In this article, we will take a look at some of the best dividend stocks in the consumer cyclical sector.
Consumer spending has been unpredictable for some time, influenced by ongoing economic conditions. Some months see strong growth, while others experience a decline. In November, spending on goods rose by 3.4%, slightly outpacing the 2.8% increase in services. However, in January, US consumer spending declined for the first time in nearly two years. According to the Commerce Department’s Bureau of Economic Analysis, consumer spending—which makes up over two-thirds of US economic activity—declined by 0.2% in January. This marked the first drop since March 2023 and was the most significant decline in nearly four years. The decrease followed a stronger-than-expected rise of 0.8% in December, which was initially estimated at 0.7%. At the same time, the goods trade deficit reached a record high as businesses ramped up imports ahead of potential tariffs. These factors suggest the economy may face slower growth or even a downturn this quarter.
Consumer cyclical companies manufacture goods and services that are considered non-essential, meaning consumers are more likely to spend on them when they have extra income or feel financially secure. This category includes businesses in industries such as retail, automotive, travel and leisure, entertainment, and luxury goods.
In February, US business activity slowed significantly, driven by growing concerns over import tariffs and substantial reductions in federal government spending. These factors wiped out the gains seen after President Donald Trump’s election victory. According to S&P Global, business and consumer sentiment has been increasingly affected by the administration’s policies. The firm’s flash U.S. Composite PMI Output Index, which measures both manufacturing and services activity, dropped to 50.4 as of February 22—the lowest level since September 2023—down from 52.7 in January. Since a reading above 50 indicates expansion, this decline suggests a slowdown in private sector growth.
Morningstar equity analyst Noah Rohr made the following comment about the performance of consumer cyclical stocks:
“We’re seeing more pressure on the discretionary side. Consumers are being more cautious with their spending, prioritizing … essential categories like food and beverage and household essentials.”
Persistent inflation is putting pressure on consumer spending, leading to shifts in purchasing habits—even for essential goods. This trend is also impacting the stock market. Although inflation has eased, food prices remain considerably higher than in previous years. As a result, Rohr has observed that grocery stores have been lagging behind larger retailers in performance.
A survey by McKinsey & Company found that, in the first quarter of the year, 46% of US consumers felt optimistic, supported by stable inflation, low unemployment, and steady job growth. However, not everyone shared this outlook. Just over a third expressed mixed feelings about the economy, while pessimism rose slightly from the previous quarter. Interestingly, while stable inflation contributed to optimism, half of the respondents still cited rising prices as their top concern, with older consumers being more worried about inflation than younger ones. The survey also revealed that consumers planned to cut back on spending in many discretionary categories. This suggests that even those with a positive economic outlook, along with those feeling uncertain or pessimistic, may be cautious about their spending habits.
In 2025, consumer cyclical stocks have underperformed compared to the broader market and more defensive sectors. Since the start of the year, the Consumer Discretionary Index has declined by nearly 8%. However, the sector remains a strong dividend payer. In the third quarter of 2024, companies in this sector distributed nearly $23 billion in dividends, a significant increase from $15.3 billion during the same period in 2023, as reported by Janus Henderson. Over the years, dividend payouts in the sector have steadily grown, rising from $16.4 billion in 2018 to $23 billion in 2024.
Our Methodology
For this list, we scanned the holdings of S&P’s Consumer Discretionary index and identified dividend stocks from the entertainment, technology, retail, housing, materials, and automotive industries. These companies are strong dividend payers and have decent yields. From that group, we picked 12 dividend stocks with the highest number of hedge fund investors, according to Insider Monkey’s database of Q4 2024. The stocks are ranked in ascending order of hedge funds having stakes in them.
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).
12. Jack in the Box Inc. (NASDAQ:JACK)
Number of Hedge Fund Holders: 17
Jack in the Box Inc. (NASDAQ:JACK) is an American fast-food restaurant chain, headquartered in California. The company follows the franchise business model and is known for its diverse menu. Despite challenges such as inflation affecting its core low-income customer base and rising wages in California—where nearly 45% of its outlets are located—the company is gearing up for a strong recovery. Since acquiring Del Taco in March 2022, it has remained focused on growing its presence, upgrading kitchen operations, and improving digital ordering and delivery services. Its plans to open new locations, including an expansion into Chicago in 2025, reflect confidence in its long-term growth potential.
