly in the last decade, with an annual growth rate of 10-12%. Currently, Sharia-compliant financial assets are valued at approximately $2 trillion, encompassing both bank and non-bank institutions, as well as capital markets, money markets, and insurance.
Also read: 10 Best Diversified Dividend Stocks To Buy Now
Halal investing is still a relatively new concept in the US, where Muslims make up around 1% of the population, as of 2020. In the past, older generations of Muslims typically focused on real estate and physical gold as investments or chose stocks recommended by friends and community members. The complexities of Islamic finance have led many to overlook it. However, this is beginning to change as technology advances and demographic trends shift. Financial educators, along with fintech startups, halal stockpickers, and specialized exchange-traded funds (ETFs), are helping fill the gap. In addition, the rise of zero-fee brokerages has made investing more accessible to Muslims who follow strict financial guidelines. These low-cost platforms have made it easier to serve clients who were previously overlooked or considered unprofitable. Omar Shaikh, director of Islamic Finance Council UK, made the following comment about this:
“Islamic finance as a sector is barely 30 years old, with the past 15 years seeing the most development. It takes time to educate and create awareness and as this has happened, more banks have focused on servicing the demand for halal investing. This in turn helps to create more products, which then creates more demand.”
Halal investing is experiencing growth despite limited awareness. A 2023 report by the General Council for Islamic Banks and Financial Institutions revealed that the global Islamic funds market has expanded by over 300% in the past decade, with nearly $200 billion in assets now managed worldwide. A Goldman Sachs report from December 2022 projected that by 2075, five of the world’s ten largest economies—India, Indonesia, Nigeria, Pakistan, and Egypt—will have Muslim populations exceeding 850 million people.
As the Muslim population grows, so does the demand for financial products tailored to their needs. According to the State of the Global Islamic Economy Report 2023 by DinarStandard, approximately $25.9 billion was invested in Sharia-compliant investments during the 2022-23 financial year, reflecting a 128% increase from the previous year.
Given this, we will take a look at some of the best halal dividend stocks to buy.
Source: Pixabay
Our Methodology:
To compile this list, we chose the top 10 stocks from the S&P High Yield Dividend Aristocrats Shariah Index. These specific companies are known for consistently providing substantial dividends to their shareholders and demonstrating robust financial stability. We ranked these holdings based on the number of hedge funds that had invested in them by the end of Q3 2024, using data from Insider Monkey’s database.
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. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 32
Sysco Corporation (NYSE:SYY) is an American wholesale company that is involved in the marketing and distribution of food products, kitchen equipment, and related products. The company holds a strong position in the market and accounts for roughly 17% of the US food service sector, an industry valued at approximately $360 billion annually. Its extensive scale and diverse customer base, which includes restaurants, healthcare facilities, and educational institutions, form the foundation of its business model.
In recent years, Sysco Corporation (NYSE:SYY) has prioritized broadening its product range and strengthening its distribution network. Through strategic acquisitions, the company has enhanced its specialty segment offerings and increased its influence in the fragmented industry. This strategy has allowed it to solidify its competitive edge and improve operational efficiency, both of which are vital for sustaining and growing its market presence.
In fiscal Q1 2025, Sysco Corporation (NYSE:SYY) reported revenue of $20.5 billion, which showed a 4.4% growth from the same period last year. The international segment continues to drive growth, reporting an 8.6% rise in operating income and a 12.1% increase in adjusted operating income for the quarter. Meanwhile, the specialty division remains a strong performer in the market, with the team-based sales approach gaining traction and building momentum. Notably, both revenue and profit growth rates saw an improvement in September.
Heartland Advisors highlighted SYY in its Q4 2024 investor letter. Here is what the firm said:
“Consumer Staples. Our 10 Principles of Value Investing™ require us to be patient and wait for a combination of factors to fall into place before committing to a stock. Among them are attractive valuations, sound finances, capable management teams, sound business strategies, catalysts for recognition, and positive earnings dynamics. Sysco Corporation (NYSE:SYY) is an example of our willingness to wait.
