In this article, we will take a look at some of the best dividend stocks in the retail sector.
The retail sector has been reshaped by a wave of digital transformation that accelerated during the COVID-19 pandemic. Instead of relying on broad, supply-driven models, retailers are now adopting data-driven strategies that focus on personalized offerings tailored to individual customers. The shift, however, has not been without hurdles, as higher costs and the limitations of traditional systems created significant challenges.
US retail sales grew in August for the third straight month, signaling that consumers are still spending despite higher prices from tariffs, weak sentiment, and signs of a cooling job market.
According to Commerce Department data released Tuesday, retail purchases rose 0.6% from the prior month, matching July’s pace and surpassing all forecasts in a Bloomberg survey of economists. Excluding autos, sales were up 0.7%. Gains were recorded in nine of 13 categories, with the strongest growth coming from online retailers, clothing outlets, and sporting goods stores, likely boosted by back-to-school shopping.
Since then, the industry has reached a point of relative stability, positioning it as an attractive option for investors seeking opportunities tied to rising consumer demand. The retail space also carries a strong track record of rewarding shareholders through dividend payouts. In fact, a report from Janus Henderson highlighted that general retail companies distributed $34.6 billion in dividends in 2024, up from $18.1 billion in 2018.
Given this, we will take a look at some of the best dividend stocks in the retail sector.
Our Methodology
For this article, we scanned Insider Monkey’s database of nearly 1,000 hedge funds as of Q2 2025 and picked companies that operate in the retail industry. These companies sell goods and services directly to consumers for personal use and operate through physical stores, online platforms, or a combination of both. From that list, we picked 12 stocks with the highest number of hedge fund investors and ranked them in ascending order of the hedge funds’ sentiment towards 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 36
Macy’s, Inc. (NYSE:M) stands among the top retailers in the US, running its business under the Macy’s, Bloomingdale’s, and Bluemercury names. The company offers clothing, accessories, beauty products, and home essentials through roughly 680 stores as well as its online channels.
In recent years, Macy’s, Inc. (NYSE:M) has concentrated on upgrading its stores, strengthening its online marketplace, and expanding its luxury offerings. Its key priorities include creating a smooth connection between digital and in-store shopping, adjusting its store footprint to match demand, building unique private-label brands, and keeping costs under control in an increasingly competitive retail landscape.
Macy’s, Inc. (NYSE:M) is among the best dividend stocks in the retail sector as the company has been growing its payouts for four consecutive years. The company currently pays a quarterly dividend of $0.1824 per share and has a dividend yield of 4.32%, as of September 22.
11. American Eagle Outfitters, Inc. (NYSE:AEO)
Number of Hedge Fund Holders: 41
American Eagle Outfitters, Inc. (NYSE:AEO) is a specialty retailer that caters mainly to teens and young adults with casual clothing. Its business revolves around two core brands: American Eagle, which focuses on jeans and everyday apparel, and Aerie, which offers intimates, activewear, swimwear, and other apparel. The company operates 1,185 stores and continues to expand its reach globally through franchise partnerships.
American Eagle Outfitters, Inc. (NYSE:AEO)’s recent efforts have emphasized setting its brands apart, streamlining its supply chain, and enhancing digital capabilities. Key drivers of growth include the strong performance of Aerie, sustainability efforts through the Real Good line, and maintaining operational efficiency as retail dynamics evolve. Its focus on digital integration and inclusive brand policies further strengthens its standing in a highly competitive market.
On September 16, American Eagle Outfitters, Inc. (NYSE:AEO) declared a quarterly dividend of $0.125 per share, which was in line with its previous dividend. Though the company doesn’t hold any dividend growth streak, it has been making regular payments to shareholders for the last two decades. The stock has a dividend yield of 2.79%, as of September 22.
10. Best Buy Co., Inc. (NYSE:BBY)
Number of Hedge Fund Holders: 44
Best Buy Co., Inc. (NYSE:BBY) is an American multinational retailer specializing in consumer electronics, offering a broad range of products and related services. Along with its physical stores, the company has built a strong online presence, with both channels playing a key role in its omnichannel strategy. The company also benefits from solid partnerships with major vendors like Apple and Samsung, relationships that help it respond effectively to shifts in consumer demand.
In the second quarter of 2025, Best Buy Co., Inc. (NYSE:BBY) reported revenue of just under $9.44 billion, compared with about $9.29 billion in the same period a year earlier. This growth reflected a 1.6% year-over-year rise in comparable sales, which marked the strongest pace in three years. The increase was driven in part by a 5% jump in online sales.
In addition, Best Buy Co., Inc. (NYSE:BBY) is a solid dividend payer. The company has been rewarding shareholders with growing dividends for the past 12 consecutive years, which makes it one of the best dividend stocks in the retail sector. Currently, it offers a quarterly dividend of $0.95 per share and has a dividend yield of 5.25%, as of September 22.
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