In this article, we will take a look at some of the best dividend leaders.
Investors have long favored dividend stocks for their financial strength and solid returns, which have historically outpaced many other asset classes. Although they may be underperforming right now, their long-term gains continue to make them appealing. Building wealth through dividends takes time, as the benefits come gradually rather than immediately.
A report by Hartford Funds underscores the value of dividends over time. Since 1960, reinvested dividends and compounding have contributed to 85% of the total return in the broader market. The report also noted that in decades like the 1940s, 1960s, and 1970s— when overall returns were below 10%— dividends played a key role in driving investor gains.
Dividend-paying stocks are especially popular during economic slowdowns or market volatility. Companies in sectors like utilities and consumer staples tend to deliver reliable earnings regardless of market conditions. However, during bull markets, these stocks often lag behind, as seen since 2020 when large tech firms have led market surges.
Overall, dividend stocks remain a popular choice for investors because of the stability and downside protection they offer. Given this, we will take a look at some of the best dividend leaders to invest in.
Our Methodology
For this list, we scanned holdings of First Trust Morningstar Dividend Leaders Index Fund (FDL), which tracks the performance of the 100 highest-yielding stocks with consistent growth in dividends and can maintain their dividends in the future. From this list, we further refined our selection criteria by picking stocks across a range of different industries. We then ranked these stocks according to hedge funds having stakes in them, as per Insider Monkey’s Q1 2025.
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. Hormel Foods Corporation (NYSE:HRL)
Number of Hedge Fund Holders: 37
Hormel Foods Corporation (NYSE:HRL) is one of the best dividend leaders. On June 23, Goldman Sachs started coverage of Hormel with a Buy rating and set a price target of $35. The firm highlighted the company’s “strong protein demand” as a key reason for its positive view.
Goldman also pointed to Hormel’s robust packaged food lineup, featuring a variety of brands, price ranges, and options across important protein categories, as the main drivers of its optimistic stance. The firm made the following comment:
“We expect near-term supply reductions in turkey to support our Buy rating on HRL, along with its solid packaged food portfolio, including a recovery in its Planters nut business.”
Hormel Foods Corporation (NYSE:HRL) is a solid dividend company, having raised its dividends for 59 consecutive years. The company currently offers a quarterly dividend of $0.29 per share and has a dividend yield of 3.76%, as of June 23.
9. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 39
Archer-Daniels-Midland Company (NYSE:ADM) is among the best dividend leaders. The company is undertaking a strategic plan focused on boosting profitability, targeting $200–$300 million in cost savings over the next few years through operational streamlining and workforce reductions. These steps are designed to strengthen margins and bolster financial stability amid persistent economic headwinds.
This initiative may also support Archer-Daniels-Midland Company (NYSE:ADM)’s dividend. The company has raised its dividend annually for 52 consecutive years and has maintained uninterrupted quarterly payouts for 90 years. Strong underlying business fundamentals further back the stability of its dividend. At the end of the most recent quarter, the company had over $864 million available in cash and cash equivalents. It currently offers a quarterly dividend of $0.51 per share and has a dividend yield of 3.86%, as of June 23.
Archer-Daniels-Midland Company (NYSE:ADM) plays a vital role in the global agricultural supply chain, helping ensure food security by linking local demands with worldwide resources and capabilities.
8. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 39
Ford Motor Company (NYSE:F) offers a highly attractive dividend, with a current yield of 5.6%, well above the S&P’s average, which is under 1.5%. The company pays a quarterly dividend of $0.15 per share, amounting to $0.60 annually, a level it has maintained since raising the payout from $0.10 in mid-2022.
In addition to its regular dividends, Ford Motor Company (NYSE:F) has issued several special dividend payments in recent years. These extra payouts have helped the company meet its goal of returning 40% to 50% of its adjusted free cash flow to shareholders annually.
Ford Motor Company (NYSE:F) kicked off the year with a sense of optimism, having wrapped up 2024 on a high note by posting record-breaking revenue. CEO Jim Farley commented in the fourth-quarter earnings release that the company was becoming a fundamentally stronger company, highlighting its wide-ranging product lineup and the strong market position of Ford Pro.
