In this article, we discuss the 10 best dividend stocks hedge funds are buying.
According to a Business Insider report dated October 30, hedge funds are on track for their strongest annual results following Covid-19, despite the year being politically and economically volatile. In the first three quarters of 2025, the average gains for hedge funds clocked in at 16.6%, while they reported net inflows of over $40 billion, as cited by Citco, a fund administrator.
The hedge fund industry is gearing up for its strongest year since 2020, with the average gains in Q3 2025 coming in at 5.2% within every core strategy. In addition, 80% of funds reported an upswing in returns, according to Citco data.
Multistrategy funds have a diverse investment methodology, and they gained about 19.3% in 2025 on average, with equity funds clocking in at 17.1% in terms of average gains and global macro funds standing at 15.8%. Citadel and Millennium, hedge funds that manage assets worth $69 billion and $79 billion, respectively, were up 5% and 6% through September.
On November 10, Reuters cited a Goldman Sachs report, stating that hedge funds, including equity traders, have posted gains exceeding 13% this year as of October end. Hedge fund stock pickers in October realized 1.75% in gains, falling short of the 2.3% increase in the S&P 500 index. According to Goldman Sachs, crowded trades, pouring money into healthcare and tech stocks, and market volatility contributed to positive returns. Hedge funds remained invested in global stocks for the second consecutive month as of October, as they perceive a favorable outlook in the long run. However, systematic funds and quant funds did not fare particularly well in October, potentially due to their exposure to short bets. Macro funds, on the other hand, performed better than in September.
With that outlook in mind, let’s take a look at the best dividend stocks hedge funds are buying.
Photo by Dan Dennis on Unsplash
Our Methodology
For this list, we manually browsed Insider Monkey’s Q3 database of 978 hedge funds for dividend stocks favored by the highest number of hedge fund holders and boasting a minimum of 10 years of dividend history. We included hedge fund sentiment data for each stock as of Q3 2025, ranking them in ascending order based on the number of hedge fund holders. For further insight, we used company websites to count the number of years of consistent dividend payouts for each company.
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. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 111
Number of Years of Dividend Payouts: 20
Bank of America Corporation (NYSE:BAC) is one of the best dividend stocks to buy according to hedge funds. On November 19, Chris Kotowski, an Oppenheimer analyst, reiterated a Buy recommendation on BAC. The price target was set at $55.
In a November 5 report by Fortune, it was revealed that Bank of America’s yearly expenditure has risen by 44% over the course of the last ten years, reaching $4 billion in 2025. The increase in spending stemmed from new tech initiatives, notably the adoption of artificial intelligence within the bank.
Hari Gopalkrishnan, BAC’s chief technology and information officer, mentioned to Fortune:
“We have steadily increased our spend in technology, now up to $13 billion a year, of which $4 billion goes into strategic growth. We leverage across the enterprise, so every dollar you spend gets the maximum bang for the buck, as opposed to sort of being siloed by line of business.”
Gopalkrishnan mentioned that the latest AI products and applications will be scaled and implemented across each of the eight business segments at Bank of America.
Bank of America Corporation (NYSE:BAC) is one of the most popular dividend stocks among hedge funds, with the company boasting 20 years of dividend payouts.
9. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 114
Number of Years of Dividend Payouts: 53
Eli Lilly and Company (NYSE:LLY) is one of the best dividend stocks to buy according to hedge funds. On November 23, Morgan Stanley analyst Terence Flynn maintained a Buy call on Eli Lilly, along with a price target of $1,290.
In a different corporate update, dated November 24, Eli Lilly reported that it will present the latest data from its breast cancer pipeline at the San Antonio Breast Cancer Symposium (SABCS). This symposium will take place from December 9 to 12. These findings reflect Lilly’s ongoing progress across core mechanisms in HR+, HER2– breast cancer, which is the most prevalent breast cancer subtype.
Jacob Van Naarden, Executive Vice President and President of Lilly Oncology, commented:
“At SABCS 2025, we’re proud to showcase new data across our portfolio of investigational and approved breast cancer medicines, addressing the three most important biologic targets in HR+ breast cancer: CDK4/6, the estrogen receptor, and PI3K. Together, these presentations reflect the continued momentum of Lilly’s breast oncology portfolio and our commitment to translating biologic conviction into meaningful progress for people living with breast cancer.”
Eli Lilly and Company (NYSE:LLY) is an Indianapolis-based company that develops, manufactures, and markets pharmaceuticals for diabetes, oncology, autoimmune and inflammatory diseases, mental health, and pain management globally.
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