In this article, we will take a look at some of the best dividend stocks according to hedge funds.
The sustained high inflation over the past two years has resulted in increased borrowing costs, posing difficulties for both businesses and consumers. Additionally, uncertainty surrounding potential interest rate cuts by central banks, regulatory changes under the new US administration, and ongoing geopolitical tensions have further dampened economic activity. In this challenging landscape, competition for capital has intensified, with companies focusing on their competitive advantages and adjusting their strategies for both short-term stability and long-term growth to secure essential resources amid rising economic uncertainty.
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Dividends are becoming increasingly attractive in the current market environment. A report from S&P Global indicates that global dividend growth saw a significant boost in 2024, rising by 8.5%. This growth was especially notable in the Asia-Pacific region, where government policies encouraged companies to shift from annual to semiannual dividend distributions. Meanwhile, the US market experienced a surge in new and reinstated dividends, with the technology, media, and telecommunications (TMT) sector playing a key role in driving this trend. The report also pointed out that over the past decade, companies across the broader market—excluding real estate investment trusts (REITs)—have, on average, distributed 85% of their discretionary cash flow (DCF), which is calculated as operating cash flow minus capital expenditures. On average, this distribution has been divided between dividends and share buybacks, with 47% allocated to dividends and 38% directed toward buybacks.
Global dividend growth had been slowing since the post-COVID recovery, but that trend reversed last year, with the growth rate accelerating to 8%. Shareholders received approximately $180 billion more in payouts than in 2024, which came as a surprise given the prevailing geopolitical and economic uncertainties, according to an S&P Global report. The firm projects that total global dividend payments will remain at $2.3 trillion in 2025.
Analysts point out that earnings growth has traditionally been the key driver of dividend increases. With strong earnings growth recorded last year, expectations for 2025 are even higher. Goldman projects an 11% rise in earnings per share this year, up from an estimated 8% in 2024, which is expected to drive a 7% increase in dividends, compared to a 6% rise last year. Meanwhile, Ohsung Kwon, a US equity strategist at BofA Securities, holds an even more optimistic view, forecasting a 12% dividend boost this year, supported by accelerating earnings growth.
Historically, dividends accounted for 40% of the market’s total returns from 1936 to 2012, but their contribution has dropped to just 16% over the past decade, according to a BofA Securities research note published late last year. However, Kwon expects dividends to play a more substantial role in overall market returns moving forward. In view of this, we will take a look at some of the best dividend stocks according to hedge funds.
Photo by Artem Beliaikin on Unsplash
Our Methodology
For this article, we scanned Insider Monkey’s database of over 1,000 hedge funds and identified the top 10 companies that pay regular dividends to shareholders and have dividend yields of at least 1%, as of February 25. This means the stocks mentioned in this list are the most popular dividend stocks among the elite hedge funds in America. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
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).
10. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 93
Union Pacific Corporation (NYSE:UNP) is a Nebraska-based transport company. It transports a wide range of products and commodities, providing it with broad exposure across multiple industries. This diversification helps mitigate the effects of downturns in any single market segment. Since the start of 2025, the stock has surged by over 7.5%.
In the fourth quarter of 2024, Union Pacific Corporation (NYSE:UNP) reported $6.12 billion in revenue, marking a 1% decline from the previous year. However, a 5% rise in revenue carloads contributed to improved overall performance. The operating ratio strengthened to 58.7%, showing a 220-basis-point improvement, despite a 70-basis-point impact from the ratification of a crew staffing agreement. Additionally, operating income grew by 5% to $2.5 billion.
On February 6, Union Pacific Corporation (NYSE:UNP) declared a quarterly dividend of $1.34 per share, which was in line with its previous dividend. The company maintained a solid cash position in FY24, generating more than $9.3 billion in operating cash flow. By the end of the quarter, the company had over $1 billion in cash and cash equivalents. This financial strength has allowed it to reward shareholders with dividends for 125 consecutive years consistently. Moreover, it has increased its payouts annually for the past 18 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 2.18%, as of February 25.
9. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 96
Wells Fargo & Company (NYSE:WFC) is an American financial services company, headquartered in California. In the fourth quarter of 2024, the company reported revenues of $20.3 billion, reflecting a slight 0.5% decline from the same quarter the previous year. However, net income saw a substantial increase, rising to $5.07 billion from $3.4 billion a year earlier. This improvement was driven by a 15% year-over-year growth in fee-based revenue, which helped counterbalance the anticipated decline in net interest income. In addition, operating expenses were lower than the prior year, and credit trends remained stable. The company also maintained a strong capital position, ending the year with a CET1 ratio of 11.1%.
Although consumer banking remains Wells Fargo & Company (NYSE:WFC)’s main revenue generator, its investment banking division has emerged as a key growth driver. In the most recent quarter, investment banking fees saw a significant 59% year-over-year increase. In the past 12 months, the stock has surged by nearly 41%.
On January 28, Wells Fargo & Company (NYSE:WFC) announced a quarterly dividend of $0.40 per share, maintaining the same payout as the previous quarter. The company has consistently distributed dividends to shareholders since 1988, which makes it one of the best dividend stocks. As of February 25, the stock has a dividend yield of 2.10%.
At the end of Q4 2024, 96 hedge funds tracked by Insider Monkey held stakes in Wells Fargo & Company (NYSE:WFC), growing significantly from 72 in the previous quarter. The collective value of these stakes is over $6.6 billion. With over 14.4 million shares, Harris Associates was the company’s leading stakeholder in Q3.
8. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 98
An American multinational pharmaceutical company, Johnson & Johnson (NYSE:JNJ) ranks eighth on our list of the best dividend stocks according to hedge funds. The company has a diverse portfolio that includes over 10 high-performing drugs across multiple therapeutic areas, such as infectious diseases and oncology. In addition to its pharmaceutical business, the company is a major player in the medical device industry, providing further diversification. Its financial performance remains stable and reliable. Since the start of 2025, the stock has surged by nearly 15%.
In the fourth quarter of 2024, Johnson & Johnson (NYSE:JNJ) reported $22.5 billion in revenue, marking a 5.2% increase from the prior year. As a prominent healthcare company, it remains focused on developing treatments for diseases with substantial unmet needs, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. The MedTech division recorded a 6.2% rise in global operational sales, with acquisitions and divestitures contributing 1.5% to this growth. Strong demand for electrophysiology products and Abiomed supported growth in the Cardiovascular segment, while the General Surgery unit saw increased sales of wound closure products.
Johnson & Johnson (NYSE:JNJ)’s quarterly dividend currently comes in at $1.24 per share and has a dividend yield of 3.00%, as of February 25. The company maintains one of the longest dividend growth streaks in the market, spanning 62 years.
7. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is a New York-based multinational investment bank that offers a wide range of related services to its consumers. Lately, the company has placed a strong emphasis on digital transformation and streamlining operations, demonstrating its commitment to navigating an evolving financial environment. Key factors for success include addressing economic challenges, ensuring regulatory compliance, managing risks, and investing in technology to enhance customer experiences and improve efficiency. Over the past year, the stock has soared by over 41%.
In fiscal year 2024, Citigroup Inc. (NYSE:C)’s net income climbed nearly 40% to $12.7 billion, exceeding its annual revenue goal. This strong performance was driven by growth in its Services, Wealth, and US Personal Banking segments. The company maintained expenses within expected levels, improved its efficiency ratio, and completed a major restructuring. Annual revenue reached $81.1 billion, reflecting a 3% increase from the previous year.
Citigroup Inc. (NYSE:C) currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 2.86%, as of February 25. The company returned $6.7 billion to shareholders through dividends and share buybacks, highlighting its dedication to delivering shareholder value. Moreover, with a track record of consistent dividend payments for 34 years, it remains one of the best dividend stocks to buy according to hedge funds.
6. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 102
Philip Morris International Inc. (NYSE:PM) is an American multinational tobacco company that also offers a wide range of related products. The company reported strong earnings in the fourth quarter of 2024, with revenues amounting to $9.7 billion, up 7.3% from the same period last year. Its operating income came in at $3.3 billion, up 14.8% from the prior-year period. In addition, the company’s smoke-free business saw a strong performance as quarterly shipments of heated tobacco units (HTU) and oral smoke-free products surpassed 40 billion units for the first time.
Zyn, a nicotine pouch brand made with nicotine powder and flavoring rather than tobacco, has remained Philip Morris International Inc. (NYSE:PM)’s strongest growth driver since its acquisition in late 2022. In the fourth quarter, Zyn’s sales volume jumped 46.2% to 183.8 million cans. Looking ahead, the company expects Zyn volumes to increase by 34% to 41% in 2025, reaching between 780 million and 820 million cans.
Philip Morris International Inc. (NYSE:PM) has been grabbing investors’ attention due to its strong dividend policy. The company offers a quarterly dividend of $1.35 per share and has an attractive dividend yield of 3.4%, as of February 25. It holds a 15-year track record of consistent dividend growth, which makes PM one of the best dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in Philip Morris International Inc. (NYSE:PM) jumped to 102 in Q4 2024, from 75 in the previous quarter. The total value of these stakes is more than $12.6 billion.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 104
Exxon Mobil Corporation (NYSE:XOM) ranks fifth on our list of the best dividend stocks, with 104 hedge funds in Insider Monkey’s database owning stakes in the American energy company, up from 86 in the preceding quarter.
The company announced late last year that its annual project spending is expected to increase to between $28 billion and $33 billion from 2026 to 2030, aiming to boost oil and gas production by 18%. As a result, the company anticipates an additional $20 billion in earnings and $30 billion in cash flow by the end of the decade, reinforcing its commitment to sustainable, competitive, and growing shareholder returns. In addition, Exxon Mobil Corporation (NYSE:XOM) raised its cost-reduction target to $18 billion by 2030, up from the previous goal of $15 billion by 2027.
In the fourth quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) reported $83.4 billion in revenue, marking a 1.1% decline from the same period a year earlier. Since 2019, it has achieved $12.1 billion in structural cost savings, outpacing industry peers and mitigating the effects of inflation and expansion. For the year, it recorded the highest return on capital employed in its sector at 12.7%, with a five-year average of 10.8%.
In fiscal year 2024, Exxon Mobil Corporation (NYSE:XOM) showcased strong financial performance, generating $55 billion in free cash flow—the third-highest level in the past decade. Total free cash flow for the year reached $36.2 billion, while $16.7 billion was returned to shareholders through dividends. The company also remains committed to its $20 billion annual share repurchase program, which is set to continue through 2026. Moreover, it has maintained a 42-year streak of consecutive dividend increases. The company offers a quarterly dividend of $0.99 per share and has a dividend yield of 3.62%, as of February 25.
4. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 113
Bank of America Corporation (NYSE:BAC) is a North Carolina-based financial services company that offers a wide range of related services and products to its consumers. The company has a significant presence in retail banking and a well-developed digital platform, providing millions of customers with checking accounts, credit cards, mortgages, and lending services. Its investment banking and asset management divisions, which include Merrill and BofA Securities, offer advisory, trading, and financial planning solutions. In the past 12 months, the stock has surged by nearly 31%.
In Q4 2024, Bank of America Corporation (NYSE:BAC) reported solid financial performance, with revenue reaching $25.3 billion, up from $22 billion in the same period a year earlier. Net income more than doubled to $6.7 billion, compared to $3.1 billion the previous year. The bank also expanded its customer base, adding 213,000 new consumer checking accounts, marking six consecutive years of quarterly growth. In addition, it returned $2 billion to shareholders through dividend payments.
Bank of America Corporation (NYSE:BAC) is one of the best dividend stocks on our list as the company has been regularly paying dividends to shareholders for the past 27 years. It currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 2.37%, as of February 25. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q4 2024.
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 123
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services company that offers services in commercial banking, financial transaction processing, and asset management. The company remains focused on technology and digital banking, advancing innovations in AI, blockchain, and cybersecurity to enhance efficiency and sustain its industry leadership. In the past 12 months, the stock has surged by over 41%.
