In this article, we will take a look at the 12 Best Dow Jones Dividend Stocks to Buy According to Hedge Funds.
The Dow Jones Industrial Average tracks 30 large, well-established companies across areas like finance, technology, and pharmaceuticals. Because the list is so small, people often question how much it really says about the stock market overall.
Fidelity’s research helps put that concern into perspective. When markets unraveled in March 2020, the Dow fell nearly 3,000 points in a single session as COVID-19 spread and uncertainty took over. However, stocks recovered, and the Dow eventually pushed to record highs, much like the broader market did in the years that followed.
Over time, the performance gap hasn’t been dramatic. From June 2015 through June 2025, the Dow posted an annualized return of 12.1%, according to Fidelity. The S&P 500 did slightly better at around 13.6%, while the Nasdaq Composite led the group with a 15.2% annualized gain. Those figures include tough periods, including 2022, when markets struggled.
That year was telling. The Dow fell 8.9%, while the S&P 500 dropped more than 19% and the Nasdaq sank over 33%. The difference shows why the Dow often behaves differently. Markets move in cycles. Losses happen. The Dow doesn’t always capture every rally, but it has tended to hold up better during downturns, which has helped support steady gains over the long run.
Given this, we will take a look at some of the best Dow Jones dividend stocks to invest in.
Photo by Dan Dennis on Unsplash
Our Methodology:
For this list, we started with the 30 stocks in the Dow Jones Industrial Average and selected dividend-paying stocks from that group. From that list, we picked stocks with dividend yields of at least around 1%, as of January 27. Then, we ranked those stocks according to hedge fund investors, as per Insider Monkey’s database of Q3 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. The Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 47
Dividend Yield as of January 27: 1.56%
On January 26, Argus analyst Kevin Heal lifted his price target on The Travelers Companies, Inc. (NYSE:TRV) to $295 from $287 and reiterated a Buy rating after the company delivered a strong fourth-quarter earnings beat. Heal said results came in well ahead of expectations, helped by lower catastrophe losses and a meaningful boost from net investment income. Argus also sees room for margins to improve as Travelers continues raising prices on auto and homeowners policies while keeping customer retention steady.
According to Reuters, Travelers easily exceeded Wall Street’s fourth-quarter profit estimates on January 21, driven by solid underwriting performance and stronger investment returns. Insurance spending has remained resilient even as businesses and consumers pull back in other areas, as demand for coverage against financial risk, natural disasters, and unexpected losses continues to hold up. Net written premiums in the quarter edged up 1% to $10.86 billion.
Catastrophe losses totaled $95 million on a pre-tax basis, largely tied to winter storms that hit several states. For US insurers, catastrophe losses remain a key swing factor, with earnings often shaped by the timing and severity of major weather events. Travelers has been deliberately reducing exposure to large property risks where pricing does not fully compensate for catastrophe exposure, sticking to disciplined underwriting while some competitors continue to prioritize volume.
Underlying profitability improved as well. The company’s combined ratio declined by 1.8 percentage points to 82.2%, a level that signals premiums collected more than covered claims and expenses.
The Travelers Companies, Inc. (NYSE:TRV) provides property and casualty insurance across auto, home, and business lines, operating through its Business Insurance, Bond & Specialty Insurance, and Personal Insurance segments.
11. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 60
Dividend Yield as of January 27: 7.00%
On January 26, Wells Fargo cut its price target on Verizon Communications Inc. (NYSE:VZ) to $41 from $43. The firm kept an Equal Weight rating on the stock. The adjustment came as the firm took another look at the wireless space.
Wells Fargo said fourth-quarter trends are shaping up better than expected, with subscriber growth showing some upside. Even so, competitive pressures are still a concern. That ongoing tension has kept investor sentiment cautious and pushed the firm to lower price targets across the sector.
For Verizon, the investment case continues to lean heavily on the dividend. The company has raised its payout for 19 straight years. Those increases have not come at the expense of the balance sheet. By late 2025, Verizon had cut net unsecured debt to about $112 billion and brought its debt-to-EBITDA ratio down to roughly 2.2. In practical terms, that suggests the company is in a much better position to handle its debt using operating earnings.
