In this article, we will take a look at some of the best dividend stocks to buy and hold.
In recent years, many investors have shifted their focus from dividend-paying stocks to high-growth secular-themed stocks that typically don’t offer dividends. However, history shows that investors shouldn’t overlook dividends. According to estimates by AGF Investments, the long-term case for dividend-paying equities is strong: if a dollar was invested in the broader market Index in 1927 without reinvesting dividends, it would be worth $243 today. In contrast, that same dollar with dividends reinvested would be worth $3,737.
Because of this earnings and income potential, income investors often turn to dividend stocks when the market shifts. While these stocks may not be keeping pace with the broader market, analysts remain optimistic about their future prospects. A report from J.P. Morgan indicated that global equities are approaching a notable period of dividend growth, not just due to a cyclical rise in payouts but also because of a long-term increase in dividend momentum. Over the past 20 years, global dividends per share have grown at an annual rate of 5.6%, but analysts predict this growth will accelerate to 7.6%. The main factor driving this increased growth is the low starting point of payout ratios (dividends as a proportion of earnings). During the Covid pandemic in 2020, many companies cut their dividends, leading to a 12% drop in global dividends, which was a steeper decline than during the Global Financial Crisis. This was a rational response to an uncertain environment with unpredictable effects and duration.
Also read: 10 Most Promising Dividend Stocks According to Hedge Funds
However, equity markets rebounded strongly as global earnings soared, primarily driven by Big Tech and, more recently, AI. Since dividends are typically determined by conservative boards and management, they tend to lag behind earnings during significant earnings surges. As a result, dividend payout ratios are now near their lowest levels in 25 years, meaning companies are paying out less compared to historical averages. Simply returning to a more typical payout level could contribute an additional 2% annual growth over the next five years. This isn’t just a theoretical scenario—global dividend growth has already started to exceed earnings growth in seven of the past eight quarters, as reported by J.P. Morgan.
While recent market gains have largely been driven by a small group of non-dividend-paying companies, this is starting to shift. In 2024, many big tech companies initiated their dividend policies, highlighting the importance of returning capital to shareholders and positioning dividends as a complement to share buybacks. The report highlighted that although the dividend yields from these tech giants are initially modest, the total amount they are committing to dividends is significant—$17 billion collectively over the next year. More importantly, these actions send a strong signal to the market.
Income-focused investors have increasingly turned their attention to dividend income, making it a more prominent part of personal earnings. A report by S&P Dow Jones Indices reveals that dividend income has risen from 2.68% in Q4 1980 to 7.88% in Q2 2024, demonstrating its growing importance as an income source. The report further highlighted that since 1936, dividends have accounted for over a third of total equity returns, with the rest coming from capital gains. Given this, we will take a look at some of the best dividend stocks to buy and hold.
Photo by lucas Favre on Unsplash
Our Methodology:
For this list, we scanned through various credible sources, including Business Insider, Forbes, Morningstar, and Barron’s, and identified their consensus picks from their recent articles. Next, we sorted these companies based on the number of hedge funds in Insider Monkey’s database that owned stakes in these companies, as of 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).
15. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 30
General Mills, Inc. (NYSE:GIS) is a Minnesota-based food processing company that markets processed consumer food through retail stores. The company reported strong earnings in fiscal Q2 2025. It reported revenue of $5.24 billion, which showed a 2% growth from the same period last year. The revenue also beat analysts’ estimates by $97 million. Operating profit reached $1.1 billion, reflecting a 33% increase, largely due to higher gross profit and the absence of a goodwill impairment charge recorded in the prior year.
With decades of experience, General Mills, Inc. (NYSE:GIS) has continually met customer expectations, including during the COVID-19 pandemic. During this time, business activity surged as more consumers turned to home-cooked meals amid dining restrictions. Its core North American retail segment performed well, benefiting from heightened demand for organic products, meal solutions, and baking essentials.
General Mills, Inc. (NYSE:GIS) has a strong dividend history because of its stable cash generation. In the first six months of FY25, the company generated $1.8 billion in operating cash flow, up 19% from the prior-year period. During this period, it also returned $676 million to shareholders through dividends. The company has never missed a dividend in 125 consecutive years, making GIS one of our list’s best dividend stocks. It currently offers a quarterly dividend of $0.60 per share and has a dividend yield of 4.01%, as of February 4.
At the end of Q3 2024, 30 hedge funds tracked by Insider Monkey held stakes in General Mills, Inc. (NYSE:GIS), up from 29 in the previous quarter. The consolidated value of these stakes is over $674 million. With nearly 2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q3.
14. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 40
L3Harris Technologies, Inc. (NYSE:LHX) is an American defense technology company that operates in various segments of the defense and aerospace industries. It specializes in developing propulsion and power systems used in rockets, spacecraft, missiles, missile defense systems, and various tactical applications. The company has played a key role in several major space and missile initiatives for the US military, underscoring its importance in the industry. On January 7, the company secured a contract from the US Space Force’s Space Systems Command to create design concepts for the Resilient GPS program. This initiative aims to enhance existing satellite constellations by incorporating small satellites, strengthening GPS reliability for both military and civilian users.
In the fourth quarter of 2024, L3Harris Technologies, Inc. (NYSE:LHX) reported revenue of $$5.52 billion, which showed a 4% growth from the same period last year. Highlighting its agility and standing as a trusted disruptor in the defense industry, the company reported a record backlog of $34 billion. These results demonstrate its alignment with customer priorities, fueling strong demand across various sectors. Through the LHX NeXt initiative, the company surpassed its 2024 cost-savings target, reaching $800 million, and has now increased its overall cost-savings goal to $1.2 billion by the end of 2025, achieving this milestone a year earlier than planned.
L3Harris Technologies, Inc. (NYSE:LHX) reported a strong cash position in FY24. The company’s operating cash flow came in at $2.6 billion and it generated $2.3 billion in free cash flow. This cash position has enabled the company to raise its payouts for 23 consecutive years, which makes LHX one of the best dividend stocks on our list. The company pays a quarterly dividend of $1.16 per share and has a dividend yield of 2.19%, as of February 4.
As of the close of Q3 2024, 40 hedge funds tracked by Insider Monkey held stakes in L3Harris Technologies, Inc. (NYSE:LHX), the same as in the previous quarter. The consolidated value of these stakes is over $915 million. Among these hedge funds, Diamond Hill Capital was the company’s leading stakeholder in Q3.
13. Pentair plc (NYSE:PNR)
Number of Hedge Fund Holders: 47
Pentair plc (NYSE:PNR) is an American water treatment company that offers related services to its consumers. According to analysts, there is room for growth in its residential and industrial water technology solutions, as well as its residential pool products, as lower interest rates encourage increased spending. This is especially significant for pool products, where discretionary purchases tend to align with housing market trends. The stock is delivering solid returns, surging by over 37% in the past 12 months.
In the fourth quarter of 2024, Pentair plc (NYSE:PNR) posted revenue of $973 million, which fell by 1% from the same period last year. However, the revenue surpassed analysts’ estimates by $2.05 million. Each of the company’s Move, Improve and Enjoy Water segments achieved record margins for another consecutive year following the nVent separation in 2018. In the Flow segment, the Commercial business continued to expand, while efforts were made to refine the go-to-market strategy within the Industrial. In Water Solutions, filtration sales experienced another year of growth, while the Pool segment returned to sales growth, supported by strong aftermarket demand.
Pentair plc (NYSE:PNR) also generated strong results from a cash point of view. The company generated $767 million and $693 million in operating cash flow and operating cash flow, respectively. It currently pays a quarterly dividend of $0.23 per share, having raised it by 8.7% in December 2024. Through this increase, the company stretched its dividend growth streak to 49 years, which makes PNR one of the best dividend stocks on our list. The stock’s dividend yield on January 4 came in at 1.01%.
The number of hedge funds tracked by Insider Monkey owning stakes in Pentair plc (NYSE:PNR) grew to 47 in Q3 2024, from 40 in the preceding quarter. These stakes have a total value of more than $1.7 billion.
12. Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Hedge Fund Holders: 49
Automatic Data Processing, Inc. (NASDAQ:ADP) ranks twelfth on our list of the best dividend stocks to buy and hold. The American management services company offers payroll processing, tax administration, and human capital management services to its consumers. The company leverages its cloud-based software and solutions to help businesses concentrate on growth while managing the complexities of workforce logistics.
Operating in 140 countries, Automatic Data Processing, Inc. (NASDAQ:ADP) handles payroll for one in six US workers and a total of 16 million employees worldwide. Its vast client network has established ADP as an industry leader, providing operational efficiency and valuable economic insights through its aggregated workforce data. These insights, such as wage benchmarks, offer businesses a competitive edge, further enhancing the company’s service offerings. In the past 12 months, the stock has delivered a nearly 23% return to shareholders.
