In this article, we will take a look at some of the best dividend stocks for passive income.

In 2025, side hustles are on the rise as more people look for ways to supplement their income or turn personal interests into full-time careers.

According to a Hostinger report, more than 36% of Americans have a side gig, earning an average of $530 per month, with Gen Z at the forefront of this trend. On a global scale, the side hustle market was valued at $556.7 billion in 2024. In the US alone, March 2025 saw 452,255 new business applications, a 6.4% increase from the previous month. With 55% of full-time workers showing interest in converting hobbies into businesses, the trend highlights a clear shift toward turning side hustles into formal entrepreneurial ventures.

When it comes to passive income, dividend stocks offer a reliable source that appeals to retirees and those looking for passive earnings. This income is usually paid even when share prices fluctuate, providing some stability during uncertain market conditions.

Some investors reinvest their dividends to purchase additional shares. With each new dividend payment, they may receive a larger payout since they own more stock, which also increases their ability to reinvest. Over time, this approach can grow both dividend income and the overall value of the investment.

Given this, we will take a look at some of the best stocks for passive income.

Our Methodology

For this article, we scanned Insider Monkey’s database of nearly 1,000 hedge funds as of Q2 2025 and selected stocks with strong dividend policies, sound financials, and dividend growth histories. These stocks have a minimum of 4% yield, as of September 22. The stocks are then ranked according to 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

12. Arbor Realty Trust, Inc. (NYSE:ABR)

Number of Hedge Fund Holders: 14

Arbor Realty Trust is a real estate investment trust company. It operates with a two-pronged strategy, running both a Structured Loan Origination and Investment platform and an Agency Loan Origination and Servicing business. The structured side focuses on bridge loans, mezzanine financing, and preferred equity for multifamily, single-family rental, and commercial properties. The agency side works with government-sponsored entities such as Fannie Mae, Freddie Mac, and HUD to provide agency-backed financing, generating steady servicing revenue.

Lately, Arbor Realty Trust, Inc. (NYSE:ABR) has concentrated on navigating a difficult credit environment while preserving strong ties with its agency partners. Its approach emphasizes risk management, resolving troubled loans, and continuing originations in both segments. The company’s success depends on effectively managing interest rates and credit exposure, executing deals efficiently in a competitive market, and drawing on the expertise of its experienced leadership team. Maintaining a balance between structured and agency lending remains central to its long-term stability and growth.

Arbor Realty Trust, Inc. (NYSE:ABR) has been making regular dividend payments to shareholders for years. The company offers a quarterly dividend of $0.30 per share and has a dividend yield of 10.26%, as of September 22.

11. Universal Corporation (NYSE:UVV)

Number of Hedge Fund Holders: 23

Universal Corporation (NYSE:UVV) is a global agricultural company with more than 100 years of experience, providing high-quality products and customized solutions to meet customer needs. Its extensive network of farmers and partners spans over 30 countries across five continents, earning it a reputation for delivering reliable and traceable agricultural goods.

In the Q1 2025 earnings report, CEO Preston Douglas Wigner noted that flue-cured and burley crop sizes are much larger this year, with green tobacco purchases largely finished in Brazil and Africa. He projected that supply levels should become more balanced during the fiscal year, though an oversupply could emerge by year-end. Wigner also emphasized that customer demand has stayed strong despite the larger harvests, adding that uncommitted tobacco stocks were relatively low, representing about 11% of total inventory as of June.

In addition, Universal Corporation (NYSE:UVV) is popular among income investors as the company is a Dividend King. It has raised its dividends for 55 years in a row, which makes UVV one of the best stocks for passive income. The company pays a quarterly dividend of $0.82 per share and has a dividend yield of 5.99%, as of September 22.

10. Guess?, Inc. (NYSE:GES)

Number of Hedge Fund Holders: 24

Guess?, Inc. (NYSE:GES) is an international apparel and accessories company best known for its denim, casualwear, and lifestyle collections. The brand connects with customers worldwide through its own retail stores, wholesale partnerships, and licensing agreements.

Guess?, Inc. (NYSE:GES)’s success relies on maintaining strong brand value, expanding its global presence, and making use of multiple distribution channels. Strategic acquisitions, ongoing product innovation, and impactful marketing also play key roles in keeping the brand relevant and appealing to consumers. Expanding in Europe and Asia helps reduce reliance on any one region. The company has also advanced sustainability efforts and grown through moves like acquiring rag & bone and forming partnerships in the Middle East and Asia.

Guess?, Inc. (NYSE:GES) is one of the best stocks for passive income as the company has been making regular dividend payments to shareholders for the past 18 consecutive years. In August, the company declared a 25% hike in its quarterly dividend to $0.225 per share. The stock has a dividend yield of 5.35%, as of September 22.