In fiscal year 2024, JPMorgan Chase & Co. (NYSE:JPM) achieved record earnings, reporting an annual profit of $58.5 billion—an 18% increase from the previous year. This growth was primarily driven by its dealmakers and traders, who benefited from a market rebound in the fourth quarter. However, net interest income (NII) fell 3% year-over-year to $23.5 billion in Q4 2024, marking its first decline since 2021.
JPMorgan Chase & Co. (NYSE:JPM) is widely regarded as one of the best dividend stocks, having consistently paid dividends to shareholders since 1972. In the latest quarter, the company reaffirmed its commitment to investor returns by distributing $3.5 billion in dividends. It offers a quarterly dividend of $1.25 per share and has a dividend yield of 1.93%, as of February 25. The company has built up substantial excess capital, amounting to approximately 10% of its market capitalization, while adhering to a disciplined capital allocation strategy, with share repurchases being a lower priority. In the third quarter of 2024, the bank repurchased $6.36 billion worth of stock. As the macroeconomic outlook improves, it is expected to have less need for maintaining high cash reserves and will gradually return more capital to shareholders.
2. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) is an American health insurance company that a wide range of related products and services to its consumers. On February 24, the company declared a quarterly dividend of $2.10 per share, which was in line with its previous dividend. The company began issuing annual dividends in 1990 before transitioning to quarterly payouts in 2010, consistently increasing its dividend since then. The stock has a dividend yield of 1.82%, as of February 25.
UnitedHealth Group Incorporated (NYSE:UNH) has fallen by over 8% since the start of 2025. While analysts anticipate a somewhat challenging operating environment in the coming year, its strategic initiatives and pricing strategies are expected to support growth. In addition, the company has enhanced its operating cost ratio through strategic portfolio adjustments, strengthening its long-term profitability. Its diversified portfolio further provides a competitive advantage in the market.
UnitedHealth Group Incorporated (NYSE:UNH) exceeded investor expectations with its fiscal year 2024 earnings, delivering strong performance. Revenue for the year rose 8% to $400 billion, driven by growth across its broad range of services. Operating earnings totaled $32.3 billion, but after adjusting for expenses related to a cyberattack and challenges in South America, adjusted operating earnings stood at $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) also reported solid cash flow results, aligning with investor expectations. It generated $24.2 billion in operating cash flow for the year, equivalent to 1.6 times its net income. Throughout 2024, UnitedHealth returned more than $16 billion to shareholders through dividends and share repurchases. In the fourth quarter, its return on equity reached 23.7%, reflecting strong earnings and efficient capital management.
1. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor company that offers a wide range of semiconductor and infrastructure software products. The company has garnered significant investor interest due to its critical role in enabling products across various industries, including data centers and smartphones. The company plays a dominant role in networking, managing over 99% of internet traffic. Its market position was further strengthened by the acquisition of VMware, a cloud virtualization firm, a year ago. Since then, VMware’s operating margin has climbed to 70%, and the company is on track to exceed its target of generating more than $8.5 billion in adjusted EBITDA within three years.
In the fourth quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) reported $14.05 billion in revenue, reflecting an impressive 51% increase from the previous year. Semiconductor revenue reached a record $30.1 billion, while AI-related revenue surged 220% year-over-year to $12.2 billion, driven by strong demand for its advanced AI XPUs and Ethernet networking solutions. For the full fiscal year, adjusted EBITDA rose 37% year-over-year to a record $31.9 billion.
Broadcom Inc. (NASDAQ:AVGO) has consistently increased its dividend payments for 14 consecutive years, supported by its strong cash flow. In the latest quarter, the company generated $5.6 billion in operating cash flow and $5.48 billion in free cash flow, representing 39% of its total revenue. It currently pays a quarterly dividend of $0.59 per share and has a dividend yield of 1.16%, as of February 25.
Overall Broadcom Inc. (NASDAQ:AVGO) ranks first on our list of the best dividend stocks according to hedge funds. While we acknowledge the potential for AVGO 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 AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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