While we purchased shares of the nation’s largest food service distributor in the fourth quarter, we’ve been watching the company’s self-help strategy unfold for years. Recovering from an awful COVID-19-era operating environment, Sysco has been responding with sweeping improvements in its digital capabilities along with changes to sales management and cost containment. Recently, the company — which delivers ingredients and food products to restaurants while avoiding slower-growing grocery stores — has been making a push to grow its specialty platform, offering services such as pre-cut meat, pre-cut produce, and dry aged beef to help customers streamline their operations. When the company’s restaurant, hotel, and food service clients utilize Sysco’s specialty services, they tend to spend three times more than traditional broadline customers…” (Click here to read the full text)
Sysco Corporation (NYSE:SYY)’s cash position also remained strong, which has supported its dividends over the years. During the quarter, the company generated $53 million in operating cash flow and its free cash flow came in at $8 million, which was an improvement of $81 million in the same quarter last year. The company also returned $251 million to shareholders through dividends, which makes it one of the best halal stocks that pay dividends. Sysco Corporation (NYSE:SYY) has been rewarding shareholders with growing dividends for the past 54 years. The company offers a quarterly dividend of $0.51 per share and has a dividend yield of 2.78%, as of January 22.
At the end of Q3 2024, 32 hedge funds in Insider Monkey’s database owned stakes in Sysco Corporation (NYSE:SYY), compared with 37 in the previous quarter. These stakes have a total value of nearly $520 million.
9. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 34
Archer-Daniels-Midland Company (NYSE:ADM) is an American multinational food processing and commodities trading company. The company focuses on converting crops into a wide range of products, including food, animal feed, industrial materials, and energy. As a major participant in the global agricultural industry, it oversees an extensive network for sourcing, transporting, and processing various agricultural goods. Its activities involve managing complex supply chains while catering to the varied demands of the market.
In the past 12 months, Archer-Daniels-Midland Company (NYSE:ADM) has declined by over 2%. Moreover, the company also disappointed investors with its quarterly earnings results. In the third quarter of 2024, it reported $20 billion in revenue, marking an 8% decline from the same period last year and falling short of analysts’ expectations by $1.57 billion. Looking ahead, the company expects tougher market conditions in the coming year but is taking steps to improve performance and deliver value. Its focus remains on boosting productivity, enhancing operational efficiency, and maintaining a disciplined approach to capital allocation.
Despite these challenges, Archer-Daniels-Midland Company (NYSE:ADM) maintained strong cash flow generation. During the first nine months of the year, it recorded an operating cash flow of approximately $2.5 billion, up from $1.9 billion in the same period the previous year. It is one of the best halal stocks that pay dividends and the company holds a 51-year track record of consistent dividend growth. Currently, it pays a quarterly dividend of $0.50 per share and has a dividend yield of 3.96%, as of January 22.
As of the close of Q3 2023, 34 hedge funds in Insider Monkey’s database held stakes in Archer-Daniels-Midland Company (NYSE:ADM), down from 35 in the previous quarter. These stakes are worth $556.5 million in total. With over 2.2 million shares, AQR Capital Management was the company’s leading stakeholder in Q3.
8. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 45
Kimberly-Clark Corporation (NYSE:KMB) ranks eighth on our list of the best halal stocks. The Texas-based multinational consumer goods and personal care company offers related products and services to its consumers. The company has a proven ability to deliver steady performance regardless of economic conditions, making it a resilient choice even during broader market downturns. However, it is currently facing significant pressure on both pricing and volume. In the first three quarters of 2024, consolidated volumes grew by only 1%, while net prices rose 2%. Overall consolidated growth declined by 2%, largely due to unfavorable currency impacts. In the past 12 months, the stock has surged by just a little over 3%.
In the third quarter of 2024, Kimberly-Clark Corporation (NYSE:KMB) reported revenue of $4.95 billion, which fell by 4% from the same period last year. However, its cash position remained encouraging for investors. In the first nine months of the year, the company reported an operating cash flow of $2.4 billion, up from $2.3 billion in the prior-year period. Moreover, it also returned $2 billion to shareholders through dividends and share repurchases.
Due to this strong cash generation, Kimberly-Clark Corporation (NYSE:KMB) was able to raise its payouts for 51 consecutive years. The company offers a quarterly dividend of $1.22 per share and has a dividend yield of 3.87%, as of January 22.