Due to new tariffs on key imports, Ford Motor Company (NYSE:F) suspended its first-quarter financial guidance, including its adjusted free cash flow outlook. That said, the company heads into this uncertain period with solid financial footing, closing the first quarter with $27 billion in cash and $45 billion in total liquidity. However, if tariffs significantly affect its earnings and cash flow, it might be prudent for the company to scale back its dividend. Many analysts covering Ford expect a potential dividend cut, possibly as early as the next quarter.
7. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 43
General Mills, Inc. (NYSE:GIS) is one of the best dividend leaders to buy now. The company has proven to be resilient during tough economic times. In 2010, for instance, it company delivered record performance with higher sales, stronger margins, improved segment profits, and solid cash flow.
A major reason behind this stability is its dependable dividend, which has been paid consistently for 126 straight years, even through economic challenges, thanks to its strong cash flow. In the first nine months of FY25, General Mills, Inc. (NYSE:GIS) generated $2.3 billion in operating cash and paid out $1 billion in dividends.
General Mills, Inc. (NYSE:GIS) continues to attract income-focused investors by consistently evolving and expanding its portfolio. On June 23, the company announced two new initiatives in its North America Pet segment, with launches from Blue Buffalo and Edgard & Cooper. These efforts aim to align with changing consumer preferences and support growth in the pet food market.
The company offers a quarterly dividend of $0.60 per share, and its 4.5% dividend yield stands out as especially attractive in the packaged food sector.
General Mills, Inc. (NYSE:GIS) is an American multinational company that produces and markets branded, ultra-processed consumer foods, primarily sold through retail outlets.
6. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 46
The Kraft Heinz Company (NASDAQ:KHC) is one of the best dividend leaders to buy now. The company was once a classic income stock known for regularly raising its dividend. When Kraft merged with Heinz in 2015, they formed one of the largest consumer goods companies, initially maintaining a strong dividend strategy.
Dividends rose during the first three years after the merger, but then The Kraft Heinz Company (NASDAQ:KHC) drastically cut its dividend. Several high-profile brand acquisitions didn’t deliver the expected profits, leading the company to tighten its dividend policy to preserve cash.
Since early 2019, the quarterly dividend has remained fixed at $0.40 per share. That said, its cash flows are increasing, which provides a positive outlook for its dividends. The company’s operating cash flow has jumped from $2.46 billion in 2022 to $4.1 billion in 2024. Similarly, free cash flow grew from $1.5 billion in 2022 to $3.02 billion last year. Due to this cash flow, the company remained committed to its shareholder value, returning $477 million through dividends in the first quarter of 2025.
The Kraft Heinz Company (NASDAQ:KHC) pays a quarterly dividend of $0.40 per share and has a dividend yield of 6.17%, as of June 23.
5. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 63
While many bank stocks are recognized for paying dividends, only a select few are known for consistently maintaining those payments over time. U.S. Bancorp (NYSE:USB) has been rewarding shareholders with growing dividends for the past 14 years. Currently, it pays a quarterly dividend of $0.50 per share, and its dividend yield of 4.54% also catches investors’ attention.
U.S. Bancorp (NYSE:USB) is one of the few major banks to stay profitable during the 2008-09 financial crisis, thanks to its strong risk management. Unlike many peers, it doesn’t rely heavily on investment banking, which tends to be more volatile, making its earnings and revenue more stable and predictable.
In its latest earnings report, U.S. Bancorp (NYSE:USB) saw its Common Equity Tier 1 (CET1) capital ratio rise to 10.8%, up from 10.6% at the end of 2024. Additionally, average total loans increased 2.1% year-over-year and 0.9% quarter-over-quarter.
U.S. Bancorp (NYSE:USB) is the parent company of U.S. Bank National Association. As of March 31, the company holds about $676 billion in assets. Based in Minneapolis, it serves millions of customers at local, national, and global levels through a diverse range of services, including consumer, business, commercial, and institutional banking, as well as payments and wealth management.
4. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 65
Verizon Communications Inc. (NYSE:VZ) is among the best dividend leaders. The company has increased its dividend every year for the past 18 years. As the largest wireless carrier in the US, it operates a stable business that generates a large amount of free cash flow, which helps ensure a secure and growing dividend.
In the first quarter of 2025, Verizon Communications Inc. (NYSE:VZ) reported a strong cash position. Operating cash flow reached $7.8 billion, up from $7.1 billion in the same period of 2024. Free cash flow was $3.6 billion, compared to $2.7 billion in the first quarter of 2024.
