In this article, we will take a look at some of the best dividend stocks for passive income.
In 2025, side hustles are becoming increasingly popular, with more people taking on extra work alongside their main jobs to boost their income or explore turning their passions into full-time ventures.
A report by Hostinger revealed that over 36% of Americans now have a side gig, earning an average of $530 per month. Gen Z, in particular, is leading this trend. Globally, the side hustle economy was valued at $556.7 billion in 2024. In March 2025 alone, the US recorded 452,255 new business applications, which was a 6.4% rise from the previous month. With 55% of full-time employees expressing interest in transforming their hobbies into businesses, this uptick points to a growing shift toward formalizing side hustles into entrepreneurial ventures.
The report also mentioned that affiliate marketing is becoming an increasingly popular choice for passive income, with the industry now worth $18.5 billion. Recent statistics show that more than 80% of businesses have integrated affiliate marketing into their digital marketing strategies.
Dividends remain one of the most reliable and well-established methods for generating passive income. Investing in Dividend Aristocrats— companies that have consistently increased their dividend payments for 25 straight years— is widely viewed as a dependable strategy for earning steady returns. Given this, we will take a look at some of the best dividend stocks for passive income.
Our Methodology
For this article, we scanned Insider Monkey’s database of 1,000 hedge funds as of Q1 2025 and selected stocks with strong dividend policies, sound financials, and dividend growth histories. These stocks have a minimum of 2% yield, as of July 10. The stocks are then ranked according to hedge funds having stakes in them.
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. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 31
Enterprise Products Partners L.P. (NYSE:EPD) is one of the best dividend stocks for passive income due to its dividend growth and high yield. On July 9, the company declared a 2% hike in its quarterly dividend to $0.545 per share. Through this increase, the company stretched its dividend growth streak to 29 years.
In the first quarter of 2025, Enterprise Products Partners L.P. (NYSE:EPD) reported distributable cash flow (DCF) of $2.0 billion in the first quarter of 2025, marking a 5% rise from the $1.9 billion it posted in the same period last year. DCF covered the distribution 1.7 times over for the recent quarter, allowing the company to retain $842 million in cash flow. Its adjusted cash flow from operations (CFFO) came in at $2.1 billion for the first quarter of both 2025 and 2024. For the twelve-month period ending March 31, 2025, adjusted CFFO totaled $8.6 billion. During that same period, the company’s payout ratio— which includes distributions to common unitholders and share buybacks— stood at 56% of adjusted CFFO.
In addition to dividend growth, Enterprise Products Partners L.P. (NYSE:EPD) also offers a solid dividend yield, which stands at 6.71%, as of July 10. The company ranks among the largest publicly traded partnerships and is a key midstream energy provider in North America, offering essential services to both producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals.
9. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 32
Realty Income Corporation (NYSE:O) is an American real estate investment trust company. It is among the best dividend stocks for passive income as the company distributes its payouts monthly. On July 8, the company declared a monthly dividend of $0.269 per share, which fell in line with its previous dividend. Overall, it has raised its payouts 131 times since its inception three decades ago. Moreover, the company has paid 661 consecutive monthly dividends to shareholders. The stock has a dividend yield of 5.67%, as of July 10.
Realty Income Corporation (NYSE:O) generates stable and reliable rental income from a diverse portfolio that includes retail, industrial, gaming, and data center properties. Over 90% of its rental revenue comes from sectors that tend to be resilient during economic downturns or less impacted by the rise of e-commerce. The company typically leases its properties to financially sound tenants on a net lease basis through long-term contracts that often include annual rent escalations, helping to drive steady income growth.
As of mid-2025, Realty Income Corporation (NYSE:O) maintains a prudent dividend payout ratio below 75% and has one of the strongest balance sheets in the REIT sector, with a leverage ratio of 5.4x. This solid financial footing enables the company to continue expanding its portfolio with income-producing assets.