Insider Monkey’s database of Q3 2024 indicated that 45 hedge funds held stakes in Kimberly-Clark Corporation (NYSE:KMB), up from 43 in the previous quarter. The consolidated value of these stakes is over $1 billion. Among these hedge funds, D E Shaw was the company’s leading stakeholder in Q3.
7. Kenvue Inc. (NYSE:KVUE)
Number of Hedge Fund Holders: 46
Kenvue Inc. (NYSE:KVUE), a consumer health company based in New Jersey, became a fully independent entity in 2023 following its separation from Johnson & Johnson. Corporate breakups and restructurings often create uncertainty, which has impacted the recent stock performance of both Kenvue and Johnson & Johnson. Nevertheless, Kenvue has the potential to establish itself as a robust high-yield dividend stock, making it an appealing option for long-term investors. In the past 12 months, the stock has surged modestly by a little over 1.5%.
In the third quarter of 2024, Kenvue Inc. (NYSE:KVUE) maintained strong productivity and achieved efficiency gains through its Vue Forward initiative. These improvements are being reinvested into its iconic brands to unlock the business’s full potential and uphold its commitment to delivering long-term value for shareholders. The reinvestment is allowing the company to sustain market share growth in Self Care, achieve widespread growth across Essential Health categories, and establish a solid foundation in Skin Health and Beauty, where early signs of recovery are becoming evident. The company reported revenue of $3.9 billion, which showed a 0.4% decline from the same period last year.
Kenvue Inc. (NYSE:KVUE)’s cash position was also noticed by income investors. In the first nine months of the year, the company generated $1 billion in operating cash flow and its free cash flow came in at $0.7 billion. On January 17, the company declared a quarterly dividend of $0.205 per share, having raised it by 2.5% in July 2024. With a dividend yield of 3.95% as of January 22, KVUE is one of the best halal stocks to buy.
Kenvue Inc. (NYSE:KVUE) was a part of 46 hedge fund portfolios at the end of Q3 2024, as per Insider Monkey’s database. The stakes owned by these hedge funds are worth over $1.3 billion. With more than 31.4 million shares, Harris Associates was the company’s leading stakeholder in Q3.
6. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, beverage, and snack company. It owns an extensive portfolio of popular brands such as Pepsi, Mountain Dew, Gatorade, Lay’s, Doritos, and Quaker. In recent years, it has also expanded its product lineup through strategic acquisitions, adding a variety of Mediterranean and Mexican-American offerings. For investors looking for growing income, this leading American corporation is worth serious consideration.
PepsiCo, Inc. (NASDAQ:PEP)’s focus on expansion and acquisitions has driven steady growth in both revenue and profit, even though it is often viewed as a defensive, slower-growth stock. This stability, combined with its capacity to navigate inflationary pressures, makes the company a reliable investment option during economic downturns. That said, the stock experienced notable pressure in 2024 as investors shifted focus to higher-growth opportunities, compounded by external factors like deglobalization and concerns over the adoption of GLP-1 drugs. These challenges have resulted in a 10% drop over the past year, with shares reaching their lowest point since mid-2021, despite a revenue increase of over 15%.
PepsiCo, Inc. (NASDAQ:PEP)’s dividend history makes it a prominent company among income investors. The company has been growing its dividends for 52 consecutive years, achieving the status of a Dividend King. Moreover, it plans to pay $8.2 billion to shareholders through dividends and share repurchases in FY24. Its quarterly dividend comes in at $1.355 per share and has a dividend yield of 3.66%, as of January 22.
As per Insider Monkey’s database of Q3 2024, 58 hedge funds owned stakes in PepsiCo, Inc. (NASDAQ:PEP), down from 65 in the previous quarter. These stakes are collectively valued at over $4.44 billion. Ken Fisher’s Fisher Asset Management was the company’s leading stakeholder in Q3.
5. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 60
Medtronic plc (NYSE:MDT) is a multinational medical device company that has a diversified business, offering a wide range of devices across four key sectors: medical-surgical, neuroscience, cardiovascular, and diabetes. The stock has surged by over 9.5% since the start of 2025, grabbing investors’ attention. Earlier this year, the company received US approval for its Simplera continuous glucose monitoring (CGM) system. In addition, it formed a partnership with Abbott Laboratories, a leading name in the CGM market. As part of this collaboration, Abbott will provide a CGM system that is compatible with Medtronic’s devices, which Medtronic will distribute exclusively. This partnership highlights the company’s focus on innovation and strengthening its diabetes division.
