In this article, we will take a look at some of the best wide moat stocks that pay dividends.
Wide-moat stocks refer to companies that possess lasting competitive strengths, helping them stay ahead of rivals. These advantages support long-term earnings and often make such companies reliable investment choices.
There are various ways a company can create a wide moat. Some do so through strong brand recognition, which draws in customers and allows for higher pricing. Others achieve it by keeping their fixed costs lower than competitors, giving them a cost edge. In some cases, government regulations limit market entry, offering additional protection from competition.
Investing in wide-moat companies is attractive because they tend to deliver steady, long-term returns. Unlike businesses in highly competitive sectors, where profits can swing due to price wars and intense rivalry, wide-moat firms are generally more stable during economic downturns and periods of market uncertainty. Their solid market standing and strong financial health help them navigate challenges that might severely impact companies with weaker competitive positions.
Given this, we will take a look at some of the best wide moat stocks that pay dividends.
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Our Methodology
To select wide-moat dividend stocks, we identified companies with durable competitive advantages and a strong history of rewarding shareholders. These advantages included brand strength, cost leadership, network effects, regulatory barriers, and high switching costs, all of which help protect a company from competition. From that group, we picked 10 dividend companies with the highest number of hedge fund investors, as per Insider Monkey’s database of 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. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 63
Medtronic plc (NYSE:MDT) is one of the best wide moat stocks that pay dividends. The company remains a major player in the medical technology space as it focuses on medical devices. Its broad product lineup targets a variety of chronic conditions, including heart disease, diabetes, chronic pain, and acute care needs. With strengths across several therapeutic areas, the company has multiple paths for growth and holds a strong position in each market it serves.
R&D is key in healthcare, often drawing attention to smaller companies with breakthrough potential, but they carry high risk and usually don’t pay dividends. Medtronic plc (NYSE:MDT) stands out as a stable, mature firm that offers a dividend. The company has raised its payouts for 48 consecutive years, which means that it’s just two years away from becoming a Dividend King. The company pays a quarterly dividend of $0.71 per share and has a dividend yield of 3.30%, as of June 24.
Medtronic plc (NYSE:MDT) recently announced that it will spin off its diabetes care division into an independent, publicly traded company within the next 18 months. The move is part of its strategy to streamline operations and focus on core, high-margin growth areas.
Although it will part with its fastest-growing segment, Medtronic plc (NYSE:MDT)’s overall business remains strong, with a broad portfolio of products that continue to deliver steady revenue and profits. In a tough market, investors often favor reliable, stable companies like Medtronic.
9. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 65
Becoming the world’s most chosen personal care brand is no small feat. Colgate-Palmolive Company (NYSE:CL) is present in over half of all households globally, which reflects strong leadership, a deep understanding of consumers, and steady investment in innovation and branding.
Colgate-Palmolive Company (NYSE:CL) has carefully built its flagship Colgate brand since the early 1800s, transforming it from a simple dental powder into a global leader in oral care, now available in more than 200 countries. The brand is backed by solid research and development and offers a wide range of products.
Colgate holds a 20 percent share of the global toothpaste market, which grew at an average rate of 5 percent annually from 2009 to 2023. That makes it 2.5 times larger than its closest competitor. Its dominance is even stronger in some regions, with about 53 percent market share in Australia and 77 percent in Mexico. Oral care contributes roughly half of Colgate-Palmolive Company (NYSE:CL)’s $20 billion in global revenue, making the Colgate brand the core of the company’s competitive strength.
After past underinvestment, the company has boosted marketing and innovation, launching new products like whitening pens, which have reignited growth. With solid retail ties and ongoing investment, Colgate-Palmolive Company (NYSE:CL) is well-positioned to adapt to changing consumer needs and continue delivering value.
In addition, the company is a strong dividend payer, having raised its payouts for 62 consecutive years. It has never missed a dividend since 1895. It offers a quarterly dividend of $0.52 per share and has a dividend yield of 2.36%, as of June 24.
8. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 71
After years of weak growth caused by operational missteps and limited investment, PepsiCo, Inc. (NASDAQ:PEP)’s management has successfully turned things around, delivering steady gains in revenue and profits. However, the company still has more room to grow, supported by strong long-term trends in the snack industry, expansion into high-growth beverage segments like energy drinks, and increasing demand in emerging markets such as Latin America, Africa, and Asia-Pacific. Its integrated business model also helps it bring products to market more efficiently.