In fiscal Q2 2025, Automatic Data Processing, Inc. (NASDAQ:ADP) reported revenue of $5.05 billion, up 8% from the same period last year. For fiscal year 2025, the company expects revenue growth of 6% to 7%, along with an adjusted EBIT margin improvement ranging between 30 and 50 basis points.
Automatic Data Processing, Inc. (NASDAQ:ADP)’s cash position remained stable as it ended the quarter with over $2.2 billion available in cash and cash equivalents. In the first six months of the fiscal year, the company generated nearly $2 billion in operating cash flow, showing an improvement from $1.35 billion in the prior-year period. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for 50 consecutive years. Currently, it offers a quarterly dividend of $1.54 per share and has a dividend yield of 2.02%, as of February 4.
Automatic Data Processing, Inc. (NASDAQ:ADP) was included in 49 hedge fund portfolios at the end of Q3 2024, compared with 52 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these funds are worth over $3.5 billion in total. Among these hedge funds, Fundsmith LLP was the company’s leading stakeholder in Q3.
11. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 49
Target Corporation (NYSE:TGT) is a Minnesota-based retail corporation that operates a chain of hypermarkets and discount department stores. The company has shown consistent growth in operating income over the past year while maintaining a strong financial position. Although its debt levels are on the higher side, its cash, cash equivalents, and short-term investments are adequate to meet near-term obligations. The company’s increasing cash reserves and an interest coverage ratio of 11.6 further strengthen its financial stability. Its liquidity is supported by a clean balance sheet with no intangible assets and a solid return on invested capital (ROIC) of 11.5%.
Target Corporation (NYSE:TGT) is a strong dividend payer with solid balance sheet. In the first nine months of 2024, the company reported an operating cash flow of $4.07 billion. It ended the quarter with $3.4 billion in cash and cash equivalents. This cash position enabled the company to return $516 million to shareholders through dividends. It currently pays a quarterly dividend of $1.12 per share and has a dividend yield of 3.31%, as of February 4. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for 53 consecutive years.
As per Insider Monkey’s database of Q3 2024, 49 hedge funds held stakes in Target Corporation (NYSE:TGT), compared with 52 in the previous quarter. The total value of these stakes is more than $1.4 billion.
10. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
Colgate-Palmolive Company (NYSE:CL) is a global consumer products company that is recognized for its products in Oral Care, Personal Care, Home Care, and Pet Nutrition. In its recently announced FY24 earnings, the company reported revenue of $20 billion for the first time. The revenue showed a 4% growth from the same period last year. The company achieved its sixth consecutive year of organic sales growth within or exceeding its targeted range of 3% to 5%. Strong sales performance, combined with operating leverage, contributed to a solid bottom-line outcome, with both net income and earnings per share rising by double digits compared to 2023.
In the past 12 months, Colgate-Palmolive Company (NYSE:CL) has surged modestly by over 3%. However, the company is consistently working on its operational efficiency. It has recently placed a strong emphasis on sustainability while expanding its product portfolio. The company’s commitment to making all packaging recyclable by 2025 reflects growing environmental awareness among consumers and regulators. By collaborating on renewable energy initiatives, the company is adapting its operations to meet evolving market demands and regulatory requirements.
Colgate-Palmolive Company (NYSE:CL) also demonstrated a strong cash position in FY24. The company reported an operating cash flow of over $4 billion, up 10% from 2023. Its free cash flow came in at over $3.5 billion, up from $3 billion in the prior-year period. The company remained committed to its shareholder obligation, returning $3.4 billion to investors through dividends and share repurchases in the fiscal year. Currently, it offers a quarterly dividend of $0.50 per share and has a dividend yield of 2.30%, as of February 4. The company holds a 62-year streak of consistent dividend growth, which makes CL one of the best dividend stocks on our list.
As per Insider Monkey’s database of Q3 2024, 54 hedge funds owned stakes in Colgate-Palmolive Company (NYSE:CL), up from 52 in the previous quarter. The overall value of these stakes is over $3.4 billion. With over 9.3 million shares, GQG Partners was the company’s leading stakeholder in Q3.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 56
International Business Machines Corporation (NYSE:IBM) is an American multinational technology company. In its recently released Q4 2024 earnings, the company reported $17.6 billion in revenue, reflecting a 1% increase compared to the same period last year. The company ended the year with double-digit revenue growth in its Software segment, fueled by strong momentum in Red Hat. Businesses worldwide are increasingly relying on IBM for AI-driven transformation. Its generative AI business has now surpassed $5 billion in total, growing by nearly $2 billion from the previous quarter.
