In this article, we will discuss some of the most profitable stocks that pay dividends.
When it comes to profits, dividend investing is the first thing that springs to mind. Dividends represent a portion of a company’s earnings paid out to its shareholders, and over the years, they’ve come to play a growing role in personal income, with their share increasing notably. According to a report by S&P Dow Jones Indices, dividends as a part of personal income has grown from 2.68% in Q4 1980 to 7.88% in Q2 2024, while net interest has fallen from 14.58% to 7.61% during the same timeframe. The report also mentioned that dividends made up more than one-third of the market’s total return from 1936 through 2024, with capital appreciation accounting for the other two-thirds.
With the market becoming turbulent today, investors are once again turning their attention to dividend stocks, which had largely been sidelined for the past two years. The last time dividend stocks had their moment was in 2022, but since then, they have been overshadowed by AI stocks. That said, dividend stocks are witnessing a renewed interest because of their stable characteristics. According to Jefferies, dividend-paying stocks can be a good choice in light of the Trump administration’s approach to tariffs. Desh Peramunetilleke, head of the quantitative strategy at Jefferies, emphasized that dividend stocks can make an impression during rough economic patches. His team also supported this idea, believing that dividend stocks would outperform this year, driven by high-quality yield stocks and defensive yield names. Peramunetilleke made the following comment on March 27 note:
“A study of past stagflation-like period shows that it is a headwind for equities, but dividend strategies tend to be more resilient. Since 2001, [bond proxies] and [high-quality yield] have outperformed the most during such periods in [the] U.S.”
Analysts like Peramunetilleke have noticed this renewed interest in dividends this year. The Dividend Aristocrat Index, which follows companies with at least a 25-year track record of dividend growth, has fallen by a little over 4% since the start of 2025, compared with a steeper decline in the broader market. Dividend-focused exchange-traded funds (ETFs) are also in the green. According to a report by Franklin Templeton, between August 2024 and January 2025, dividend ETFs listed in the US attracted average monthly net inflows of nearly $3.3 billion—marking a significant rise from just $107 million during the same stretch a year earlier.
The report also mentioned that dividend-focused strategies have repeatedly shown their ability to act as a defensive play, regardless of the region or market cycle. Over the three years ending December 31, 2024, companies that paid dividends experienced less volatility and smaller peak-to-trough declines than the broader market across global, US, and European benchmarks. When inflation concerns and interest rate jitters resurfaced in August 2024, dividend stocks proved more resilient than most, weathering the storm better than the wider market. Given this, we will take a look at some of the best profitable stocks that pay dividends.
Photo by Annie Spratt on Unsplash
Our Methodology
For this list, we screened for stable dividend companies that have strong dividend growth track records. From that group, we picked companies with a net profit margin exceeding 30%, which suggests sound financial health and excellent cost management. The stocks are ranked in ascending order of their net profit margin as of the most latest quarter.
At Insider Monkey, we are obsessed with hedge funds. 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).
8. McDonald’s Corporation (NYSE:MCD)
Net Profit Margin: 31.73%
McDonald’s Corporation (NYSE:MCD) is a multinational fast food chain that operates nearly 43,000 locations globally. The company, recognized worldwide for its golden arches, is making a strong push into artificial intelligence, as highlighted by The Wall Street Journal. For a fast-food giant like McDonald’s, AI holds potential across various operations. Around 18 months ago, the company entered a partnership with Alphabet’s Google Cloud, placing a strong emphasis on AI. The company has already tested AI-powered ordering, and this collaboration may help the company scale up those efforts. If AI proves effective in handling orders, it could help cut down labor costs while improving the customer experience.
Despite its innovation drive, McDonald’s Corporation (NYSE:MCD)’s quarterly results came in below expectations, partly due to an E. Coli outbreak, though the company faced broader headwinds as well. In Q4 2024, revenue came in at $6.4 billion—a modest 0.2% dip year-over-year and nearly $88 million short of analyst forecasts. Global same-store sales, which reflect performance at established locations, inched up by 0.4%. However, US same-store sales dropped by 1.4%, indicating a slowdown in domestic growth and ongoing pressure to maintain momentum. However, it is one of the stocks that have shown positive returns this year, surging by over 2% since the start of 2025.
McDonald’s Corporation (NYSE:MCD) has a strong cash reserve with over $1 billion available in cash and cash equivalents at the end of FY24. The company has been growing its payouts for 48 consecutive years, which makes it one of the most profitable stocks on our list. It offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.36%, as of April 6.
7. Abbott Laboratories (NYSE:ABT)
Net Profit Margin: 31.95%
Abbott Laboratories (NYSE:ABT) is an American medical device company that provides services and products in diagnostics, nutrition, and established pharmaceuticals. In the fourth quarter of 2024, the company reported $11 billion in revenue, reflecting a year-over-year increase of more than 7%. However, the results fell slightly short of Wall Street’s expectations, missing estimates by over $57 million. Despite this, the company demonstrated consistent growth throughout the year.
For the full year, Abbott Laboratories (NYSE:ABT) met the upper range of its original January projections for both organic sales growth and adjusted earnings per share. The company’s strong focus on research and development led to the launch of more than 15 new growth initiatives in 2024, including newly approved products and expanded indications for existing treatments. With a net profit margin of nearly 32%, ABT is one of the most profitable stocks that pay dividends.
Abbott Laboratories (NYSE:ABT) announced a quarterly dividend of $0.59 per share on February 21, which was in line with its previous dividend. Overall, the company holds a 53-year streak of consistent dividend growth. The stock supports a dividend yield of 1.9%, as of April 6.
At the end of Q4 2024, 66 hedge funds tracked by Insider Monkey held stakes in Abbott Laboratories (NYSE:ABT), growing from 63 in the previous quarter. The consolidated value of these stakes is more than $3.2 billion. With over 11.2 million shares, Fisher Asset Management was the company’s leading stakeholder in Q4.
