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.

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.

10. Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Holders: 66

Dividend Yield as of May 21: 2.21% 

Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement company serving approximately 20 million customers a week in the United States.

On May 21, RBC Capital lowered its price target on Lowe’s Companies, Inc. (NYSE:LOW) from $264 to $232, while maintaining a ‘Sector Perform’ rating on the shares. The trimmed target still indicates an upside potential of almost 7% from the current price level.

The analyst highlighted that Lowe’s EPS in the recent Q1 report exceeded expectations by roughly 2%, despite comparable sales falling slightly short of forecasts. Moreover, the company reaffirmed its FY 2026 guidance of comparable sales of flat to up 2% and adjusted profit per share of between $12.25 and $12.75.

However, RBC noted that, given a potentially weaker category outlook, there may still be a downside risk to the 2026 forecasts. Moreover, while the analyst firm believes that much of the guidance risk is already reflected in the stock price, it continues to see limited catalysts that could drive its estimates higher.

9. Automatic Data Processing, Inc. (NASDAQ:ADP)

Number of Hedge Fund Holders: 68

Dividend Yield as of May 21: 3.09%

Automatic Data Processing, Inc. (NASDAQ:ADP)  is a comprehensive global provider of cloud-based human capital management (HCM) solutions that unite HR, payroll, talent, time, tax and benefits administration, and is a leader in business outsourcing services, analytics, and compliance expertise.

On May 18, Wells Fargo upgraded Automatic Data Processing, Inc. (NASDAQ:ADP) from ‘Underweight’ to ‘Equal Weight’, while assigning the stock a price target of $214.

Wells Fargo believes that ADP offers a better risk/reward profile at current levels, given the “modest improvement” in the company’s fundamentals and its year-to-date share price weakness. The analyst firm is of the view that while the recent concerns surrounding AI “are not completely unfounded, they are likely overdone”.

Automatic Data Processing, Inc. (NASDAQ:ADP) posted strong results for its Q3 2026 last month, exceeding estimates in both profits and revenue. The company delivered 7% revenue growth, 80 basis points of adjusted EBIT margin expansion, and 10% adjusted EPS growth compared to the year-ago period.

Moreover, ADP raised its guidance for FY 2026. The company now expects its adjusted EPS to rise by 10%-11%, compared to its prior outlook for a 9%-10% growth. Its consolidated revenue growth outlook also now stands at 6% to 7%, from around 6% previously. Additionally, the company now expects full-year EBIT margin expansion of 70-80 basis points, versus its prior range of 50-70 bps.

Matrix Asset Advisors, an asset management company, stated the following regarding Automatic Data Processing, Inc. (NASDAQ:ADP) in its Q1 2026 investor letter:

“During the quarter, we started new partial positions in Automatic Data Processing, Inc. (NASDAQ:ADP) and Procter & Gamble. Automatic Data Processing (ADP) is a leader in the business of administering payroll, group health insurance, business insurance, workers’ comp plans, retirement plans, and compliance for large and small businesses. These administrative functions are critical to a business’s operations, and the company has a very high client retention rate. The company’s stock price has declined approximately 30% over the past year on concerns that artificial intelligence will disrupt its business and a slowing labor market. ADP has a long history of increasing earnings and dividends. At our initial purchase price of about $215, the shares were trading at the lower end of their historic P/E multiple, 18x forward earnings, and at the higher end of their dividend yield at 3.2%. ADP has increased its dividend for over 50 consecutive years. We believe the share price will rebound strongly when the company demonstrates that the fears about AI’s disruption to its business are exaggerated.”

8. Gilead Sciences, Inc. (NASDAQ:GILD)

Number of Hedge Fund Holders: 71

Dividend Yield as of May 21: 2.50%

Next on our list of the Best Dividend Stocks is Gilead Sciences, Inc. (NASDAQ:GILD). It is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally.

On May 20, Maxim analyst Michael Okunewitch upgraded Gilead Sciences, Inc. (NASDAQ:GILD) from ‘Hold’ to ‘Buy’, while assigning the stock a price target of $165. The price estimate reflects an upside of over 25% from the current levels.