PepsiCo, Inc. (NASDAQ:PEP) stays ahead of health and wellness trends by introducing zero-sugar and functional beverages and exploring unique flavors, including through its recent acquisition of Poppi. The company owns popular brands like Pepsi, Quaker Oats, and Aquafina, which are staples in grocery stores. Its sales generally remain steady even during economic downturns, giving it a solid advantage in navigating recessions.
PepsiCo, Inc. (NASDAQ:PEP) also holds a strong dividend policy. The company has been rewarding shareholders with growing dividends for the past 53 consecutive years. Currently, it offers a quarterly dividend of $1.4225 per share and has a dividend yield of 4.34%, as of June 24.
7. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 85
Union Pacific Corporation (NYSE:UNP) is one of the largest railroads in North America, operating mainly in the western two-thirds of the US. It also connects with Canadian rail networks and serves all six major gateways to Mexico. While it might seem vulnerable to trade tensions, the company has solid earnings and guidance, even as many others lowered theirs.
Union Pacific Corporation (NYSE:UNP) divides its freight revenue into three main segments: bulk, industrial, and premium, each contributing about a third of total freight income. Its diverse product mix and low operating costs help it stay resilient even during periods of higher tariffs. The company continues to demonstrate strong efficiency and return on invested capital. A high operating margin reflects its ability to generate strong profits after covering operating expenses.
Union Pacific Corporation (NYSE:UNP) intends to invest $3.4 billion in 2025 to enhance safety, upgrade infrastructure, and support customer growth. This breaks down to over $9 million per day spent on improving rail operations and driving economic and supply chain activity across the 23 states it serves, benefiting local, regional, and national economies.
The company’s vast and intricate rail network is tough to replicate because of its size, the complexity of its connections, the specialized equipment it uses, and the major time and cost involved in building and maintaining such infrastructure.
Union Pacific Corporation (NYSE:UNP) has been paying uninterrupted dividends to shareholders for the past 125 years, while growing its payouts for 18 consecutive years. The company offers a quarterly dividend of $1.34 per share and has a dividend yield of 2.35%, as of June 24.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 87
The Coca-Cola Company (NYSE:KO) is among the best wide moat stocks that pay dividends. Its strong brand and close ties with retailers and food service providers have led analysts to classify it as having a wide moat based on intangible assets. However, Coca-Cola’s advantage goes beyond brand value. Analysts also highlight its significant cost benefits from operating at an efficient scale.
The Coca-Cola Company (NYSE:KO)’s growth is expected to pick up if inflation slows down. As the world’s largest beverage company, it is likely to maintain this position for years to come.
Coca-Cola is highly profitable, backed by a loyal global customer base and an efficient distribution network. Its main Coca-Cola products generate the majority of revenue, while acquisitions of new brands help drive faster sales growth. These new brands are quickly integrated into Coca-Cola’s extensive distribution system, boosting sales and improving profit margins through greater efficiency.
With a huge customer base and a vast global manufacturing and distribution network, The Coca-Cola Company (NYSE:KO) is well-positioned to maximize efficiency throughout its supply chain in both emerging and developed markets.
The Coca-Cola Company (NYSE:KO) has raised its payouts for 63 years straight. The company offers a quarterly dividend of $0.51 per share and has a dividend yield of 2.83%, as of June 24.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 88
The Procter & Gamble Company (NYSE:PG) is one of the best wide moat stocks that pay dividends. The company is behind many of the world’s most recognized household brands. Its wide-ranging portfolio includes well-known names like Ariel, Pampers, Bounty, Gillette, and several skincare lines.
The Procter & Gamble Company (NYSE:PG) has built strong retail relationships across the globe, with its products now sold in more than 180 countries. However, given its extensive international presence, P&G is exposed to risks such as currency fluctuations— especially a stronger U.S. dollar— and economic challenges in major markets like China.
Despite these risks, The Procter & Gamble Company (NYSE:PG) is considered one of the most reliable dividend-paying stocks. Its strength lies in a diverse mix of leading products across sectors like beauty, health, grooming, home care, and family care. Backed by powerful brand recognition and a world-class supply chain, P&G consistently delivers higher profit margins compared to many of its competitors.
The Procter & Gamble Company (NYSE:PG) has been rewarding shareholders with growing dividends for the past 69 years. The company offers a quarterly dividend of $1.0568 per share for a dividend yield of 2.64%, as of June 24.