In fiscal Q1 2025, Jack in the Box Inc. (NASDAQ:JACK)’s total revenue declined by 3.7% to $469.4 million, down from $487.5 million in the same quarter last year. The decrease was largely driven by Del Taco’s refranchising transactions. Net income for the first quarter of fiscal 2025 came in at $33.7 million. The company’s same-store sales saw a modest rise of 0.4%. This included a 0.5% increase in franchise locations, while company-owned stores experienced a slight decline of 0.4%.
Despite mixed overall results, Jack in the Box Inc. (NASDAQ:JACK) reported a strong cash position in the most recent quarter. The company’s operating cash flow came in at over $105.6 million, compared with a negative operating cash flow of $22,675 in the same period last year. It has been regularly paying dividends to shareholders, which makes it one of the best dividend stocks on our list. The company pays a quarterly dividend of $0.44 per share and has a dividend yield of 4.87%, as of March 4.
11. Amcor plc (NYSE:AMCR)
Number of Hedge Fund Holders: 29
Amcor plc (NYSE:AMCR) is a packaging company, headquartered in Australia. The company offers a wide range of related products for different industries. Amcor and Berry Global Group recently revealed that their shareholders have overwhelmingly approved the merger of the two companies. This vote fulfills a key condition for the combination, which was initially announced in November 2024. The merged entity will become a leading force in consumer and healthcare packaging, leveraging advanced material science and innovation to enhance product development and meet both customer demands and sustainability goals. With a stronger growth outlook and anticipated synergies of $650 million, the merger is expected to create substantial value for shareholders in both the short and long term.
In fiscal Q2 2025, Amcor plc (NYSE:AMCR) reported revenue of $3.24 billion, down 0.3% from the same period last year. Volumes increased by 2.3% year-over-year, building on the 1.6% growth recorded in the first quarter and marking the fourth consecutive quarter of sequential volume gains. On a comparable constant currency basis, adjusted EBIT reached $363 million, reflecting an approximately 5% increase from the previous year.
In the first half of FY25, Amcor plc (NYSE:AMCR) generated an operating cash flow of $228 million, compared with $159 million in the prior-year period. The company currently offers a quarterly dividend of $0.1275 per share and has a dividend yield of 5.12%, as of March 4. AMCR is one of the best dividend stocks on our list as the company has raised its payouts for 41 years in a row.
10. Genuine Parts Company (NYSE:GPC)
Number of Hedge Fund Holders: 36
Genuine Parts Company (NYSE:GPC) is a Georgia-based industrial supplies company that deals in automotive and industrial replacement parts. The stock struggled in 2024, declining by over 18% over the past year. The company is dealing with two key demand-related challenges. First, industrial production in its primary US market has slowed, outweighing the gains from international demand. Second, sales of replacement automotive parts have seen a slight decline.
That said, Genuine Parts Company (NYSE:GPC) reported strong earnings in the fourth quarter of 2024. The company posted revenue of $5.77 billion, which showed a 3.3% growth from the same period last year. The revenue also beat analysts’ estimates by $57.6 million. Gross profit amounted to $2.1 billion, representing 35.9% of total sales, reflecting a 1.8% increase from the previous year’s figure of $2.0 billion, which accounted for 36.4% of sales. Net income stood at $133 million, translating to $0.96 per diluted share, compared to $317 million, or $2.26 per diluted share, in the same period last year.
Genuine Parts Company (NYSE:GPC)’s cash position also came in strong. In FY24, the company posted an operating cash flow of $1.3 billion and its free cash flow came in at $684 million. Due to this cash generation, the company was able to return $705 million to shareholders through dividends and share repurchases. On February 19, it declared a 3% hike in its quarterly dividend to $1.03 per share. This marked the company’s 69th consecutive year of dividend growth, which makes GPC one of the best dividend stocks on our list. The stock supports a dividend yield of 3.35%, as of March 4.
9. Best Buy Co., Inc. (NYSE:BBY)
Number of Hedge Fund Holders: 38
Best Buy Co., Inc. (NYSE:BBY) ranks ninth on our list of the best dividend stocks in the consumer cyclical sector. The American consumer electronics company deals in a wide range of related products and services. The company is focused on broadening its service offerings, with a particular emphasis on growing its Geek Squad operations and expanding its presence in the healthcare sector. These efforts not only enhance product sales but also contribute to higher margins and foster stronger customer loyalty. Maintaining efficient inventory and supply chain management remains essential, allowing the company to adapt to shifting market conditions while effectively meeting consumer demand.
