In this article, we will take a look at some of the best Strong Buy stocks that pay dividends.
Dividend-paying stocks have consistently rewarded investors with steady and reliable returns, particularly during times of economic uncertainty. Their performance has generally been more stable than many other types of investments, which is why more investors are turning to them to benefit from compounding over time. This growing interest has also led several companies, including many in the tech sector, to begin issuing dividends in 2024.
Dividends have played a major role in driving long-term returns from equity investments. A study by London-based Guinness Global Investors, which examined market performance since 1940, found that dividends and reinvested payouts made up about 94% of the index’s total return over that period. To illustrate, a $100 investment made at the end of 1940 would have grown to roughly $525,000 by the end of 2019 with reinvested dividends, compared to only $30,000 if dividends had been taken as cash.
The study also showed that the importance of dividends increases with the length of the holding period. Since 1940, dividends have accounted for around 27% of total returns over a typical one-year holding period. That figure rises to 36% over three years, 40% over five years, and 47% over ten years. For investments held over twenty years, dividends contributed about 57% of the total return. Because of this long-term impact, many analysts recommend including dividend-paying stocks in a portfolio. Given this, we will take a look at some of the best Strong Buy stocks that pay dividends.
Our Methodology
We used Finviz and Tipranks to make a list of Strong Buy dividend stocks and then selected the top 10 with consensus Strong Buy ratings and the highest number of hedge fund holders as of Q1 2025. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 36
Energy Transfer LP (NYSE:ET) is among the best Strong Buy stocks. The company’s generous yield rests on a solid and dependable financial base. Around 90% of its yearly earnings come from long-term, fee-based agreements and government-regulated pricing, which ensure consistent cash flow. In addition, it returns only a modest share of its cash flow to shareholders. In the first quarter, the midstream firm reported $2.3 billion in distributable cash flow—more than double the $1.1 billion it paid out.
With this surplus, Energy Transfer LP (NYSE:ET) can continue expanding its operations without compromising its financial strength. Its leverage ratio currently sits at the lower end of its 4.0 to 4.5 target range, marking its strongest financial standing to date.
This robust position also supports ongoing increases to its distribution. Energy Transfer LP (NYSE:ET) is aiming for quarterly raises, with a goal of 3% to 5% annual growth. Over the past year, it has already lifted its payout by more than 3%. On July 24, the company declared a 0.8% hike in its quarterly dividend to $0.33 per share. This marked the company’s 14th consecutive quarter of dividend increases. The stock has a dividend yield of 7.29%, as of July 29.
9. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 45
Diamondback Energy, Inc. (NASDAQ:FANG) is among the best dividend stocks for income investors. As a policy, the company plans to return half of its free cash flow to shareholders through a mix of base and variable dividends, along with share repurchases. The company still has $1.845 billion left under its $6 billion share repurchase program.
By the end of the first quarter, Diamondback Energy, Inc. (NASDAQ:FANG) had bought back $829 million worth of its shares, roughly $2.80 per share. The company reported strong earnings in the first quarter of 2025, with revenues of $4.05 billion, up 81.7% from the same period last year. The revenue also beat analysts’ estimates by $294.2 million. Its cash position also remained stable with an operating cash flow of $2.4 billion and free cash flow of $1.5 billion.
Diamondback Energy, Inc. (NASDAQ:FANG) initiated its dividend policy in 2018 and has raised its payouts multiple times since then. The company currently offers a quarterly dividend of $1.00 per share and has a dividend yield of 3.44%, as of July 29.
8. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 63
U.S. Bancorp (NYSE:USB) is one of the best Strong Buy dividend stocks. The company revealed on July 1 its plan to increase its quarterly dividend by 4%, raising the payout from $0.50 to $0.52 per share. This move came on the heels of the bank’s solid performance in the Federal Reserve’s stress test. In addition to the dividend increase, the company intends to proceed with share repurchases under its existing $5 billion buyback program.