International Business Machines Corporation (NYSE:IBM) has outperformed the market in the past 12 months, surging by nearly 44%. The company has reinvented itself as a leader in cloud computing and artificial intelligence (AI). Its advancements in hybrid cloud technology and the development of Watsonx AI have solidified its position in the tech industry. However, one area that has received less focus is its progress in quantum computing. IBM is considered a frontrunner in this field, leading some investors to evaluate whether this cutting-edge technology enhances the appeal of its stock.
International Business Machines Corporation (NYSE:IBM), one of the best dividend stocks, has been growing its dividends for 29 consecutive years. The company reported solid cash results for 2024. It generated $13.4 billion in operating cash flow, with free cash flow totaling $12.7 billion. In Q4 2024, IBM returned $1.5 billion to shareholders via dividends. The company’s quarterly dividend comes in at $1.67 per share for a dividend yield of 2.53%, as of February 4.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 56 funds held stakes in International Business Machines Corporation (NYSE:IBM), up from 54 in the previous quarter. The consolidated value of these stakes is more than $1.7 billion.
8. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
PepsiCo, Inc. (NASDAQ:PEP) is a global food and beverage company that produces a wide range of popular products. The company has achieved consistent growth in both revenue and profit through its focus on expansion and acquisitions, despite being seen as a defensive stock with slower growth. This stability, along with its ability to manage inflationary pressures, positions the company as a reliable investment during economic downturns. However, in 2024, the stock faced significant pressure as investors shifted their attention to higher-growth opportunities. External factors such as deglobalization and concerns about the adoption of GLP-1 drugs further contributed to the challenges. As a result, the stock has declined by over 16% in the past 12 months.
That said, PepsiCo, Inc. (NASDAQ:PEP) has delivered stable earnings in FY24. The company’s revenue for the year came in at $91.8 billion, up from $91.4 billion in FY23. Its operating profit came in at $12.8 billion, compared with $11.9 billion a year ago. Its net income also showed growth at $9.6 billion. The company expects to achieve low-single-digit organic revenue growth and mid-single-digit core constant currency EPS growth in 2025.
PepsiCo, Inc. (NASDAQ:PEP) reported an operating cash flow of $12.5 billion in FY24. On February 3, the company declared a 5% hike in its annual dividend to $5.69 per share. This marked the company’s 53rd consecutive year of dividend growth, which makes PEP one of the best dividend stocks on our list. In FY25, the company expects to return approximately $7.6 billion to shareholders through dividends. The stock supports a dividend yield of 3.78%, as of February 4.
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.
7. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 60
An American multinational fast food company, McDonald’s Corporation (NYSE:MCD) ranks seventh on our list of the best dividend stocks to buy and hold. The company faced several challenges last year, and analysts note that while it has historically been able to pass on increased costs to customers, there is now greater resistance, making growth more difficult. In the quarter ending September 30, 2024, global comparable sales fell by 1.5%, with minimal growth of just 0.3% in its primary US market. To regain customer interest, the company may need to adopt more competitive pricing strategies. However, while this could help boost sales, it may also result in lower margins and profits.
Despite these challenges, McDonald’s Corporation (NYSE:MCD) has a strong portfolio that can endure various economic conditions. The company remains a dominant force in the fast-food industry, with over 40,000 locations in more than 100 countries. Known for its iconic menu and commitment to quality, convenience, and affordability, McDonald’s has become a global household name. Its focus on innovation, including digital ordering, delivery services, and sustainability efforts, aligns with changing consumer preferences, further cementing its leadership in the expanding fast-food market.
McDonald’s Corporation (NYSE:MCD) reinforces its reputation as a strong investment through its consistent dividend payments, highlighting its financial stability and dedication to delivering value to shareholders. The company has increased its payouts for 48 consecutive years and currently pays a quarterly dividend of $1.77 per share. As of February 4, the stock has a dividend yield of 2.44%.
Insider Monkey’s database of Q3 2024 indicated that 60 hedge funds were bullish on McDonald’s Corporation (NYSE:MCD), compared with 67 a quarter earlier. The consolidated value of these stakes is more than $2.37 billion. With over 1.3 million shares, Adage Capital Management was the company’s leading stakeholder in Q3.
6. 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 company reported strong earnings for fiscal Q1 2025, with revenue of $8.4 billion, reflecting a 5.3% increase compared to the same quarter last year. Diabetes-related revenue for the period reached $686 million, showing a 12.4% year-over-year growth. This increase was largely driven by a substantial rise in international revenue, fueled by greater adoption of continuous glucose monitoring (CGM) devices and the continued rollout of the Simplera Sync sensor.
