In this article, we will take a look at some of the best dividend stocks from the broader market.
Stock market investors have enjoyed strong annual returns over the past two years, but analysts caution that 2025 may not deliver a repeat performance. In 2024, the broader market posted a 23% gain, following a 24% increase in 2023. When factoring in dividends, total returns for those years reached 25% and 26%, respectively. However, such sustained high returns are uncommon. According to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, US stocks have only recorded three consecutive years of 20%-plus total returns once since 1928, during the late 1990s.
Analysts do not expect the market’s strong run to persist this year. A report from Morgan Stanley points out that while the third year of a bull market tends to deliver only modest returns on average, it is usually not negative.
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The report mentioned that one possible scenario for 2025 is that earnings-per-share growth outpaces market gains, leading to a decline in overall price-to-earnings valuations. Factors such as prolonged high interest rates and geopolitical uncertainties could contribute to a lackluster year, causing some of the recent optimism to fade. However, if this happens, the market could regain momentum in 2026, making 2025 more of a temporary pause rather than a deeper downturn.
Dividends are a key component of the investment market, with nearly 80% of companies in the broader market distributing payments to shareholders. However, maintaining steady dividend increases is a difficult achievement. Only about 13% of companies in the index qualify for the Dividend Aristocrats Index, which includes corporations that have raised their dividends for at least 25 consecutive years. Investors are often drawn to dividend growth stocks, as they have demonstrated strong long-term performance, especially during times of elevated interest rates.
According to data from Abrdn, it was noted that between December 2002 and December 2022, companies that either increased or initiated dividends achieved a compounded return of 10.68%. In contrast, firms that reduced or discontinued their dividends saw a significantly lower return of 2.70%. In addition, it was highlighted that companies not paying dividends also lagged behind dividend growers, generating a return of 9.25% over the same timeframe.
When assessing the reliability of dividend stocks, analysts suggest that investors should emphasize dividend growth rather than being lured by high yields that may not be sustainable. Dan Lefkovitz, a strategist with Morningstar’s Index team, underscored the significance of dividend growth as a strategy distinct from high-yield investing. He pointed out that companies with consistent dividend growth often have strong competitive advantages and promising future outlooks. A portfolio focused on dividend growth generally mirrors the broader market in terms of sector allocation and the balance between growth and value characteristics, including price-to-earnings ratios. While it leans toward a value-driven approach, it remains more balanced and core-oriented compared to portfolios concentrated on high-yield stocks.
Although dividend stocks did not experience the same level of gains as tech stocks in 2024, they still delivered impressive returns. That year, companies across the broader market that distributed dividends returned approximately 35% of their net income and 45% of their free cash flow to shareholders, according to Bloomberg. On average, these companies had a dividend yield of around 2.3%, while the market capitalization-weighted yield was about 1.5%. Given this, we will take a look at some of the best dividend stocks in the broader market.
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Our Methodology
For this list, we scanned the list of the companies in the broader market and picked dividend stocks with dividend yields of about 2%, as of February 27. From that list, we picked 15 dividend stocks with the highest number of hedge fund investors, according to Insider Monkey’s database of over 1,000 hedge funds, as of Q4 20234. The stocks are ranked in ascending order of the number 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).
15. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 45
Ford Motor Company (NYSE:F) is an American company, based in Michigan. The company is engaged in the manufacturing, distribution, and sale of automobiles. It recently wrapped up its 2024 fiscal year, with substantial losses in its electric vehicle segment eating into the profits generated by its conventional combustion engine sales. Additionally, rising trade tensions with Mexico and Canada have added uncertainty, as potential tariffs on imported materials and goods present further risks. The stock has declined by over 22.5% in the past 12 months.
That said, Ford Motor Company (NYSE:F) has been actively restructuring its operations to enhance efficiency. The company has scaled back its global presence by exiting underperforming markets such as Brazil and India while reducing its footprint in Europe. This strategic shift has allowed Ford to place greater emphasis on expanding its electric vehicle initiatives. In the fourth quarter of 2024, the automaker generated $48.2 billion in revenue, reflecting a 5% increase from the previous year.
Throughout 2024, Ford Motor Company (NYSE:F) maintained strong cash flow, reporting $15.4 billion in operating cash flow and $6.7 billion in free cash flow. Looking ahead to 2025, the company expects adjusted EBIT to fall between $7.0 billion and $8.5 billion, with projected adjusted free cash flow ranging from $3.5 billion to $4.5 billion. Capital expenditures are forecasted to be between $8 billion and $9 billion. Currently, it pays a quarterly dividend of $0.15 per share and has a dividend yield of 6.46%, as of February 27.
14. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that manufactures a wide range of related products including cigarettes and other nicotine products. In the past 12 months, the stock has surged by nearly 35%, and its YTD returns have come in at almost 5%. The tobacco industry has undergone major transformations in recent years. Although smoking rates have declined worldwide, there has been a growing preference for smoke-free alternatives such as e-cigarettes and oral tobacco, which are viewed as less harmful. Altria Group, the company behind brands like Marlboro and Parliament, has been responding to these shifting consumer preferences by expanding its portfolio of smoke-free products.
In the fourth quarter of 2024, Altria Group, Inc. (NYSE:MO) posted revenue of $5.11 billion, marking a 1.63% increase from the previous year and surpassing analyst expectations by $59.6 million. Growth in brand strength contributed to higher income and improved margins within its core tobacco segment, while the company continued making strategic investments to drive future expansion. Looking ahead to 2025, Altria anticipates adjusted diluted EPS in the range of $5.22 to $5.37, reflecting an expected growth of 2% to 5% compared to its 2024 EPS of $5.12.
Altria Group, Inc. (NYSE:MO) currently offers a quarterly dividend of $1.02 per share and has a dividend yield of 7.4%, as of February 27. The company has a strong track record of dividend payments, consistently prioritizing shareholder returns. In fiscal year 2024, the company distributed $6.8 billion in dividends. With 55 consecutive years of dividend growth, it remains one of the best dividend stocks on our list.
13. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 49
General Mills, Inc. (NYSE:GIS) is an American food processing company that markets processed consumer food through retail stores. The company reported strong earnings for fiscal Q2 2025, with revenue reaching $5.24 billion, up 2% from the previous year and surpassing analyst forecasts by $97 million. Operating profit climbed 33% to $1.1 billion, benefiting from improved gross profit and the absence of a goodwill impairment charge that had affected the prior year’s performance.
General Mills, Inc. (NYSE:GIS) sells packaged consumer foods through retail stores. With a long-standing presence in the industry, it has continuously adapted to meet consumer preferences, including during the COVID-19 pandemic. As dining restrictions encouraged more home cooking, the company experienced a rise in business activity. Its core North American retail division performed well, benefiting from growing demand for organic products, convenient meal solutions, and baking ingredients.
General Mills, Inc. (NYSE:GIS)’s quarterly dividend comes in at $0.60 per share for a dividend yield of 4.00%, as of February 27. The company has a strong history of paying dividends, backed by its steady cash flow. In the first half of FY25, it reported $1.8 billion in operating cash flow, marking a 19% increase from the previous year. During this time, it returned $676 million to shareholders through dividends. Impressively, the company has upheld an unbroken streak of dividend payments for 125 years, which makes it one of the best dividend stocks on our list.