In this article, we are going to discuss the 12 best dividend stocks to invest in according to hedge funds.
Investors tend to favor dividend stocks in times of market volatility and economic uncertainty, as we have seen in recent months. As a result, dividend ETFs, including funds focused on high-yield stocks and dividend growers, garnered nearly $22 billion in net inflows in the first quarter, according to Morningstar. This marked the strongest quarter for these funds since the second quarter of 2022.
Morningstar further reported that in a low-yield environment, equity investors can be drawn to stocks offering large payouts. Still, that approach can come with risks. Some of the market’s highest yields are tied to struggling sectors, industries, or companies.
A company’s yield can also rise when its share price falls. In many cases, that decline happens for fundamental reasons tied to weaker business performance or investor concerns. Because of that, equity-income investing tends to work best when approached with a strong focus on risk awareness. Investors often pay close attention to dividend durability and a company’s ability to keep supporting payouts over time.
Given this, we will take a look at some of the best dividend stocks according to hedge funds.
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Our Methodology
To collect data for this article, we used our screeners to identify stocks with the highest number of hedge funds invested in them at the end of Q4 2025, as per the Insider Monkey database. We then shortlisted stocks that had an annual dividend yield of at least 2%, as of May 21. Finally, we limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. The following are the Best Dividend Stocks to Buy According to Hedge Funds.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
12. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 43
Dividend Yield as of May 21: 3.39%
Shell plc (NYSE:SHEL) is an integrated energy company with operations spanning exploration, production, refining, marketing, and chemical manufacturing, alongside growing investments in biofuels and hydrogen.
On May 18, HSBC analyst Kim Fustier upgraded Shell plc (NYSE:SHEL) from ‘Hold’ to ‘Buy’, while also raising the firm’s price target on the stock from £3,350 to £3,700. The target boost represents an upside potential of over 14% from the current share price.
The upgrade was driven by HSBC’s higher cash flow estimates and Shell’s improved medium-term growth visibility following its $16.4 billion acquisition of the Canadian energy company ARC Resources last month. The analyst firm believes that the valuation gap between Shell and TotalEnergies is unjustified, given the former’s higher dividend yield, lower exposure to the Middle East conflict, and improving upstream production visibility.
On the other hand, Morgan Stanley turned more bearish on Shell plc (NYSE:SHEL) earlier on May 12 and reduced its price target on the stock by £94 (read more details here).
11. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 51
Dividend Yield as of May 21: 3.42%
Duke Energy Corporation (NYSE:DUK) engages in the distribution of natural gas and energy-related services. The company owns and operates a diverse mix of regulated power plants – including hydro, coal, nuclear, natural gas, solar, and battery storage.
On May 18, Truist analyst Richard Sunderland lowered the firm’s price target on Duke Energy Corporation (NYSE:DUK) from $142 to $137, but kept a ‘Buy’ rating on the shares. The trimmed target, which still indicates an upside of 10% from the current levels, came as part of a broader research note revising the analyst firm’s models in the Power and Utilities group ahead of the American Gas Association’s Financial Forum.
As we stand in the third year of the data center wave, investments and growth expectations across the sector continue to rise. Truist believes that integrated electric utilities are the key beneficiaries in the current scenario, given their role in building the infrastructure to serve the soaring energy demand.
Duke Energy Corporation (NYSE:DUK) continues to benefit from the AI boom and signed an additional 2.7 GW of electric service agreements with data center customers during Q1, bringing its total executed agreements to around 7.6 GW. Moreover, the utility announced that it was in advanced discussions on an additional 15.4 GW of data centers.
Duke Energy Corporation (NYSE:DUK) was also recently included in our list of the 12 Best Electric Utility Stocks to Buy for the Data Center Power Surge.