Management has repeatedly pointed to this balance sheet progress as essential. It helps protect the dividend while leaving room to keep spending on priorities like 5G and fiber buildouts.That approach sets Verizon apart from some high-profile names piling on debt to chase AI-related projects, data centers, or large acquisitions. Verizon has stayed in its lane, focusing on wireless and broadband, and steering clear of the risks that come with pushing into less tested territory.
Verizon Communications Inc. (NYSE:VZ) operates as a holding company. Through its subsidiaries, it provides communications, technology, information, and streaming services to consumers, businesses, and government customers.
10. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 62
Dividend Yield as of January 27: 2.95%
On January 26, UBS lifted its price target on Amgen Inc. (NASDAQ:AMGN) to $390 from $380 and kept a Buy rating on the stock. The call reflects a more constructive view on the broader US pharma and biotech space. UBS expects the group to hold up well this year. Valuations are still appealing, investor positioning remains light, and some of the pressure around drug pricing has started to ease. Add in steady pharma-led M&A activity, which often spills over into biotech, and the setup looks supportive. Even with worries that guidance could turn cautious after the recent rally, UBS argues that big pharma and biotech still look cheap enough to keep money flowing into the sector.
Earlier this month, Amgen CEO Bob Bradway spoke with CNBC’s Jim Cramer and shared his optimism around the company’s obesity drug. He said long-term weight management is one of the hardest challenges in this space, and that is where Amgen believes it can make a difference.
On January 12, Amgen said a trial of its experimental GLP-1 drug, MariTide, showed patients were able to maintain weight loss for up to two years with a monthly injection. That stands out, since most weight-loss drugs on the market today are taken weekly.
Bradway told Cramer the company believes MariTide could eventually be dosed monthly or even less often. He pointed to early data suggesting a quarterly option may be possible. Amgen is also testing a range of doses to figure out what works best over the long haul. As Bradway put it, keeping patients on therapy is critical. Persistence, he said, is everything.
He also commented on Amgen’s acquisition of Horizon Therapeutics, noting that the deal has been working well so far. According to Bradway, Horizon fits naturally with Amgen’s strengths, particularly in biologics and autoimmune diseases.
Amgen Inc. (NASDAQ:AMGN) is a biotechnology company that develops, manufactures, and delivers medicines aimed at some of the most challenging diseases, with a focus on areas where medical needs remain high.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
Dividend Yield as of January 27: 2.28%
On January 21, JPMorgan raised its price target on International Business Machines Corporation (NYSE:IBM) to $312 from $290 and kept a Neutral rating on the stock. The firm expects IBM to post “solid” fourth-quarter results, driven by faster growth in software. Strength in automation and Red Hat is expected to help as transaction processing activity begins to recover. That said, JPMorgan cautioned that much of this optimism already appears to be reflected in the share price at current levels.
Picking clear winners in AI is still messy, but IBM has carved out a lane that plays to its strengths. It has already lined up $9.5 billion in AI-related business, most of it tied to consulting rather than pure software. That is by design. IBM spotted early that companies rolling out AI need hands-on help to make it work inside real businesses, not just tools. As AI adoption spreads, that services-heavy angle puts IBM in a good spot, especially as AI consulting becomes a much larger market.
At the same time, the company is keeping its eyes on the long game with quantum computing. IBM expects to demonstrate quantum advantage this year and is targeting a fault-tolerant quantum computer by 2029, a key step toward real-world use. From there, it plans to scale systems in the early 2030s. The payoff is still years away, but if quantum computing grows into the massive market many expect, IBM wants to be right in the middle of it.
International Business Machines Corporation (NYSE:IBM) provides global hybrid cloud and artificial intelligence capabilities, along with consulting services for enterprises worldwide.
8. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 70
Dividend Yield as of January 27: 0.94%
On January 23, Barclays lifted its price target on Caterpillar Inc. (NYSE:CAT) to $610 from $555 and kept an Equal Weight rating on the stock. The update came as part of the firm’s fourth-quarter preview for the machinery and construction group. In its note, Barclays said companies that stand to benefit from interest rate cuts “still reign supreme.” At the same time, the firm expects management teams to strike a cautious tone, with “conservative” initial outlooks for 2026.
