In this article, we will take a look at some of the best income stocks to invest in.
Dividends have always played a meaningful role in market returns. Hartford Funds and Ned Davis Research examined how dividend policy affects long-term performance and volatility, focusing on large US stocks in the S&P 500 from 1973 through 2022.
The differences were clear. Dividend-paying companies delivered an average annual return of 9.18%. Stocks that paid no dividends lagged far behind, with annual returns of 3.95%. Companies that consistently raised their dividends performed even better, generating 10.24% a year. Firms that kept dividends unchanged posted returns of 6.60%. The weakest group was companies that cut or eliminated payouts, which produced a –0.60% annual return and even trailed non-dividend payers.
Volatility showed a similar pattern. Beta measures how much a stock or group of stocks moves relative to the broader market. A beta below 1 signals smaller price swings. A beta of 1 means the stock moves in line with the market. A beta above 1 points to sharper moves in both directions.
From 1973 to 2022, non-dividend-paying stocks carried a beta of 1.18, making them more volatile than the overall market. Dividend-paying stocks had a beta of 0.94, reflecting steadier performance and fewer extreme swings.
Kirsten Cabacungan, investment strategist in the Chief Investment Office for Merrill and Bank of America Private Bank, said:
“Companies that have consistently increased their dividends tend to be more stable, higher-quality businesses, which historically have weathered downturns and are more likely to have the ability to pay dividends consistently.”
Given this, we will take a look at some of the best dividend stocks.
Our Methodology:
To compile this article, we screened for stocks known for their consistent dividend track records and sustained shareholder payouts over an extended period. This group reflects stability and long-term performance in dividend payouts. From that group, we identified stocks with dividend yields above 2% as of December 28. Finally, we picked companies with the highest number of hedge fund investors, as per Insider Monkey’s database of Q3 2025. The stocks are ranked in ascending order of the number of hedge funds having stakes in them.
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. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 27
Dividend Yield as of December 28: 5.72%
Realty Income Corporation (NYSE:O) is one of the best dividend stocks to invest in.
On December 24, Morgan Stanley raised its price target on Realty Income Corporation (NYSE:O) to $65 from $62 and kept an Equal Weight rating on the shares. The update followed changes to the firm’s 2025 and 2026 AFFO per share estimates.
Realty Income follows a straightforward model. It buys single-tenant commercial properties and leases them on a long-term basis using triple-net leases. Under this structure, tenants cover taxes, insurance, and maintenance. That setup lowers operating costs and helps support steady cash flow and reliable monthly dividends.
The REIT focuses on essential, non-discretionary businesses. These are tenants that tend to hold up even when economic conditions soften. Scale also plays a role. As one of the largest net lease REITs, Realty Income Corporation (NYSE:O) operates with an investment-grade-rated balance sheet. That gives it consistent, low-cost access to capital markets. It also opens the door to large acquisition opportunities that smaller competitors often cannot pursue.
The company has been pushing further into Europe. These markets now make up a meaningful share of its investment activity and are offering higher initial cash yields than many US properties. Realty Income currently operates across eight European countries, including the U.K., Spain, Ireland, and Poland.
Dividends remain a core part of the story. Realty Income Corporation (NYSE:O) pays shareholders monthly and has delivered 666 consecutive monthly dividends so far. That record stands out. Since listing on the NYSE in 1994, Realty Income has raised its dividend 133 times and logged 113 straight quarterly increases.
Realty Income Corporation (NYSE:O) is a real estate investment trust that invests in free-standing, single-tenant commercial properties across the US, the United Kingdom, and six other European countries. These properties are leased under NNN agreements, a structure that continues to anchor its long-term strategy.
11. National Fuel Gas Company (NYSE:NFG)
Number of Hedge Fund Holders: 32
Dividend Yield as of December 28: 2.64%
National Fuel Gas Company (NYSE:NFG) is one of the best dividend stocks to invest in.
On December 8, JPMorgan analyst Zach Parham raised the firm’s price target on National Fuel Gas Company (NYSE:NFG) to $96 from $95 and kept a Neutral rating on the shares. The change came as JPMorgan updated its ratings and targets across the exploration and production space for its 2026 outlook. The firm points to growing supply-side risks for oil and liquids. At the same time, it says the “long-awaited demand inflection for natural gas has finally arrived.” Parham adds that the scale of crude oil oversupply, combined with the possibility of an end to the Russia-Ukraine conflict in 2026, creates a “double whammy” for lower oil prices.
Earlier in October, National Fuel Gas Company (NYSE:NFG) announced a definitive agreement with CenterPoint Energy Resources Corp., a subsidiary of CenterPoint Energy, to acquire CenterPoint’s Ohio natural gas utility business.
National Fuel will acquire the equity interests in CNP Ohio for $2.62 billion on a cash-free, debt-free basis, subject to customary closing adjustments. The deal values the business at about 1.6x its estimated 2026 rate base of $1.6 billion. Once completed, the transaction brings a dedicated workforce that operates roughly 5,900 miles of distribution and transmission pipelines. The system serves about 335,000 residential, commercial, industrial, and transportation customers, with annual consumption near 60 Bcf of natural gas.
The company expects the transaction to close in the fourth quarter of 2026. The acquisition significantly expands National Fuel Gas Company (NYSE:NFG)’s regulated footprint. It doubles the size of the company’s gas utility rate base and extends operations into Ohio, a neighboring state known for its supportive stance on natural gas and constructive regulatory environment. The added regulated cash flows, paired with National Fuel’s ability to fund growth capital through free cash flow from its integrated upstream and gathering operations, help reinforce its investment-grade balance sheet.
National Fuel Gas Company (NYSE:NFG) distributes and transports natural gas to hundreds of thousands of customers across Western New York and Northwestern Pennsylvania.