Medtronic plc (NYSE:MDT) delivered solid earnings in fiscal Q1 2025, reporting $8.4 billion in revenue, a 5.3% increase compared to the same period last year. Diabetes revenue for the quarter reached $686 million, marking a 12.4% year-over-year growth. This growth was driven by a significant rise in international revenue, boosted by increased adoption of CGM devices and the ongoing launch of the Simplera Sync sensor.
Matrix Asset Advisors made the following comment about MDT in its Q3 2024 investor letter:
“In Q3, we added to two Healthcare positions, Medtronic plc (NYSE:MDT) and Becton Dickinson (BD). Both companies are very attractive in our valuation analysis. We started the LCV position in MDT in the second quarter and added to it as more cash became available. The company’s business results have improved this year as the number of medical procedures normalized from their decline during the pandemic. “
Medtronic plc (NYSE:MDT) is one of the best halal dividend stocks on our list because of the company’s solid cash position. In the first half of its fiscal year, the company generated close to $2 billion in operating cash flow, an increase from $1.5 billion during the same period last year. Free cash flow also grew, reaching $1.02 billion compared to $721 million in the previous year. This strong financial position has enabled Medtronic to consistently increase its dividend for 47 consecutive years. Currently, it pays a quarterly dividend of $0.70 per share and has a dividend yield of 3.19%, as of January 22.
The number of hedge funds tracked by Insider Monkey owning stakes in Medtronic plc (NYSE:MDT) grew to 60 in Q3 2024, from 52 in the previous quarter. These stakes are collectively valued at over $4.2 billion.
4. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) ranks fourth on our list of the best halal stocks that pay dividends. The multinational energy company manufactures and sells a range of high-quality refined products. The company aims to remain profitable even when oil prices are moderate, ensuring it can fund capital projects and increase dividends. For this, it plans to achieve additional structural cost savings of $2 billion to $3 billion by 2026 while continuing to focus on maintaining a low-cost, high-margin production portfolio. In the past year, the stock has surged by nearly 10%.
Chevron Corporation (NYSE:CVX) already has a solid cash position, and the CEO recently revealed plans to increase free cash flow by $6 billion to $8 billion next year while also implementing cost reductions of several billion dollars. These gains are anticipated to come from new or expanded oil production projects in Kazakhstan, US shale regions, and the offshore Gulf of Mexico. In the most recent quarter, the company reported an operating cash flow of $9.7 billion, up from $6.3 billion in the same period last year. In addition, it returned $7.7 billion to shareholders through dividends and share repurchases.
Chevron Corporation (NYSE:CVX) currently offers a quarterly dividend of $1.63 per share and has a dividend yield of 4.17%, as of January 22. The company has been growing its dividends for the past 37 consecutive years. It continued to increase its dividends even during severe industry downturns, making it a solid choice for investors new to the sector who are looking for reliable foundational investments. While many exploration and production (E&P) companies carry greater risks, they also offer the potential for higher returns.
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. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
3. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 68
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. When Abbott Labs spun off AbbVie in 2013, the latter heavily relied on its top-selling drug, Humira. However, in recent years, sales declined due to competition from biosimilars. AbbVie, however, had planned ahead by investing in research and development and making strategic acquisitions. By the time Humira’s patent expired, the company had significantly reduced its reliance on the drug. In addition, it had already introduced two fast-growing successors, Rinvoq and Skyrizi, to the market.
In the third quarter of 2024, AbbVie Inc. (NYSE:ABBV) reported $14.46 billion in revenue, a 4% increase compared to the same period last year. Its Immunology Portfolio contributed over $7 billion, also reflecting 4% growth. In August 2024, the company completed an $8.7 billion acquisition of Cerevel Therapeutics, a neuroscience-focused firm. While the company’s primary focus remains on immunology, oncology, inflammation, and eye care, its entry into neuroscience provides new growth opportunities and diversifies its revenue streams. For investors, the emphasis should be on AbbVie’s strong pipeline in these established areas, which offers significant growth potential, independent of its progress in neuroscience.