For the full year 2025, Verizon Communications Inc. (NYSE:VZ) expects operating cash flow to be between $35.0 billion and $37.0 billion, with free cash flow projected between $17.5 billion and $18.5 billion. In addition, the company’s balance sheet remains healthy, with a leverage ratio of 2.3 for its unsecured debt (calculated as net unsecured debt divided by trailing 12-month adjusted EBITDA).
Considering this strong financial position, Verizon Communications Inc. (NYSE:VZ)’s dividend appears secure and well-positioned for future growth. The company offers a quarterly dividend of $0.6775 per share and has a dividend yield of 6.4%, as of June 23.
Verizon Communications Inc. (NYSE:VZ) is an American telecommunications company that provides a range of wireless and wireline communication services and products, including corporate networking solutions, data center and cloud services, and security and managed network services.
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 93
Merck & Co., Inc. (NYSE:MRK) has struggled over the past year, with its stock falling nearly 40%, partly due to concerns about rising competition from therapies still in development, such as Summit Therapeutics’ ivonescimab.
However, the company is working on a subcutaneous version of Keytruda, its flagship drug, which could help extend the drug’s patent protection. While ivonescimab may eventually pose a threat, it has yet to receive US approval and will likely take time to gain clearance for the full range of Keytruda’s uses.
At the same time, Merck & Co., Inc. (NYSE:MRK) is actively growing its robust pipeline, which includes dozens of programs and several new drug candidates. Over the long term, the company is expected to continue delivering strong performance and rewarding shareholders.
The company has raised its payouts for 14 consecutive years, and its nearly 89% growth over the last 10 years provides a solid dividend outlook. With a dividend yield of 4.04%, as of June 23, Merck & Co., Inc. (NYSE:MRK) remains a compelling option for long-term, income-focused investors.
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 94
Exxon Mobil Corporation (NYSE:XOM) is one of the best dividend leaders to invest in. The company’s updated 2030 plan targets $20 billion in earnings growth and $30 billion in additional cash flow over five years. It will invest $140 billion in key projects, including $30 billion in low-carbon initiatives and Permian Basin development, aiming for returns above 30%. It also plans to cut $18 billion in structural costs by 2030 compared to 2019.
With strong earnings growth and ongoing cost reductions, Exxon Mobil Corporation (NYSE:XOM) is on track to generate significant excess free cash flow, an estimated $165 billion between 2025 and 2030, after covering capital spending and its current dividend.
The company plans to return much of this surplus to shareholders through higher dividends and stock buybacks. If market conditions remain stable, Exxon Mobil Corporation (NYSE:XOM) expects to repurchase $20 billion in shares this year and another $20 billion in 2026. It has also increased its dividend at a 6% annual rate over the years, a pace it may maintain over the next five years.
Overall, Exxon Mobil Corporation (NYSE:XOM) has raised its dividends for 42 years in a row and currently pays a quarterly dividend of $0.99 per share. As of June 23, the stock has a dividend yield of 3.54%.
1. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 99
Pfizer Inc. (NYSE:PFE) is among the best dividend leaders to invest in. The company’s strategy focuses on steadily increasing its dividend, reinvesting in the business with strong financial returns, and carrying out value-driven share buybacks. In the first quarter, it returned $2.4 billion to shareholders through dividends.
Pfizer Inc. (NYSE:PFE)’s cash flow remains strong enough to support these payouts. In 2024, the company generated $12.7 billion in operating cash flow, up from $8.7 billion in 2023. Free cash flow also rose to $9.8 billion in 2024, compared to $4.8 billion in 2022.
That said, Pfizer Inc. (NYSE:PFE) has a five-year average payout ratio above 101%, which may seem alarming at first. A company can’t consistently pay more in dividends than it earns. After generating $9.8 billion in free cash flow in 2024, the company paid out around $9.5 billion in dividends, leaving it with a narrow margin.
However, its free cash flow is still enough to cover the dividend. Looking ahead, Pfizer Inc. (NYSE:PFE) plans to achieve $7.2 billion in cost savings by 2027, which should improve cash flow and provide more flexibility for sustaining its dividend. The company offers a quarterly dividend of $0.43 per share and has a dividend yield of 7.16%, as of June 23. It has raised its payouts for 15 years straight.
While we acknowledge the potential of PFE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PFE and that has 100x upside potential, check out our report about this cheapest AI stock.
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