During the second quarter of 2025, U.S. Bancorp (NYSE:USB) reported diluted earnings per share of $1.11 and achieved a return on tangible common equity of 18%, along with a return on average assets of 1.08%. Notably, a year-over-year increase in top-line revenue, combined with disciplined expense management, contributed to 250 basis points of positive operating leverage (as adjusted) and led to an efficiency ratio of 59.2% for the quarter.
Currently, U.S. Bancorp (NYSE:USB) offers a quarterly dividend of $0.50 per share and has a dividend yield of 4.34%, as of July 29. The company has been rewarding shareholders with growing dividends for the past 14 consecutive years.
7. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 73
American Tower Corporation (NYSE:AMT) is an American real estate investment trust that focuses on owning, developing, and managing wireless and broadcast communications infrastructure across multiple countries.
Given its critical role in supporting ongoing technological advancements, American Tower Corporation (NYSE:AMT) continues to perform well in the second quarter of 2025. It reported a 3% increase in total revenue, driven in part by a 1% uptick in property revenue. In addition, tenant billings rose by 5%, reflecting stronger demand for its infrastructure services.
American Tower Corporation (NYSE:AMT)’s cash position also remained strong. The company reported an operating cash flow of nearly $1.3 billion, and its free cash flow was $969 million. It maintains a strong approach to dividend payments. While it did not raise its dividend during 2024, the company did announce a 5% increase in March. Since 2013, its dividends have grown at an average annual rate of 20%. Currently, it pays a quarterly dividend of $1.70 per share and has a dividend yield of 3.17%, as of July 29.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 87
The Coca-Cola Company (NYSE:KO) has outperformed in a struggling consumer staples sector, where many food and beverage stocks have hit long-term lows due to inflation and high interest rates. These factors have dampened demand, especially among lower-income consumers.
Shifting preferences toward healthier options have also played a role. The Coca-Cola Company (NYSE:KO)’s latest results showed strong volume growth in Coca-Cola Zero Sugar, Diet Coke, Fanta, Fairlife, BodyArmor, and Powerade— highlighting the success of its investment in low-sugar and diet products.
Investor confidence in The Coca-Cola Company (NYSE:KO) has recently strengthened, partly due to its resilience against potential tariff effects. In the second quarter of 2025, the company posted solid results, with revenue reaching $12.6 billion, up 1% year-over-year and $42 million above analyst expectations. Operating income surged by 63%, and on a comparable currency-neutral basis, it rose by 15%.
The Coca-Cola Company (NYSE:KO) is also a strong dividend payer, having raised its payouts for 63 consecutive years. The company offers a quarterly dividend of $0.51 per share and has a dividend yield of 2.94%, as of July 29.
5. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 87
AT&T Inc. (NYSE:T) is a Texas-based multinational telecommunications company. The company has capitalized on a recent Verizon price increase to boost its wireless subscriber base. In the second quarter, the company added 479,000 retail postpaid subscribers, including 401,000 new postpaid phone users.
Looking ahead, AT&T Inc. (NYSE:T) plans to accelerate its fiber expansion, aiming to reach 4 million new locations annually. It recently crossed 30 million fiber locations and is working to double that by 2030. Planned acquisitions will support this growth, including its Gigapower joint venture with BlackRock and partnerships with other open-access network providers.
AT&T Inc. (NYSE:T) also posted a strong cash position. The company’s operating cash flow was $9.8 billion, and its free cash flow amounted to $4.4 billion. The company distributed just over $2 billion in dividends, with a coverage ratio of 2.2 times. Its quarterly dividend of $0.2775 has remained unchanged since May 2022. The stock has a dividend yield of 4.05%, as of July 29.
4. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 100
Walmart Inc. (NYSE:WMT)’s strength lies in its position within the retail industry. The company follows an “everyday low prices” approach, aiming to offer quality products at prices people can afford. In strong economic conditions, it attracts steady customers who seek value either out of preference or necessity. These shoppers usually remain loyal regardless of economic shifts.