Earlier this month, on January 7, Caterpillar announced a deeper partnership with NVIDIA aimed at bringing AI-driven tools into both customer solutions and manufacturing systems. The goal is to change how work gets done across Caterpillar’s ecosystem, from customers and dealers to employees. As part of that push, Caterpillar is investing to make its equipment ready for an AI-enabled future.
The collaboration centers on NVIDIA’s Jetson Thor platform, which allows real-time AI processing on Caterpillar’s construction, mining, and power equipment. That capability is expected to support more advanced automation, smarter in-cab features, and, over time, AI-assisted and potentially autonomous operations.
Caterpillar also used CES 2026 to introduce the Cat AI Assistant. The tool is designed to act as a built-in digital partner within Cat’s onboard and digital products, helping customers make decisions with more confidence. Built using NVIDIA Riva open speech models, the assistant can answer questions and offer tailored recommendations related to equipment, parts, maintenance, and other day-to-day needs.
Inside the cab, the assistant relies on voice activation to adjust settings, walk operators through troubleshooting, and connect them to relevant tools across Caterpillar’s apps and websites. It pulls from Caterpillar’s own data housed on the Helios unified data platform, ensuring the information is reliable and tailored to each situation.
Caterpillar Inc. (NYSE:CAT) is the world’s largest manufacturer of construction and mining equipment, as well as off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 74
Dividend Yield as of January 27: 2.08%
On January 26, Evercore ISI analyst Amit Daryanani upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to Outperform from In Line and lifted his price target to $100 from $80. The shift reflects a more upbeat view on Cisco’s growth path over the next several years. There is still debate over whether Cisco should be viewed as a cyclical or a secular story, but Evercore believes the setup is improving. The firm points to “plenty of tailwinds” that could keep revenue growing at a high single-digit pace while supporting low-teens EPS growth. Those drivers include a campus network refresh cycle, growing AI-related demand, a recovery in traditional enterprise and telecom spending, and expanding EBIT margins. With core networking rebounding and AI traction building, Evercore sees a path for Cisco to generate EPS above $5.00 by FY27.
That same day, Cisco rolled out the Cisco 360 Partner Program, the result of roughly fifteen months of co-design work with its partners. Cisco’s business has long been built around its partner ecosystem, and the new program is aimed at strengthening those relationships as customers adapt to a rapidly evolving, AI-driven environment.
The program expands the way Cisco supports partners while making it easier for them to deliver solutions. It is designed for developers, consultants, managed services providers, resellers, and other partner models, with a focus on helping customers across AI-ready data centers, modern workplaces, and digital resilience.
Cisco said the Cisco 360 Partner Program is meant to provide more clarity and help partners achieve more consistent profitability. Alongside it, the company introduced a new Cisco Partner Locator tool, which allows customers to search for the right partner across key areas such as Security, Networking, Collaboration, Services, Splunk, and Cloud and AI Infrastructure.
Cisco Systems, Inc. (NASDAQ:CSCO) develops and sells technologies that power the Internet, bringing together networking, security, collaboration, applications, and cloud capabilities under one platform.
6. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 75
Dividend Yield as of January 27: 1.92%
On January 16, Bank of America lifted its price target on The Goldman Sachs Group, Inc. (NYSE:GS) to $1,100 from $1,050 and kept a Buy rating in place. The call followed a strong fourth quarter and growing momentum across dealmaking and IPO activity. The firm also pointed to a shifting regulatory environment that is “significantly boosting Goldman’s competitive positioning.” Alongside management’s push for steady, durable growth and profitability, BofA sees room for earnings in 2026 to come in ahead of current expectations.
Around the same time, a Reuters report said Qatar Investment Authority and Goldman Sachs signed a preliminary agreement to expand their strategic partnership. The arrangement targets up to $25 billion in investments from the Gulf wealth fund into Goldman-managed vehicles and co-investment opportunities.
Under the memorandum of understanding, QIA will serve as an anchor investor in several of Goldman’s flagship and more innovative strategies, according to a joint statement released on January 20. Goldman also said it plans to “meaningfully” increase its headcount in Doha, though no specific figures were disclosed.
Qatar, one of the world’s largest exporters of liquefied natural gas, has been pushing to diversify its economy beyond hydrocarbons and attract more foreign capital. As part of that effort, it has been expanding its financial sector, drawing in global asset managers and investment banks. Many of those firms have been increasing their presence in Doha to work more closely with institutions like QIA.