In the fourth quarter of FY25, Best Buy Co., Inc. (NYSE:BBY) reported revenue of $13.9 billion, which fell by 4.7% from the same period last year. The company is reinforcing its position in the retail sector as a leading omni-channel destination for technology while working to enhance its operating income rate. At the same time, it is developing and expanding additional profit streams, such as Best Buy Marketplace and Best Buy Ads, which are expected to generate strong returns in the future.
Best Buy Co., Inc. (NYSE:BBY) CFO Matt Bilunas noted that consumers are displaying heightened price sensitivity amid ongoing inflation, leading to sluggish sales in the first quarter, with only a modest rebound anticipated in the latter half of 2025. His full-year sales outlook suggested that revenue could slightly trail the previous year’s total. Earnings are projected to remain relatively unchanged from fiscal 2025. These conservative growth expectations were set against the likelihood of price hikes, driven by tariffs imposed by the Trump administration on goods from Canada, Mexico, and China.
Best Buy Co., Inc. (NYSE:BBY)’s cash position remained strong from a dividend perspective. The company ended the quarter with approximately $1.6 billion available in cash and cash equivalents. Moreover, its operating cash flow for FY25 came in at over $2 billion, compared with $1.4 billion in the previous year. Recently, the company declared a 1.1% hike in its quarterly dividend to $0.95 per share. This was the company’s 12th consecutive year of dividend growth. As of March 4, the stock has a dividend yield of 5.01%.
8. Tractor Supply Company (NASDAQ:TSCO)
Number of Hedge Fund Holders: 40
Tractor Supply Company (NASDAQ:TSCO) is an American farm supplies company, based in Tennessee. The company sells home improvement and related equipment and supplies. In the fourth quarter of 2024, it reported net sales of approximately $3.8 billion, marking a 3% increase from the previous year. This growth was supported by new store openings and an uptick in comparable store sales. Earnings per share (EPS) for the quarter came in at $0.44, reflecting a slight 3% decline year over year. However, both net sales and EPS fell slightly short of expectations. Gross profit rose by 2.8% to $1.33 billion, compared to $1.29 billion in the same period last year.
Tractor Supply Company (NASDAQ:TSCO) recently expanded its presence in the pet care sector through the acquisition of Allivet, a pet pharmacy business. With more than 200 pet stores under the Petsense brand and pet products available at its Tractor Supply locations, this acquisition presents an additional avenue for growth, albeit at a gradual pace. In the past 12 months, the stock has surged by nearly 11%.
Tractor Supply Company (NASDAQ:TSCO) also maintained a solid cash position, ending the quarter with approximately $252 million in cash and cash equivalents. For the full year 2024, the company generated $1.4 billion in operating cash flow. This financial strength enabled it to distribute $472.5 million in dividends to shareholders during the year.
Tractor Supply Company (NASDAQ:TSCO) recently announced that its Board of Directors has raised its dividend by $0.04, representing a 4.5% year-over-year increase, bringing it to $0.92 per share on an annualized basis for fiscal year 2025. Following this adjustment, the Board also declared a quarterly cash dividend of $0.23 per share for its common stock. This was the company’s 16th consecutive year of dividend growth, which makes TSCO one of the best dividend stocks on our list. The stock has a dividend yield of 1.68%, as of March 4.
7. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 45
Ford Motor Company (NYSE:F) is a Michigan-based company that is engaged in the manufacturing, distribution, and sale of automobiles. The company has been actively restructuring its operations to improve efficiency. The automaker has scaled back its global footprint by withdrawing from underperforming markets such as Brazil and India while also reducing its presence in Europe. This strategic shift has enabled Ford to focus more on expanding its electric vehicle initiatives. In the fourth quarter of 2024, the company reported $48.2 billion in revenue, marking a 5% increase compared to the previous year.
Ford Motor Company (NYSE:F) is involved in the manufacturing, distribution, and sale of automobiles. However, despite wrapping up its 2024 fiscal year with strong overall performance, significant losses in its electric vehicle segment eroded the profits generated by its traditional combustion engine sales. In addition, growing trade tensions with Mexico and Canada have introduced further uncertainty, as potential tariffs on imported materials and goods could pose additional risks.
