In this article, we discuss the 10 best defensive dividend stocks for 2025.
According to a McKinsey report dated June 5 this year, consumer spending worldwide is still lagging behind the average at the start of 2020, with persistent inflation continuing to strain budgets. The report indicates a rather interesting trend, which is the declining connection between consumer spending and sentiment. It is difficult to predict how the average consumer will move next, because current trends show them skimping in one retail category, only to extend their budget in others. Patterns in consumer spending, previously attributed to COVID, have now taken root as long-term habits.
McKinsey noted that behavioral changes observed during COVID lockdowns, like relying on digital platforms, staying indoors, and prioritizing convenience, have become part of daily life. While people spend the majority of their free time alone on hobbies, fitness, online shopping, and social media, consumers still report low trust in social media for purchase decisions. Although its consistent presence still shapes their buying behavior and perceptions of brands.
Moreover, Gen Z is becoming the biggest and richest generation, with their spending rising faster than earlier generations. Growing up in a digital world and during COVID-19, Gen Z focuses more on financial success than traditional milestones like marriage or kids. Overall, consumers are also focusing on local and homegrown brands over imported products, in a bid to promote domestic businesses, ensure affordability, and get products that meet their needs more effectively. Due to rising prices, customers now delay their purchases by looking for deals and waiting for sales rather than buying full-priced items.
Meanwhile, NIQ’s Consumer Outlook report from September 29, 2025, shows that while consumers are used to absorbing new market shocks and consistent volatility, spending has become very purposeful to allocate resources properly. Consumers are unable to cater to further price hikes, which is why businesses will need to focus on volume growth over higher prices to maintain a competitive advantage. Additionally, digital shopping experiences are now preferred by customers for an effortless shopping experience.
With that outlook in mind, let’s take a look at the best defensive dividend stocks for 2025.
Image by Steve Buissinne from Pixabay
Our Methodology
For this list, we used a stock screener to identify dividend-paying consumer staples stocks. To narrow the selection, we focused on companies with strong hedge fund interest, consistent dividend records over several years, and healthy financial performance. These firms are better positioned to endure market fluctuations due to their operational scale. We included hedge fund sentiment data for each stock as of Q2 2025, ranking them in ascending order based on the number of hedge fund holders.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 46
Dividend Yield as of November 6: 3.44%
Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the best dividend stocks to buy. KDP’s current momentum is driven by its acquisition of JDE Peet’s (JDEP), a Dutch coffee chain. On October 27, the company announced that it is securing $7 billion from Apollo and KKR to fund the JDEP acquisition. KDP hopes this will appease investor concerns about the company’s excessive debt levels. The deal increases Keurig’s leverage and triples its commitment to a coffee segment investors had sought to minimize, according to TD Cowen analyst Robert Moskow in a note to investors in early October.
On October 29, Jefferies maintained a Buy call on KDP but trimmed the price target from $41 to $39 following “a largely successful” investor meeting where investors finally looked past the flaws on the initial JDEP deal. The deal itself was complicated, as the $7 billion strategic investment substitutes conventional debt with a payment model involving a joint venture and preferred equity. However, Jefferies remains confident that the company’s strategic reasoning and accretion expectations stay intact.
The company has a 5-year history of raising its dividend payouts, and the plans for expansion are not likely to deter its solid shareholder returns. Keurig Dr Pepper Inc. (NASDAQ:KDP) is a multinational beverage company that offers a range of beverages and single-serve brewing systems.
9. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 55
Dividend Yield as of November 6: 2.38%
Dollar General Corporation (NYSE:DG) is one of the best dividend stocks to buy. On October 28, Bernstein analyst Zhihan Ma reiterated a Buy rating on Dollar General, with a price target of $134.
On November 4, in another update independent of the analyst action, Dollar General reported that it has hired Travis Nixon as the Senior Vice President of AI Optimisation. This is a newly minted role that aims to implement artificial intelligence to improve operational efficiency, in addition to optimising merchandising and supply chains. Nixon has had over 10 years of AI and machine learning experience, and he previously worked as the Head of AI at Dropbox. His experience also includes technical roles at Meta and Microsoft.
Regarding Nixon’s appointment, Steve Deckard, Dollar General’s Executive VP of Strategy and Development, commented:
“At a time when our customers rely on us more than ever, we’re excited to welcome Travis and his transformative AI leadership to streamline operations and enhance the experience for Dollar General employees and customers. This new role represents our commitment to driving innovation to unlock value in our operations, making us stronger now and in the future. With greater strategic integration of AI, we look forward to accelerating and expanding existing efforts to drive operational excellence, cost efficiency, and customer-centric innovation.”
Dollar General Corporation (NYSE:DG) is an American discount retailer that offers a wide range of products, including everyday consumables, packaged foods, household items, and apparel.
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