The analyst expects Gilead’s core business growth to reach 5%-6%, exceeding the previous estimates of 4%-5%. Maxims believes that GILD deserves to trade at a premium to peers due to the growth potential of Yeztugo in PREP, Trodelvy in first-line breast cancer, and the company’s continued dominance in the treatment of HIV. However, the analyst firm added that following the stock’s pullback from its all-time highs, Gilead’s P/E multiple of 15.1 times projected 2026 earnings is now roughly in line with its biopharma peers.

The upgrade comes after Gilead Sciences, Inc. (NASDAQ:GILD) exceeded estimates in its Q1 report on May 7. However, the company revealed that it now expects an adjusted loss per share in the range of $1.05 to $0.65 for full-year 2026, primarily due to the IPR&D charges of $11.5 billion and financing costs related to Arcellx, Ouro Medicines, and Tubulis GmbH deals.

7. Philip Morris International Inc. (NYSE:PM)

Number of Hedge Fund Holders: 82

Dividend Yield as of May 21: 3.12% 

Philip Morris International Inc. (NYSE:PM) operates as a global tobacco company. Its products include cigarettes and smoke-free alternatives. Its smoke-free business also covers wellness and healthcare products, along with consumer accessories such as lighters and matches.

On May 20, BofA analyst Lisa Lewandowski raised the firm’s price target on Philip Morris International Inc. (NYSE:PM) from $200 to $209, while maintaining a ‘Buy’ rating on the shares. The target boost reflects an upside of almost 11% from the current price level.

BofA views the recent changes in the FDA’s enforcement approach towards vapes and nicotine pouches as “a positive development” for Philip Morris. The analyst believes that the stock deserves to trade at a premium, given the strength of its operations, visibility into smoke-free growth, and a resilient earnings outlook. BofA also highlighted the appointment of Massimo Andolina as Group CFO and noted that it expects “a smooth and orderly transition from Babeau to Andolina, with continuity in both strategy and capital allocation”.

With an impressive annual dividend yield of 3.12%, Philip Morris International Inc. (NYSE:PM) was also recently included in our list of the 10 Best High-Yield Dividend Growth Stocks to Buy Right Now.

6. Bristol-Myers Squibb Company (NYSE:BMY)

Number of Hedge Fund Holders: 82

Dividend Yield as of May 21: 4.25%

Bristol-Myers Squibb Company (NYSE:BMY) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide.

Bristol-Myers Squibb Company (NYSE:BMY) announced on May 20 that it was partnering with Anthropic to deploy Claude across its research, clinical development, manufacturing, commercial, and corporate functions. The agreement will provide over 30,000 BMS employees with the platform and signals a significant evolution in how the pharma company deploys AI, extending well beyond the general-purpose chat tools and toward “agentic capabilities built into the day-to-day workflows and systems that underpin its science and global operations”.

Moreover, Bristol-Myers Squibb Company (NYSE:BMY) revealed that it would also leverage Anthropic’s ​coding tool, Claude Code, and evaluate its use ⁠in research, drug development, manufacturing, and other ​commercial and medical affairs.

Greg Meyers, EVP and Chief Digital & Technology Officer at Bristol-Myers Squibb Company (NYSE:BMY), commented:

“For more than 160 years, BMS has pushed the boundaries of science to transform patients’ lives, and artificial intelligence is the single most powerful opportunity we have to accelerate that mission today. Most enterprise AI stops at the chatbot. The real prize is the untapped value still trapped behind decades of data silos, and this collaboration is how we reach it. Anthropic’s Claude gives us the agentic capabilities, pace of innovation, and security necessary to connect our systems and put that collective knowledge in the hands of every BMS employee to accelerate innovation for patients. The companies that lead the next decade of biopharma will be the ones that learn to operate fundamentally differently with AI, and BMS intends to be one of them.”

Click to continue reading and see the 5 Best Dividend Stocks to Invest In According to Hedge Funds.

Disclosure: None. Follow Insider Monkey on Google News.