8. Kimberly-Clark Corporation (NASDAQ:KMB)
Number of Hedge Fund Holders: 45
Kimberly-Clark Corporation (NASDAQ:KMB) stands out as a strong income stock, having increased its dividend every year for 53 straight years, a track record that places it among the elite group of Dividend Kings. While past performance doesn’t guarantee future increases, this consistent history reflects the company’s dedication to rewarding shareholders. With a payout ratio of approximately 67%, the company appears to have enough financial flexibility to continue boosting its dividend in the years ahead.
Kimberly-Clark Corporation (NASDAQ:KMB)’s cash position remained strong in the first quarter of 2025. The company reported an operating cash flow of $327 million, and its capital spending came in at $204 million. It remained committed to its shareholder value, returning $466 million to investors through dividends and share repurchases.
Kimberly-Clark Corporation (NASDAQ:KMB) currently offers a quarterly dividend of $1.26 per share and has a dividend yield of 3.83%, as of July 10. The Texas-based consumer goods company is best known for its well-established brands such as Huggies, Kleenex, and Kotex. The company focuses on essential personal care and household products and operates across international markets.
7. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 62
Target Corporation (NYSE:TGT) is among the best dividend stocks for passive income. In June, the company declared a 2% increase in its quarterly dividend to $1.14 per share. This was the company’s 54th consecutive year of dividend growth. In addition, it has paid 232 consecutive dividends since its inception in 1967. As of July 10, the stock has a dividend yield of 4.42%.
Target Corporation (NYSE:TGT) generated strong earnings in the first quarter of 2025. Its revenue of $23.8 billion, fell slightly by nearly 3% on a YoY basis. However, the company’s digital comparable sales rose by 4.7%, driven by over 35% growth in same-day delivery services through Target Circle 360 and ongoing gains in Drive Up orders. Moreover, it returned $510 million to shareholders through dividends during the quarter, which marked a 1.8% increase from the same period last year.
Target Corporation (NYSE:TGT) runs nearly 2,000 retail locations alongside its online store, Target.com, with the goal of delivering everyday joy to families. Since 1946, the company has committed 5% of its profits to community support, contributions that now total millions of dollars each week.
6. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 65
Colgate-Palmolive Company (NYSE:CL) is a strong dividend stock for passive income. The company has been rewarding shareholders with growing dividends for the past 62 consecutive years, which places it in an elite group of Dividend Kings. The stock supports a dividend yield of 2.28%, as of July 10.
In the first quarter of 2025, Colgate-Palmolive Company (NYSE:CL) reported strong earnings, with its revenue coming in at $4.9 billion, which beat estimates by $47.8 million. The company’s GAAP gross profit margin and Base Business gross profit margin both rose by 80 basis points, reaching 60.8%. It maintained its leading position in the toothpaste market, holding a global share of 40.9% year to date. The company also continued to lead the manual toothbrush segment with a global market share of 31.9% over the same period.
Colgate-Palmolive Company (NYSE:CL) is a consumer goods company offering a range of products across oral care, personal care, household, and pet care categories. The stock has surged by nearly 6% in the past six months.
5. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 69
Bristol-Myers Squibb Company (NYSE:BMY) is among the best dividend stocks for passive income. On June 17, the company declared a quarterly dividend of $0.62 per share, which was consistent with its previous dividend. Overall, it has raised its payouts for 16 consecutive years and has delivered uninterrupted payouts for 93 years in a row. The stock offers a dividend yield of 5.2%, as of July 10.
Bristol-Myers Squibb Company (NYSE:BMY)’s cash position remained strong in the first quarter of 2025. The company ended the quarter with $10.8 billion available in cash and cash equivalents, up from $10.3 billion at the end of December 2024. Its Q1 revenue of $11.2 billion, though down by 5.6% on a YoY basis, beat analyst estimates by $494.6 million.
Bristol-Myers Squibb Company (NYSE:BMY) is an American multinational pharmaceutical company that specializes in developing and delivering innovative medicines. The stock has surged by 16% in the past 12 months.