AbbVie Inc. (NYSE:ABBV) is a strong dividend payer with 52 consecutive years of dividend growth under its belt. The company’s per-share dividend comes in at $1.64 every quarter for a dividend yield of 3.88%, as of January 22.
At the end of the third quarter of 2024, 68 hedge funds tracked by Insider Monkey held stakes in AbbVie Inc. (NYSE:ABBV), up from 67 in the preceding quarter. These stakes are collectively valued at roughly $2.6 billion. With over 1.7 million shares, AQR Capital Management was the company’s leading stakeholder in Q3.
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) ranks second on our list of the best halal stocks that pay dividends. The American multinational pharmaceutical company specializes in a wide range of biotech and medical products and offers related services to consumers. Its strategy of focusing on innovation and growth is proving successful, as reflected in its quarterly performance. For the third consecutive quarter, the company has raised its adjusted operational EPS guidance, excluding the impact of mergers and acquisitions. The company’s operational performance indicates strong confidence in its growth outlook for 2025 and the years to follow. Since the start of 2025, the stock has surged modestly by nearly 1%.
Johnson & Johnson (NYSE:JNJ) is drawing attention to its ongoing innovation and recent acquisitions. It recently announced plans to invest over $14 billion in acquiring Intra-Cellular Therapies, strengthening its focus on treatments for central nervous system disorders. The purchase will be financed through a mix of cash reserves and debt, with the deal anticipated to close later this year. This represents the largest biotech acquisition in more than a year, signaling a revival in healthcare mergers and acquisitions after a slowdown in 2024, as major pharmaceutical firms focused on integrating their earlier post-pandemic purchases.
Johnson & Johnson (NYSE:JNJ) recently announced its Q4 2024 earnings and posted $22.5 billion in revenue, a 5.2% increase compared to the same period last year. As a healthcare leader addressing diseases, the company is improving care standards for conditions with significant unmet needs, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. Its MedTech division saw a 6.2% increase in global operational sales, with 1.5% of this growth attributed to net acquisitions and divestitures. Key drivers included electrophysiology products and Abiomed in the Cardiovascular segment, along with wound closure products in General Surgery.
Johnson & Johnson (NYSE:JNJ) has been raising its payouts for 62 consecutive years. The company offers a quarterly dividend of $1.24 per share and has a dividend yield of 3.41%, as of January 22.
As of the close of Q3 2024, 81 hedge funds tracked by Insider Monkey reported having stakes in Johnson & Johnson (NYSE:JNJ), up from 80 in the previous quarter. These stakes are collectively valued at over $5.4 billion.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) is an American oil and gas company that is engaged in the exploration, production, refining, and distribution of petroleum products. In the past year, the stock has surged by over 13% and also reported strong earnings in the third quarter. The company reported $90.02 billion in revenue, surpassing analysts’ expectations by $1.66 billion. It delivered strong financial performance, generating $17.6 billion in operating cash flow and $11.3 billion in free cash flow for the quarter. In addition, the company returned $9.8 billion to shareholders through dividends and stock repurchases. This robust cash flow allowed Exxon to increase its payouts for the 42nd consecutive year.
Though Exxon Mobil Corporation (NYSE:XOM) remains a major player in the global fossil fuel industry, it is also ramping up its investments in lower-carbon energy. The company recently shared its 2030 vision, which aims to allocate up to $30 billion towards low-emission projects between 2025 and 2030. Exxon has also secured the largest offshore carbon dioxide storage site in the U.S. through an agreement with the Texas General Land Office. Furthermore, the company is working on developing the world’s largest low-carbon hydrogen production facility, which would have the capacity to produce up to 1 billion cubic feet of hydrogen daily.
Exxon Mobil Corporation (NYSE:XOM) currently offers a quarterly dividend of $0.99 per share, having raised it by 4% in November 2024. As of January 22, the stock supports a dividend yield of 3.62%.
Insider Monkey’s database of Q3 2024 indicated that 86 hedge funds owned stakes in Exxon Mobil Corporation (NYSE:XOM), compared with 92 a quarter earlier. These stakes have a total value of nearly $7 billion. First Eagle Investment Management was one of the company’s leading stakeholders.
Overall Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of the best halal stocks that pay dividends. While we acknowledge the potential for XOM 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 XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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