Since the start of 2025, Medtronic plc (NYSE:MDT) has surged by over 13%. Earlier this year, the company received US approval for its Simplera continuous glucose monitoring (CGM) system. In addition, it entered into a partnership with Abbott Laboratories, a prominent player in the CGM market. Under this collaboration, Abbott will supply a CGM system that is compatible with Medtronic’s devices, which Medtronic will exclusively distribute. This partnership underscores the company’s commitment to innovation and enhancing its diabetes division.
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 a reliable investment option because of its strong cash generation. In the first half of its fiscal year, the company generated nearly $2 billion in operating cash flow, up from $1.5 billion in the same period last year. Free cash flow also increased, reaching $1.02 billion, compared to $721 million the previous year. This robust financial performance has allowed Medtronic to raise its dividend for 47 consecutive years, which makes it one of the best dividend stocks on our list. The company offers a quarterly dividend of $0.70 per share and has a dividend yield of 3.08%, as of February 4.
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.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods company. It is popular among income investors because of its dividend growth, which spans over 68 years. The company’s strong cash position has supported its ability to achieve this milestone. In the latest quarter, it reported $4.8 billion in operating cash flow, with a free cash flow productivity rate of 84%. Moreover, the company distributed $2.4 billion in dividends to shareholders. It currently pays a quarterly dividend of $1.0065 per share and has a dividend yield of 2.39%, as of February 4.
The Procter & Gamble Company (NYSE:PG) recently announced its fiscal Q2 2025 earnings, reporting revenue of $21.9 billion, which marked a 2% year-over-year growth and exceeded analysts’ expectations by over $291 million. Its organic sales, which exclude the impact of foreign exchange, divestitures, and acquisitions, grew by 3%. This growth was achieved despite the company halting price increases, highlighting its ability to drive volume growth—considered more valuable than just boosting revenue through higher prices. Organic volume rose by 2%, with prices remaining stable. The baby, feminine, and family care segment saw strong performance, with both organic volume and sales increasing by 4%.
Looking forward, investors were optimistic about The Procter & Gamble Company (NYSE:PG)’s guidance, which anticipated organic sales growth of 3% to 5% and overall revenue growth of 2% to 4%, exceeding the consensus estimate of 1.4% growth. The company also projected core EPS growth of 5% to 7%, with earnings expected to range from $6.91 to $7.05, excluding the impact of foreign exchange fluctuations. This outlook is slightly above analysts’ forecast of $6.93.
The number of hedge funds tracked by Insider Monkey owning stakes in The Procter & Gamble Company (NYSE:PG) grew to 68 in Q3 2024, from 64 in the previous quarter. These stakes are collectively valued at more than $8.8 billion.
4. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
The Coca-Cola Company (NYSE:KO) is an American multinational beverage company. As a well-established leader in its sector, the company generates substantial profits, with operating margins consistently exceeding 20%, indicating efficient and profitable operations. Shareholders face minimal financial risk, as the company continues to deliver strong profits even during economic downturns. In the third quarter of 2024, it reported nearly $12 billion in revenue, beating analysts’ expectations by $290 million. The company also demonstrated solid cash generation, with an operating cash flow of $2.9 billion and a free cash flow of $1.6 billion. In addition, it achieved a remarkable adjusted operating margin of 30.7%, showcasing its strong profitability.
The Coca-Cola Company (NYSE:KO)’s most significant competitive advantage is its iconic brand, which strengthens its economic moat. It has consistently provided a product that is recognized and trusted by consumers around the globe, cultivating a level of brand loyalty that many companies strive for. This loyalty gives the company the flexibility to adjust its pricing. While unit sales fell by 1% in the most recent quarter, the negative impact was offset by effective pricing strategies, highlighting the strength of its customer base. This resilience contributes to the company’s long-term stability and success. In the past 12 months, the stock has delivered an over 4% return to shareholders.
The Coca-Cola Company (NYSE:KO) is one of the best dividend stocks on our list, having raised its payouts for 62 consecutive years. The company currently pays a quarterly dividend of $0.485 per share and has a dividend yield of 3.10%, as of February 4.
