In this article, we will take a look at some of the best innovative stocks that pay dividends.
Innovation has become a key driving force in today’s market. With tech stocks drawing increased investor interest over the past year, it is evident where capital is flowing. Technology companies are harnessing disruptive tools such as artificial intelligence to analyze large and complex data sets. In the healthcare industry, progress in research and development has resulted in life-saving treatments and drug therapies. At the same time, the effects of climate change are pushing energy and utility providers to focus more on renewable energy. As a result, innovation is now central to the progress of nearly every industry.
This shift is not limited to established corporations. The growing number of startups across the United States also highlights this trend, as they bring forward new and innovative business ideas. Economist John Haltiwanger observed that Americans have been launching new businesses at a record pace. In fact, 2020 saw more startups than any previous year, with 2021 close behind. Data from the Kauffman Indicators of Entrepreneurship shows that over 80 percent of these startups survived their first year in 2021, the highest survival rate since 1999.
Given this, we will now take a look at some of the best innovative stocks that pay dividends.
Photo by Scott Graham on Unsplash
Our Methodology
For this article, we scanned Insider Monkey’s database of 1,000 hedge funds as of Q1 2025 and picked companies that actively prioritize and promote the development of new and groundbreaking ideas, products, services, or business processes. From that list, we picked 11 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them. These companies belong to different sectors, including healthcare, technology, aerospace, and defense.
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).
11. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 45
Hewlett Packard Enterprise Company (NYSE:HPE), headquartered in Texas, is a global information technology firm known for delivering smart, open, and forward-thinking tech solutions using a service-oriented model. It is recognized as one of the three key innovators behind the invention of inkjet printers, a major advancement in printing technology. The company also introduced the first programmable pocket calculator and played a role in the development of the atomic clock, which is capable of aligning global time with remarkable precision, accurate to within one-millionth of a second.
Hewlett Packard Enterprise Company (NYSE:HPE) is becoming a significant force in the fast-changing fields of edge computing and hybrid cloud, with a strong focus on helping businesses adopt artificial intelligence more easily. The company’s strategy revolves around making advanced technology both usable and widely available, matching the growing need among enterprises for integrated AI solutions. A key driver of this progress is the recent enhancement of HPE’s GreenLake platform, which now offers powerful features for AI and machine learning.
Hewlett Packard Enterprise Company (NYSE:HPE) is a solid dividend payer, having distributed regular dividends to shareholders since 2015. The company currently offers a quarterly dividend of $0.13 per share and has a dividend yield of 2.49%, as of July 28. It is among the best innovative stocks that pay dividends.
10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the best innovative stocks that pays dividends. The global technology company, which first gained attention for its punch card machines, successfully adapted to the rise of digital computers as they became the industry norm. Over the years, it has made significant strides in areas such as software, computer memory, databases, personal computing, and more recently, cognitive computing. These groundbreaking developments played a key role in shaping billion-dollar businesses.
International Business Machines Corporation (NYSE:IBM) holds a solid market position thanks to its long-standing focus on innovation and extensive industry knowledge, both of which support clients in successfully adopting and expanding AI. Its generative AI segment has seen steady growth and has now surpassed $7.5 billion.
International Business Machines Corporation (NYSE:IBM) has raised its payouts consistently for 30 years, which makes it a Dividend Aristocrat. The company currently offers a quarterly dividend of $1.68 per share and has a dividend yield of 2.55%, as of July 28.
9. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 62
Caterpillar Inc. (NYSE:CAT) is an American company known for its expertise in construction, mining, and various types of engineering equipment. In the early 1900s, it introduced the first practical track-type tractor, also known as a crawler, which revolutionized the construction and earthmoving industry by providing better traction and easier handling on rough surfaces. The company is considered one of the best innovative stocks with dividends.
Caterpillar Inc. (NYSE:CAT)’s widespread global footprint gives it a solid advantage as international infrastructure spending continues to rise. With growing demand for construction equipment around the world and potential benefits from shifting geopolitical dynamics, the company presents a compelling opportunity for investors interested in both income and long-term growth. Its efficient operations, consistent dividend increases, and strong global positioning make it a top pick for those seeking a reliable and forward-looking industrial investment.
Caterpillar Inc. (NYSE:CAT) raised its quarterly dividend by 7% in June. This was the company’s 31st consecutive year of dividend growth. It now pays a quarterly dividend of $1.51 per share for a dividend yield of 1.40%, as of July 28.
8. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 69
3M Company (NYSE:MMM) is well known for inventing Post-it Notes, which have become a common item in workplaces, classrooms, and homes around the world. The company also introduced Scotch tape in 1930, initially designed to seal cellophane food wrappers. This transparent tape soon gained widespread popularity thanks to its wide range of uses, from wrapping presents to handling routine household tasks.
3M Company (NYSE:MMM) recently reported earnings for the second quarter of 2025. The company’s revenues came in at $6.34 billion, which showed a 1.4% growth from the same period last year. It continued the momentum seen in the first quarter, marking the third consecutive quarter of organic growth across all three business segments. Management attributed this progress to the 3M eXcellence operating model, which underpins the company’s strategic priorities and reinforces a disciplined and consistent performance culture. With stronger execution and solid results in the first half of the year, the leadership expressed confidence in the raised full-year EPS forecast, which now also reflects the anticipated effect of tariffs.
3M Company (NYSE:MMM) is currently paying a quarterly dividend of $0.73 per share. Although the company reduced its dividend by half last year and has only increased it once since, it has continued to prioritize shareholder returns. In the latest quarter, 3M distributed $1.3 billion to investors through dividends and stock buybacks. The stock supports a dividend yield of 1.92%, as of July 28.
7. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 69
Texas Instruments Incorporated (NASDAQ:TXN) is an American global semiconductor company known for manufacturing analog and embedded chips. In 1954, it made history by developing the first commercial silicon transistor, a major advancement that helped reshape the electronics industry. The company was also among the pioneers in integrated circuit technology, commonly known as microchips, which played a key role in making electronic devices more compact and driving progress in computing and communication. In 1967, Texas Instruments also introduced the TI-2500, the first handheld electronic calculator.
Texas Instruments Incorporated (NASDAQ:TXN) reported strong earnings in the second quarter of 2025. The company posted revenue of $4.45 billion, up 16.4% from the same period last year. The revenue also beat analysts’ estimates by $132.8 million.
Texas Instruments Incorporated (NASDAQ:TXN) reported operating cash flow of $6.4 billion over the past 12 months, highlighting the resilience of its business model, the strength of its product lineup, and the advantages gained from 300mm production. During the same period, free cash flow reached $1.8 billion. The company returned $1.2 billion to shareholders through dividends. Currently, it offers a quarterly dividend of $1.36 per share and has a dividend yield of 2.87%, as of July 28.
6. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 75
Honeywell International Inc. (NASDAQ:HON), headquartered in North Carolina, serves clients across various industries. One of its key innovations is the thermostatic expansion valve (TXV), a crucial part used in air conditioning and refrigeration systems. This component regulates the flow of refrigerant to ensure proper temperature and pressure levels, ultimately improving the efficiency of cooling systems.
In the second quarter of 2025, Honeywell International Inc. (NASDAQ:HON) reported revenue of $10.35 billion, which showed an 8.09% growth from the same period last year. Building Automation led the performance, with three of the company’s four segments achieving sales growth of over 5% during the quarter. This reflected the effectiveness of the Accelerator operating system in responding to shifting business conditions and driving growth. The quarter also benefited from the company’s heightened emphasis on new product innovation, which contributed to the continued expansion of its record-high backlog.
Honeywell International Inc. (NASDAQ:HON) is a strong dividend payer, having raised its payouts for 14 years in a row. The company pays a quarterly dividend of $1.13 per share and has a dividend yield of 2.01%, as of July 28.
5. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 97
Oracle Corporation (NYSE:ORCL) is among the best innovative stocks with dividends. The company introduced the world’s first autonomous database, marking a significant milestone in data management. It also offers one of the most comprehensive and advanced collections of AI-driven cloud applications across the industry. In addition, Oracle supports the largest electronic health record (EHR) implementation globally, catering to over 9.5 million beneficiaries across the United States, Europe, and the Asia Pacific region.
Although Oracle Corporation (NYSE:ORCL) was initially viewed as a late entrant in the cloud infrastructure market, it has managed to establish a strong position, particularly by helping clients handle artificial intelligence workloads. This focus has led to fast-paced growth in that segment.
Oracle Corporation (NYSE:ORCL) is popular among dividend investors as the company has paid uninterrupted dividends since 2009. The company offers a quarterly dividend of $0.50 per share and has a dividend yield of 0.81%, as of July 28.
4. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 99
Pfizer Inc. (NYSE:PFE) is one of the best innovative dividend stocks. The American multinational biotech firm developed a form of santonin used to treat intestinal worms, which gained rapid popularity thanks to its effectiveness. One of its founders, Erhart, drew on his background in candy-making to add an almond-toffee flavor, making the medicine easier to take. Around the same time, the company also started producing citric acid, a key ingredient in popular beverages like Coca-Cola. This product eventually became a core part of Pfizer’s business and played a major role in its growth over the following decades.
Pfizer Inc. (NYSE:PFE) has struggled in recent years, with its stock falling by over 28% in the past decade. Despite this underperformance, the future looks more promising due to a solid lineup of drugs in development. Many of the concerns surrounding the company seem to be already priced into its lower share value. Recently, Pfizer’s forward price-to-earnings ratio was 8.49, which is well below its five-year average of 10.2.
In addition to its innovation, Pfizer Inc. (NYSE:PFE) has always remained committed to its shareholder obligations. In the most recent quarter, it returned $2.4 billion to investors through dividends. Moreover, it has raised its payouts for 15 consecutive years. The company pays a quarterly dividend of $0.43 per share and has a dividend yield of 7.08%, as of July 28.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 140
Salesforce, Inc. (NYSE:CRM) was named one of the World’s Most Innovative Companies for 2025 by Fast Company, recognized for its efforts in sustainable AI and for integrating purpose-built AI tools and agents into Slack for employees. As the leading AI-powered CRM, Salesforce is at the forefront of digital labor through its Agentforce solution, built on a deeply unified platform. The company helps businesses engage with customers in new ways, boost productivity, and deliver fast, impactful results.
Salesforce, Inc. (NYSE:CRM)’s AI initiatives are expanding rapidly. AgentForce, a generative AI product, now has over 4,000 paying customers and has been used in more than 800 customer deployments. It has the potential to generate $1 billion in annualized revenue. Data Cloud has exceeded $1 billion in annual recurring revenue and is processing 22 trillion records, representing a 175 percent year-over-year increase. Tableau, MuleSoft, and Slack also played key roles in major deals as customers increasingly adopt cross-cloud solutions. Salesforce emphasized Slack’s transformation into an enterprise AI interface, which has significantly reduced lead routing times from 20 minutes to just 19 seconds.
Salesforce, Inc. (NYSE:CRM) is one of the major tech companies that initiated its dividend policy in 2024. The company’s first-ever dividend was $0.40 per share. In March this year, it declared a 5% hike in its quarterly dividend and now pays a per-share dividend of $0.42. As of July 28, the stock has a dividend yield of 0.62%.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 159
Apple Inc. (NASDAQ:AAPL) has been a major force in reshaping the consumer electronics industry through groundbreaking products and services such as the iPhone, iPad, iTunes, and the App Store. Earlier this year, the company revealed its largest investment commitment to date, announcing plans to spend over $500 billion in the United States over the next four years.
This pledge continues Apple Inc. (NASDAQ:AAPL)’s long-standing support for American innovation and high-tech manufacturing. It will fund a variety of initiatives focused on artificial intelligence, silicon engineering, and skill-building programs for both students and the workforce nationwide.
Apple Inc. (NASDAQ:AAPL) has a strong dividend policy. The company offers a quarterly dividend of $0.26 per share, which it raised by 4% in May this year. This marked the company’s 14th consecutive year of dividend growth, which makes AAPL one of the best innovative dividend stocks. As of July 28, the stock has a dividend yield of 0.49%.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 284
Microsoft Corporation (NASDAQ:MSFT) is an American tech giant. The company developed Microsoft Windows, an operating system designed for personal computers. It was the first to provide a graphical user interface for IBM-compatible PCs, quickly rising to become the leading system in the PC market. Currently, nearly 90 percent of personal computers run on some version of Windows. The company has maintained its focus on innovation, regularly launching new and advanced products. Each year, it dedicates approximately 13 to 14 percent of its total revenue to research and development.
Microsoft Corporation (NASDAQ:MSFT) is a notable dividend-paying company, backed by a solid business model, consistent dividend payouts, and significant growth potential. The company has raised its dividend every year for the past 20 years, with a 10-year average growth rate of 10.2 percent. Alongside its dividend policy, Microsoft also runs a $60 billion share buyback program, offering investors a strong overall return strategy.
Microsoft Corporation (NASDAQ:MSFT) currently offers a quarterly dividend of $0.83 per share and has a dividend yield of 0.65%, as of July 28.
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.
READ NEXT: 10 Best and Safe Dividend Stocks to Buy Now and 10 Stocks with Highest Dividend to Buy Right Now
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