The Goldman Sachs Group, Inc. (NYSE:GS) is a global financial institution that provides a broad range of financial services to corporations, financial institutions, governments, and individual clients.
5. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 76
Dividend Yield as of January 27: 2.20%
On January 16, JPMorgan upgraded Honeywell International Inc. (NASDAQ:HON) to Overweight from Neutral and raised its price target to $255 from $218. The change came as part of the firm’s 2026 outlook for the electrical equipment and multi-industry space. JPMorgan said it has grown more constructive on Honeywell, pointing to what it sees as a valuation gap. The stock is trading at a discount to the company’s sum-of-the-parts, and the analyst flagged a “disconnect” between the share price and the value of Honeywell’s assets, particularly its aerospace business.
A few days earlier, on January 14, Honeywell said it plans for its majority-owned quantum computing unit, Quantinuum, to confidentially file draft IPO papers with US regulators. The timing comes as more companies look for ways to develop and scale quantum technology to tackle complex challenges, including areas like hydrogen fuel cell battery design and manufacturing for transportation.
Honeywell said the size of the offering and the expected price range have not yet been determined. In September, Quantinuum raised about $600 million from investors, including Nvidia’s venture capital arm, at a $10 billion valuation. Quantinuum operates as a full-stack quantum computing provider, with its technology already in use by customers such as Honeywell, Airbus, BMW Group, HSBC, and JPMorgan Chase. The company was formed in 2021 after Honeywell separated its quantum computing unit and combined it with Cambridge Quantum.
Last year, Honeywell also reshaped its broader business, splitting its conglomerate structure into three standalone companies focused on automation, aerospace, and advanced materials. It has since divested smaller units to sharpen its focus on strengthening the automation segment.
Honeywell International Inc. (NASDAQ:HON) is an integrated operating company serving customers across industries and geographies, supported by its Honeywell Accelerator operating system and Honeywell Forge platform.
4. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 83
Dividend Yield as of January 27: 2.38%
On January 26, Bank of America trimmed its price target on McDonald’s Corporation (NYSE:MCD) to $344 from $348 and kept a Neutral rating on the stock. The adjustment came as the firm fine-tuned estimates across 22 restaurant names in its coverage, with some price targets reset to reflect updated forecasts and valuation multiples.
In a separate call earlier this month, Oppenheimer took a very different view. In a January 7 report on CNBC, the firm said McDonald’s shares have gone nowhere for a long stretch, creating what it sees as an appealing entry point. Oppenheimer upgraded the stock to Outperform from Perform.
Analyst Brian Bittner put a $355 price target on the shares, suggesting roughly 17% upside from current levels. He called the setup a “golden opportunity,” noting that the upgrade came after he had stayed on the sidelines for about two years. Bittner said McDonald’s unit growth is being underestimated. The company has continued to hit its 4% growth target, even as many competitors have struggled to keep up. He also argued that consensus forecasts fail to capture the strength of McDonald’s innovation pipeline, including the rollout of a revamped beverage platform. In his view, the market is also discounting the possibility that the lower-end consumer is starting to stabilize or recover.
McDonald’s Corporation (NYSE:MCD) is a global foodservice retailer with operations spanning the US, International Operated Markets, and International Developmental Licensed Markets and Corporate segments.
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 89
Dividend Yield as of January 27: 2.58%
On January 22, KeyBanc trimmed its price target on NIKE, Inc. (NYSE:NKE) to $75 from $90. However, the firm maintained an Overweight rating. The firm said there are early hints that the business is stabilizing, but warned that real progress will not happen overnight.
A few days later, a January 26 Reuters report added more context. Nike is laying off about 775 employees as it works to lift profitability and push more aggressively into automation. A source told Reuters the bulk of the cuts will come from distribution centers in Tennessee and Mississippi, home to some of Nike’s largest warehouses.
The company has been under steady pressure as it tries to recover lost market share to rivals. This is not the first round of job cuts tied to that reset. In August, Nike reduced its corporate workforce by just under 1% as part of turnaround efforts led by CEO Elliott Hill, who took the helm in 2024. Earlier, in February 2024, the company said it would eliminate roughly 2% of its workforce, more than 1,600 roles.