As of the close of Q3 2024, 69 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), up from 68 in the previous quarter. These stakes have a consolidated value of roughly $35 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
3. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 82
The Home Depot, Inc. (NYSE:HD) is a Georgia-based home improvement company that is engaged in the sale of building materials and home improvement products. The company has over 2,300 stores in the US, Canada, and Mexico. The home improvement industry is large and fragmented, with an estimated annual value of $1 trillion. Although The Home Depot is the sector’s largest player, it commands only a 15% market share. This creates substantial growth opportunities, as the company has the potential to gain a larger share from smaller competitors who struggle to match its strong brand, vast inventory, and smooth omnichannel experience.
The Home Depot, Inc. (NYSE:HD) maintained a strong financial position in fiscal year 2024, generating over $15 billion in operating cash flow during the first nine months. This robust cash flow highlights the company’s capacity to maintain its reputation as a reliable dividend payer. The company has increased its dividend payouts for 14 consecutive years, making it one of the best dividend stocks on our list. The company pays a quarterly dividend of $2.25 per share and has a dividend yield of 2.19%, as of February 4.
Carillon Tower Advisers made the following comment about HD in its Q3 2024 investor letter. Here is what the firm has to say:
“While Home Depot, Inc.’s (NYSE:HD) recent reported earnings were somewhat tepid, the market seems to be pricing in an inversion of the company’s sales, driven by lower interest rates. Home Depot reported its seventh consecutive quarter of same-store sales declines, giving back substantial gains that it enjoyed during the pandemic. High mortgage rates have also put a damper on existing home sales. People typically spend the most on home repairs and improvements in years when they buy or sell houses, often conducting both transactions in the same year.”
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 82 funds held stakes in The Home Depot, Inc. (NYSE:HD), down from 86 in the previous quarter. These stakes have a total value of roughly $7.6 billion. With over 9.4 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
2. 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 fourth quarter of 2024, the company reported revenue of $83.4 billion, which fell by 1.1% from the same period last year. Since 2019, the company has achieved a cumulative $12.1 billion in Structural Cost Savings, surpassing the accomplishments of its competitors and more than compensating for inflation and growth. Its return on capital employed was the industry leader for the year, reaching 12.7%, and its five-year average stood at 10.8%.
Exxon Mobil Corporation (NYSE:XOM)’s cash position also came in strong in FY24. The company generated $55 billion in free cash flow, marking its third-best year in the past decade. Its free cash flow for the year amounted to $36.2 billion. During the year, the company returned $16.7 billion to shareholders through dividends. It also intends to extend its annual $20 billion share repurchase program until 2026.
Exxon Mobil Corporation (NYSE:XOM) remains a leading player in the global fossil fuel industry while also increasing its investments in low-carbon energy. As part of its 2030 strategy, it plans to allocate up to $30 billion towards low-emission projects from 2025 to 2030. Additionally, the company has secured the largest offshore carbon dioxide storage site in the US through an agreement with the Texas General Land Office. It is also making progress on developing the world’s largest low-carbon hydrogen production facility, with an expected capacity of up to 1 billion cubic feet of hydrogen per day.
On January 31, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly dividend of $0.99 per share, which was in line with its previous dividend. Overall, the company has been growing its payouts for 42 consecutive years, which makes XOM one of the best dividend stocks on our list.
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.
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 86
Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company, headquartered in New Jersey. The company mainly offers innovative health solutions to its consumers. It has made considerable progress in diversifying its drug pipeline. Initially, the company projected an additional $35 billion in revenue from its new drug portfolio at the start of 2024, but that forecast has now risen to $50 billion. This growth is primarily driven by a significant increase in its clinical trials, with 26 phase III trials currently underway, compared to just nine in 2021. Several of these trials have the potential to lead to blockbuster drugs, particularly in the area of HIV treatments. Furthermore, the company has teamed up with Gilead Sciences on a combination therapy that could transform HIV care.
In the fourth quarter of 2024, Merck & Co., Inc. (NYSE:MRK) reported revenue of $15.6 billion, which saw a 7% growth from the same period last year. The company has positioned itself as a leader in specialty pharmaceuticals and oncology, with its top cancer drug, Keytruda, transforming treatment approaches and contributing to significant revenue growth. Its strong market position generates robust cash flow, which is used to deliver returns to shareholders. In FY24, Keytruda’s sales grew by 18% from the previous year, totaling $29.5 billion.
Merck & Co., Inc. (NYSE:MRK) is popular among income investors as the company maintains a 14-year streak of consistent dividend growth. Currently, the company offers a quarterly dividend of $0.81 per share and has a dividend yield of 3.57%, as of February 4.
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 to buy and hold. 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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