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 71
PepsiCo, Inc. (NASDAQ:PEP) is one of the best dividend stocks for passive income. The company’s earnings in the first quarter of 2025 came in strong, with its revenue of $17.9 billion beating estimates by $190 million. In its earnings report, the company noted that its operations stayed resilient despite the growing complexity of geopolitical and macroeconomic challenges in the first quarter. Looking ahead, management anticipates increased volatility and uncertainty, especially concerning global trade, which is likely to drive up supply chain costs. In addition, consumer demand remains muted across several markets, with the outlook continuing to be uncertain.
PepsiCo, Inc. (NASDAQ:PEP) is a Dividend King with 53 consecutive years of dividend growth under its belt. The company’s quarterly dividend comes in at $1.4225 per share and has a dividend yield of 4.19%, as of July 10.
PepsiCo, Inc. (NASDAQ:PEP) is a worldwide leader in the food and beverage industry, involved in producing, marketing, and distributing a diverse range of products around the globe. The company is recognized for its well-known brands such as Pepsi, Frito-Lay, Gatorade, and Quaker Oats, offering popular snacks, drinks, and other food items.
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 75
McDonald’s Corporation (NYSE:MCD) is one of the best dividend stocks for passive income. The company currently offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.36%, as of July 10. It is just two years away from becoming a Dividend King, with a current dividend growth streak spanning 48 years.
McDonald’s Corporation (NYSE:MCD) reported mixed earnings in the first quarter of 2025. The company posted revenue of $5.96 billion, which fell by 3.45% from the same period last year and also missed analysts’ expectations by $170.2 million. It also saw a 1.0% drop in global comparable sales, but after accounting for the extra Leap Day in the previous year, sales were essentially flat. Over the past year, systemwide sales to loyalty program members across 60 markets surpassed $31 billion, with around $8 billion coming from the first quarter alone.
McDonald’s Corporation (NYSE:MCD) stands as the largest global foodservice retailer, operating more than 43,000 restaurants across over 100 countries. Roughly 95% of its locations are owned and run by independent local franchisees.
2. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 81
Chevron Corporation (NYSE:CVX) is popular among dividend investors because of its solid cash position. In the first quarter of 2025, the company reported an operating cash flow of $5.2 billion, and its free cash flow came in at $1.3 billion. During the quarter, it returned $6.9 billion to shareholders, including $3 billion in dividends.
In addition, Chevron Corporation (NYSE:CVX) has returned over $78 billion to shareholders over the past three years. Management emphasized that, despite shifting market dynamics, the company’s robust asset portfolio, solid financial position, and ongoing commitment to disciplined capital spending and cost control are expected to drive leading free cash flow growth by 2026.
Chevron Corporation (NYSE:CVX) currently offers a quarterly dividend of $1.71 per share and has a dividend yield of 4.42%, as of July 10. The company has been rewarding shareholders with growing dividends for the past 38 consecutive years.
1. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 87
The Coca-Cola Company (NYSE:KO) is among the best dividend stocks for passive income. The company enjoys strong profitability, supported by a loyal global customer base and a well-organized distribution network. Its core Coca-Cola products account for most of its revenue, while the acquisition of new brands contributes to quicker sales growth. These brands are swiftly incorporated into Coca-Cola’s wide-reaching distribution system, helping to increase sales and enhance profit margins through improved efficiency.
In its recent earnings report, The Coca-Cola Company (NYSE:KO) highlighted that its performance once again reflected the strength of its all-weather strategy. While certain developed markets faced challenges, the broad global presence helped the company manage a complex external landscape. Leadership expressed confidence in the firm’s ability to generate lasting long-term value by staying aligned with its core mission and maintaining a strong connection with consumers.
The Coca-Cola Company (NYSE:KO) has been growing its dividends for 63 consecutive years, and currently, the company offers a quarterly dividend of $0.51 per share. As of July 10, the stock has a dividend yield of 2.94%, as of July 10.
While we acknowledge the potential of KO 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 KO and that has 100x upside potential, check out our report about this cheapest AI stock.
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