Throughout 2024, Ford Motor Company (NYSE:F) maintained solid cash flow, reporting $15.4 billion in operating cash flow and $6.7 billion in free cash flow. For 2025, the company anticipates adjusted EBIT to range between $7.0 billion and $8.5 billion, with adjusted free cash flow projected between $3.5 billion and $4.5 billion. Capital expenditures for the year are expected to be between $8 billion and $9 billion. The company offers a quarterly dividend of $0.15 and has a dividend yield of 6.39%, as of March 4.
6. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 67
An American fast food chain, McDonald’s Corporation (NYSE:MCD) ranks sixth on our list of the best dividend stocks. The company posted a weak quarterly performance, falling short of investor expectations. One contributing factor was an E. Coli outbreak that affected certain menu items, including the popular Quarter Pounder. However, while this incident played a role in the downturn, the company’s challenges extended beyond just the fourth quarter.
In the fourth quarter of 2024, McDonald’s Corporation (NYSE:MCD) reported revenue of $6.4 billion, reflecting a slight year-over-year decline of 0.2%. This figure also missed analysts’ estimates by over $88 million. Global same-store sales, which track the performance of locations open for at least a year, edged up by 0.4%. However, the company’s core U.S. market experienced a 1.4% drop in same-store sales, signaling a slowdown in growth and difficulty in maintaining strong sales momentum. Despite these setbacks, the stock has climbed nearly 6% since the beginning of 2025.
That said, McDonald’s Corporation (NYSE:MCD) remains appealing to investors due to its strong dividend track record and financial stability. It currently offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.31%, as of March 4. By the end of fiscal 2024, the company had over $1 billion in cash and cash equivalents, with total assets approaching $12 billion. In addition, the company has raised its dividend for 48 consecutive years, which makes it one of the best dividend stocks in the consumer cyclical sector.
5. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 68
General Motors Company (NYSE:GM) is an American multinational automotive manufacturing company that sells trucks, cars, and auto parts and provides software-enabled services and subscriptions. Instead of pursuing robotaxi development, which the company acknowledged would require significant time and resources to scale in a highly competitive market, GM shifted its focus toward driver-assist technologies that could provide near-term revenue opportunities.
This strategic shift allowed General Motors Company (NYSE:GM) to gauge consumer interest in paying for these features, and the response has been positive. According to CEO Mary Barra, approximately 20% of the nearly 18,000 Super Cruise users opted to continue their subscription after their three-year trial period ended in 2024.
In the fourth quarter of 2024, General Motors Company (NYSE:GM) reported revenue of $47.7 billion, which showed an 11% growth from the same period last year. The company’s net income declined by over $5 billion due to special charges, primarily driven by $4 billion in non-cash restructuring expenses and the impairment of its interests in certain China Joint Ventures. In addition, $0.5 billion in charges were recorded following the decision to halt funding for the Cruise robotaxi business.
General Motors Company (NYSE:GM)’s cash generation came in strong in FY24. The company recorded an operating cash flow of approximately $24 billion and its free cash flow came in at $14 billion. On February 26, it declared a 25% hike in its quarterly dividend to $0.15 per share. It is one of the best dividend stocks on our list as the company has been making regular dividend payments since 2014. The stock has a dividend yield of 1.01%, as of March 4.
4. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 70
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based home improvement company. In the fourth quarter of 2024, the company posted revenue of $18.55 billion, down 0.2% from the same period last year. Comparable sales for the quarter saw a 0.2% increase, supported by high-single-digit growth in Pro and online sales, a strong holiday season, and rebuilding efforts following recent hurricanes. However, this growth was partially offset by ongoing short-term challenges in discretionary spending within the DIY segment.
In recognition of employees’ dedication to providing excellent customer service, the company awarded $80 million in discretionary bonuses to frontline associates. As of January 31, 2025, Lowe’s Companies, Inc. (NYSE:LOW) operated 1,748 stores, encompassing 195.0 million square feet of retail selling space.
Lowe’s Companies, Inc. (NYSE:LOW) reported a strong cash position in the most recent quarter. The company ended Q4 with nearly $1.8 billion in cash and cash equivalents, compared with $921 million in the prior-year period. In FY24, it generated an operating cash flow of $9.7 billion, up from $8.1 billion in the same period last year. The company also generated $6.5 billion to shareholders through dividends and share repurchases. Currently, it offers a quarterly dividend of $1.15 per share and has a dividend yield of 1.92%, as of March 4. LOW is one of the best dividend stocks on our list as the company has raised its payouts for 59 years in a row.