When the economy slows down or enters a recession, Walmart Inc. (NYSE:WMT) often draws in higher-income customers who are looking to cut back on spending. As a result, the business tends to hold up well even during tough times. The stock has surged by over 9% since the start of 2025, and its 12-month return came in at over 41.2%.
Walmart Inc. (NYSE:WMT) is among the best Strong Buy dividend stocks as the company has been growing its payouts for 52 consecutive years. The company currently offers a quarterly dividend of $0.235 per share and has a dividend yield of 0.96%, as of July 29.
3. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 108
S&P Global doesn’t operate in the spotlight like many other stocks. Instead, it functions behind the scenes as a key part of the financial system. Its four interconnected divisions— S&P Ratings, S&P Indices, S&P Market Intelligence, and S&P Commodity Insights— play a central role in how capital is priced, allocated, and tracked around the world. Although its presence may seem subtle, its reach is extensive. More than $100 trillion in assets follow its indices, 95% of bond investors rely on its ratings, and numerous ETFs pay licensing fees to use its benchmarks.
The acquisition of IHS Markit has significantly strengthened S&P Global Inc. (NYSE:SPGI)’s data capabilities, enhancing its offerings with AI-driven analytics, more advanced terminals, and deeper market insights. This allows clients to anticipate market trends rather than just report on them. S&P’s business relies on intellectual property rather than heavy capital investment. Its true strengths lie in its content, technology, and reputation. This model supports gross margins above 70%, strong recurring revenue, low customer turnover, and solid pricing power.
In addition to this, S&P Global Inc. (NYSE:SPGI) is a strong dividend stock. On June 25, the company declared a quarterly dividend of $0.96 per share, which was in line with its previous dividend. Overall, it has raised its payouts for 53 years in a row. As of July 29, the stock has a dividend yield of 0.72%.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 117
Bank of America Corporation (NYSE:BAC) is an American multinational investment bank and financial services holding company. On July 23, the company declared a 7.7% hike in its quarterly dividend to $0.28 per share. Through this increase, the company stretched its dividend growth streak to 11 years, which makes it one of the best Strong Buy dividend stocks. The stock has a dividend yield of 2.34%, as of July 29.
Bank of America Corporation (NYSE:BAC) reported strong earnings in the second quarter of 2025. The company reported revenue of $26.46 billion, which showed a 4.2% growth from the same period last year. Book value per common share increased by 8% to reach $37.13, while tangible book value per common share rose by 9% to $27.71. The company set aside $1.6 billion for credit losses, up slightly from $1.5 billion in both the second quarter of 2024 and the first quarter of 2025. Net charge-offs remained steady at $1.5 billion compared to those same periods. The Common Equity Tier 1 (CET1) capital ratio under the standardized approach stood at 11.5%, comfortably exceeding the regulatory minimum.
1. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 158
Broadcom Inc. (NASDAQ:AVGO), a semiconductor and infrastructure firm, has consistently outperformed the market in recent years, thanks to the strong growth across the tech sector. The company serves a wide range of industries, including cloud infrastructure, networking, cybersecurity, storage, broadband, wireless, and hyperscale data centers. Its acquisition of VMware in late 2023 further strengthened its position in infrastructure software. The stock has surged by over 28% since the start of 2025.
Broadcom Inc. (NASDAQ:AVGO)’s core business, including contributions from VMware, generates steady and reliable cash flow. In addition to its solid footing in the tech space, it is also recognized as a dependable dividend-paying stock, offering a combination of income and long-term growth.
Since introducing its dividend in 2011, Broadcom Inc. (NASDAQ:AVGO) has increased its payout every year for 14 consecutive years, including an 11% boost last year. With strong growth driven by rising demand for its AI-focused semiconductors, the company appears well-positioned to continue raising its dividend moving forward. The company offers a quarterly dividend of $0.59 per share and has a dividend yield of 0.79%, as of July 29.
While we acknowledge the potential of AVGO 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 AVGO and that has 100x upside potential, check out our report about this cheapest AI stock.
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