In a statement to Reuters, Nike said it is “taking steps to strengthen and streamline our operations so we can move faster, (and) operate with greater discipline.” The company noted that the latest reductions will largely affect U.S. distribution operations. As of May 2025, Nike employed about 77,800 people worldwide, including retail and part-time staff, according to its most recent annual report.
NIKE, Inc. (NYSE:NKE) designs, markets, and sells athletic footwear, apparel, equipment, accessories, and related services across global sports and fitness markets.
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 103
Dividend Yield as of January 27: 2.32%
On January 22, Scotiabank lifted its price target on Johnson & Johnson (NYSE:JNJ) to $265 from $230. The firm reiterated an Outperform rating after the company’s Q4 results.
The bigger takeaway was how well J&J seems to be managing its patent pressures. Stelara is already dealing with biosimilar competition, and more challenges are lined up. The company expects generics to hit Opsumit in the US in the second half of 2026. Simponi is likely to face competition in Europe in the first half of that year, with the US potentially following later on. Even so, the outlook remains steady. At the midpoint of guidance, Johnson & Johnson sees 2026 sales growing about 6.7%, with adjusted EPS up roughly 6.9%.
The portfolio is doing a lot of the heavy lifting. By the end of 2025, the company had 28 platforms, each generating at least $1 billion a year. Two newer names have joined that list: the Shockwave intravascular lithotripsy device and the cancer therapy Carvykti. Thirteen brands are now growing at double-digit rates, which gives the business some real balance.
There is also a busy year ahead on the pipeline front. Johnson & Johnson is aiming for regulatory approvals on five drugs this year and plans to file two more. Results from at least 10 Phase 3 trials are expected as well.
Johnson & Johnson (NYSE:JNJ) operates across the healthcare space, with businesses focused on researching, developing, manufacturing, and selling a broad range of medical products worldwide.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 140
Dividend Yield as of January 27: 3.08%
On January 26, Morgan Stanley analyst Erin Wright trimmed her price target on UnitedHealth Group Incorporated (NYSE:UNH) to $409 from $411, while keeping an Overweight rating ahead of the Q4 report. The firm said investor mood around the stock is starting to improve, driven by what it called UnitedHealth’s “disciplined” Medicare Advantage benefit reset. Morgan Stanley is looking for a fairly in-line quarter, with room for upside when the company lays out its 2026 guidance.
A day later, the company posted a modest fourth-quarter earnings beat but paired it with weaker-than-expected revenue guidance. The results underscored how difficult the turnaround has been for the parent of the largest private health insurer in the US, especially as medical costs continue to run hotter than expected.
The timing of the report also stood out. UnitedHealth’s results came during a tense period in Minnesota, just days after CEO Stephen Hemsley joined other business leaders in urging calm following the fatal shooting of a U.S. citizen by federal immigration agents. Financially, the quarter was rough. Fourth-quarter profit fell sharply, with net income dropping to $10 million, or $0.01 a share, from $5.54 billion a year earlier. On an adjusted basis, excluding divestitures, restructuring charges, and costs tied to the Change Healthcare cyberattack, earnings came in at $2.11 per share. Revenue still moved higher year over year, reaching $100.81 billion.
Management is now leaning heavily on a refreshed leadership team after two bruising years. The strategy is not flashy. It involves shrinking membership, pushing through price increases, trimming benefits, and improving transparency, all aimed at rebuilding margins and restoring investor confidence.
Looking ahead to 2026, UnitedHealth forecasts revenue above $439 billion. That would be down about 2% from the prior year and well below what Wall Street had been expecting. CFO Wayne DeVeydt said it would be the first revenue decline in a decade, driven by asset sales, exits from international markets, and a projected drop of more than 3 million U.S. members.
DeVeydt said the company has already pulled out of South American and European operations to refocus on its core US business, strengthen the balance sheet, and lay the groundwork for longer-term growth. Another hit is coming from Medicare’s new V28 coding system, which he said will reduce 2026 revenue by roughly $6 billion, split between UnitedHealthcare and the Optum unit.
While we acknowledge the potential of UNH 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 UNH and that has 100x upside potential, check out our report about this cheapest AI stock.
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