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 73
NIKE, Inc. (NYSE:NKE) is an American apparel and footwear company, headquartered in Oregon. Jefferies believes the company’s widespread brand presence and strong global distribution network will contribute to its future growth. The investment firm projects that Nike could achieve a compound annual growth rate of approximately 7%, outperforming the consensus analyst estimate of around 3%. Furthermore, Jefferies expects that the company’s new management team will enhance its product strategy, positioning it to exceed analysts’ average financial projections for fiscal 2027 by a significant margin. The firm has set a price target of $115 for the stock.
NIKE, Inc. (NYSE:NKE) faced challenges in the second quarter, particularly in China, where revenue declined by 8% year-over-year. However, the drop was not as steep as analysts had expected, as projections had pointed to a 10% decline. Meanwhile, gross margins saw a slight decrease, falling to 43.6% from 44.6% in the same period last year. Despite these setbacks, operating expenses were reduced by 5%, potentially allowing for reinvestment in marketing efforts.
NIKE, Inc. (NYSE:NKE)’s quarterly dividend comes in at $0.40 per share and has a dividend yield of 2.09%, as of March 4. The company remains focused on delivering strong shareholder returns, supported by its solid financial position. In the most recent quarter, it reported $7.9 billion in cash and cash equivalents, reflecting a 1% increase from the previous year. It also returned $1.6 billion to shareholders through dividends and share repurchases. With a track record of 23 consecutive years of dividend increases, Nike is regarded as one of the best dividend stocks in the consumer cyclical sector.
2. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 84
Starbucks Corporation (NASDAQ:SBUX) is a global specialty coffee company that operates 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, remaining stable year-over-year when adjusted for currency fluctuations. During the quarter, the company expanded its presence by opening 377 new locations, bringing its total store count to 40,576. Of these, 53% were company-operated, while the remaining 47% operated under licensing agreements. By the end of the quarter, 61% of Starbucks’ global stores were located in the US and China, with 17,049 stores in the US and 7,685 in China.
As a global specialty coffee company, Starbucks Corporation (NASDAQ:SBUX) operates more than 32,000 locations across 80 countries, serving as both a roaster and retailer. The company is actively working to refresh its brand and enhance customer engagement through its “Back to Starbucks” initiative, which focuses on improving operations and elevating the in-store experience. This strategy underscores Starbucks’ commitment to reinforcing its core identity, with expectations that these efforts will positively impact its stock performance as it realigns with its foundational values.
Starbucks Corporation (NASDAQ:SBUX) has consistently distributed dividends for 59 consecutive quarters, achieving a compound annual growth rate (CAGR) of nearly 20% over this timeframe, reflecting its dedication to long-term shareholder value. In addition, the company has increased its dividend payments annually for 14 straight years, coming through as one of the best dividend stocks on our list. The company offers a quarterly dividend of $0.61 per share and has a dividend yield of 2.2%, as of March 4.
1. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 88
The Home Depot, Inc. (NYSE:HD) is an American multinational home improvement company. With operations spanning more than 2,300 locations across North America, the company’s performance remains closely linked to trends in the real estate market. While it has continued to experience steady growth and maintain strong profitability, elevated mortgage rates have presented challenges. Higher borrowing costs have led to a decline in home sales and a reduced supply of available properties, which has, in turn, impacted consumer spending on home improvement projects.
The Home Depot, Inc. (NYSE:HD) reported strong fourth-quarter earnings for 2024, with revenue reaching $39.7 billion, reflecting a year-over-year increase of over 14%. Looking ahead to fiscal 2025, it expects total sales to grow by approximately 2.8%, with comparable sales projected to rise by about 1% over the same 52-week period. Additionally, it plans to open around 13 new stores and anticipates a gross margin of approximately 33.4%.
The Home Depot, Inc. (NYSE:HD) ended the quarter with over $1.65 billion in cash and cash equivalents. Throughout fiscal 2024, the company generated nearly $20 billion in operating cash flow, reinforcing its strong financial position. This stability has enabled it to maintain uninterrupted dividend payments for 152 consecutive quarters. Moreover, it increased its quarterly dividend by 2.2% to $2.30 per share, marking the 15th consecutive year of dividend growth. As of March 4, the stock supports a dividend yield of 2.41%.
Overall, The Home Depot, Inc. (NYSE:HD) ranks first on our list of the best dividend stocks in the consumer staples sector. While we acknowledge the potential for HD 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 HD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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