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 91
Johnson & Johnson (NYSE:JNJ) is a long-established leader in the healthcare industry, with a strong portfolio of high-performing drugs in areas like immunology and cancer treatment, along with a thriving medical devices business. In 2023, the company separated its slower-growing consumer health segment, which includes well-known products such as Band-Aids and Tylenol, by launching it as an independent publicly listed firm called Kenvue (KVUE).
In times of economic uncertainty, large and reputable healthcare companies like Johnson & Johnson (NYSE:JNJ) are often considered reliable investment options. The company currently offers a dividend yield of 3.4%. While the dividend remains steady and continues to grow, the stock price itself can vary significantly from year to year. The company holds one of the longest dividend growth streaks in the market, spanning 63 years. It offers a quarterly dividend of $1.30 per share.
In March, Johnson & Johnson (NYSE:JNJ) announced plans to increase its investment in US operations, committing more than $55 billion over the next four years to develop new manufacturing and research facilities. This represents a 25% increase compared to its investment over the previous four years.
3. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 93
Costco Wholesale Corporation (NASDAQ:COST) stands out from other retailers in several key ways. One of its biggest strengths is its massive membership base. Over 130 million people pay an annual fee just to shop there. These members are highly loyal, with renewal rates typically exceeding 90%. Thanks to the steady income from these membership fees, Costco can operate with much lower profit margins than most competitors.
The company also keeps a limited range of products on its shelves, which gives it more leverage when dealing with suppliers. Vendors are aware that getting their products into Costco Wholesale Corporation (NASDAQ:COST) means facing less competition and benefiting from the trust shoppers place in the company’s product selection.
This bargaining power extends to payment processing as well. Unlike most major US retailers that accept a wide range of credit cards, Costco Wholesale Corporation (NASDAQ:COST) only takes Visa. In exchange for this exclusivity, the company enjoys significantly lower payment processing fees.
In addition, Costco Wholesale Corporation (NASDAQ:COST) is a strong dividend payer. The company has raised its payouts for 21 years in a row. Currently, it pays a quarterly dividend of $1.30 per share for a dividend yield of 0.52%, as of June 24.
2. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 108
S&P Global Inc. (NYSE:SPGI) is one of the best wide moat stocks that pay dividends. The company operates in a space closely tied to the expansion of financial markets. As global debt levels rise and financial systems become more complex, the need for credit ratings and financial analytics continues to grow. This allows the company to benefit from long-term economic trends, including the increasing use of artificial intelligence and the evolving structure of global finance.
Entering the credit rating business is extremely challenging due to strict regulations, which create a strong barrier for new competitors.
S&P Global Inc. (NYSE:SPGI)’s strong financial track record reflects the quality of its business. The company has increased its annual dividend for 53 years in a row, highlighting its steady profitability and dedication to rewarding shareholders. Even during tough times like the 2008 financial crisis, the company proved its ability to perform reliably. Currently, it offers a quarterly dividend of $0.96 per share and has a dividend yield of 0.73%, as of June 24.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 284
Microsoft Corporation (NASDAQ:MSFT) has a diverse range of technology operations, including cloud computing, Microsoft Office 365, gaming, LinkedIn, search, advertising, and more.
A key advantage for Microsoft Corporation (NASDAQ:MSFT) is that many of these areas involve services rather than physical products, making them less vulnerable to tariffs. This has likely contributed to the company’s strong showing in 2025. The stock has surged by over 17% since the start of the year.
However, a major driver of its success is Azure, which is part of its cloud segment. Azure plays a central role in powering Microsoft Corporation (NASDAQ:MSFT)’s artificial intelligence capabilities and overall tech strategy.
Microsoft Corporation (NASDAQ:MSFT) retains its users by prioritizing customer needs, fostering innovation, and delivering strong, consistent user experiences across its wide range of products. The company uses approaches such as tailoring solutions to individual needs, applying design thinking in product creation, and regularly updating its offerings based on user feedback. By serving both individual consumers and large businesses, Microsoft strengthens its competitive edge through a broad and differentiated product lineup.
Microsoft Corporation (NASDAQ:MSFT) offers a quarterly dividend of $0.83 per share and has a dividend yield of 0.68%, as of June 24. The company has raised its dividends for 20 consecutive years.
While we acknowledge the potential of MSFT 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 MSFT and that has 100x upside potential, check out our report about this cheapest AI stock.
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