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.

9. EPR Properties (NYSE:EPR)

Number of Hedge Fund Holders: 25

EPR Properties (NYSE:EPR) is an American real estate investment trust company that invests in entertainment properties. The company specializes in experiential real estate, owning venues such as water parks, ski resorts, casinos, movie theaters, museums, and even schools.

EPR Properties (NYSE:EPR) was hit hard during the COVID-19 pandemic since its properties rely on in-person attendance, which came to a halt. However, it bounced back as tenants reopened and social distancing measures eased. Although one major tenant filed for bankruptcy during the shutdowns, the issue was ultimately resolved favorably. Overall, EPR’s business has recovered strongly, and over the past five years, it has delivered a total return that surpassed the broader market.

EPR Properties (NYSE:EPR) is one of the best stocks for passive income as the company offers monthly dividends to shareholders. The company’s monthly dividend comes in at $0.295 per share and supports a dividend yield of 6.28%, as of September 22.

8. Enterprise Products Partners L.P. (NYSE:EPD)

Number of Hedge Fund Holders: 26

Enterprise Products Partners L.P. (NYSE:EPD), based in Houston, Texas, is a midstream company focused on natural gas and crude oil pipelines. As a master limited partnership (MLP), it offers a distribution that is well protected, covered 1.7 times by distributable cash flow, making the payout very secure.

Further stability comes from its investment-grade credit rating. Even if coverage dipped, Enterprise Products Partners L.P. (NYSE:EPD) could rely on its strong balance sheet to weather short-term challenges. That said, such a scenario is unlikely because Enterprise’s business is fee-based. It earns money by charging customers to use its infrastructure, such as pipelines, meaning its performance depends more on energy demand than on oil and gas prices. Since global demand for energy remains steady even during periods of weak commodity prices, its cash flows are generally resilient.

Enterprise Products Partners L.P. (NYSE:EPD) is a solid dividend company, offering a quarterly dividend of $0.545 per share. The stock has a dividend yield of 6.94%, as of September 22. It is among the best stocks for passive income as the company has been raising its payouts for 27 consecutive years.

7. Flowers Foods, Inc. (NYSE:FLO)

Number of Hedge Fund Holders: 32

Flowers Foods, Inc. (NYSE:FLO) is among the largest packaged baked goods producers in the US, delivering breads, rolls, snack cakes, and specialty items to retailers nationwide. Its strength lies in popular brands like Nature’s Own and Dave’s Killer Bread, which lead in mainstream and organic bread categories. While it also handles private label and foodservice, branded retail drives most of its growth and sets it apart.

Lately, Flowers Foods, Inc. (NYSE:FLO) has been reshaping its portfolio, upgrading digital systems, and expanding into health-focused and higher-growth product areas. Acquisitions— such as Simple Mills— play a key role in attracting health-conscious and value-driven customers. The company’s performance hinges on strong branding, smart pricing and product strategies, cost discipline, and its ability to keep pace with evolving consumer preferences and market competition.

On August 22, Flowers Foods, Inc. (NYSE:FLO) declared a quarterly dividend of $0.2475 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 23 consecutive years, which makes it one of the best stocks for passive income. The stock has a dividend yield of 7.54%, as of September 22.

6. Energy Transfer LP (NYSE:ET)

Number of Hedge Fund Holders: 36

Energy Transfer LP (NYSE:ET) is a major player in North America’s midstream energy sector, running over 140,000 miles of pipelines that move natural gas, natural gas liquids (NGLs), and crude oil.

Energy Transfer LP (NYSE:ET) is seeing strong momentum, recently posting record levels in gathered volumes, crude oil and NGL transport, and NGL exports. It’s also pouring capital into projects aimed at fueling future growth, including a 1.5 billion cubic feet per day expansion of the Transwestern Pipeline.

A particularly promising growth avenue comes from data centers. The AI boom is driving massive electricity needs, and as of Q2 2025, Energy Transfer LP (NYSE:ET) had roughly 200 requests for data center connections across 15 states. It also struck a deal with CloudBurst to supply natural gas to its Central Texas data centers.

In addition, Energy Transfer LP (NYSE:ET) is a solid dividend company and is one of the best stocks for passive income. The company has raised its dividends for 14 consecutive quarters. Currently, it offers a quarterly dividend of $0.33 per share and has a dividend yield of 7.71%, as of September 22.

5. Franklin Resources, Inc. (NYSE:BEN)

Number of Hedge Fund Holders: 40

Franklin Resources, Inc. (NYSE:BEN) oversees a wide range of investments, from equities and fixed income to alternatives, multi-asset strategies, and cash management. Its revenue largely comes from management fees tied to assets under management (AUM), which reached $1.61 trillion in Q3 FY25.

Franklin Resources, Inc. (NYSE:BEN)’s strength lies in its scale, broad product lineup, and global distribution network. It attracts clients through mutual funds, ETFs, separately managed accounts, and alternative strategies. Key drivers of success include sustaining large AUM, keeping products aligned with market shifts, and smoothly integrating acquisitions like Putnam and Apera Asset Management. Given its global reach, strong regulatory oversight, and tight cost control remain crucial.

Franklin Resources, Inc. (NYSE:BEN) is one of the best stocks for passive income with 49 consecutive years of dividend growth. The company pays a quarterly dividend of $0.32 per share and has a dividend yield of 5.28%, as of September 22.

4. Canadian Natural Resources Limited (NYSE:CNQ)

Number of Hedge Fund Holders: 44

Canadian Natural Resources Limited (NYSE:CNQ) is a major oil and gas producer with a well-diversified asset base. Its sizable reserves, low reinvestment needs, and efficient operations have reduced its breakeven costs, strengthening profitability and cash flow.

Canadian Natural Resources Limited (NYSE:CNQ) holds significant reserves with a proven life index of 32 years, largely made up of high-value petroleum products. In 2025, it plans to drill 182 net primary heavy crude oil multilateral wells, while also pursuing acquisitions to boost output further. The midpoint of its 2025 production outlook signals a 12.4% increase from last year. With higher production and lower costs, CNQ is positioned to deliver strong results and continue its history of dividend growth.

Canadian Natural Resources Limited (NYSE:CNQ) currently offers a quarterly dividend of C$0.5875 per share and has a dividend yield of 5.31%, as of September 22. The company has been rewarding shareholders with growing dividends for the past 25 consecutive years.

3. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 54

Altria Group, Inc. (NYSE:MO) is an American company that specializes in the production and marketing of tobacco and related products. The company has seen sales volumes drop as smoking rates decline in the US, but the addictive nature of tobacco gives it pricing power that helps maintain steady cash flow. While relying on price hikes isn’t a long-term solution, it provides the company with time to develop new revenue sources, including smokeless and non-tobacco products.

Altria Group, Inc. (NYSE:MO)’s free cash flow comfortably covers its dividend. Over the past year, free cash flow per share reached $5.16, which exceeds the $4.24 per share it plans to pay out in dividends over the next year.

Due to this strong cash generation, Altria Group, Inc. (NYSE:MO) was able to raise its dividends 60 times in a row in the past 56 years. The company offers a quarterly dividend of $1.06 per share and has a dividend yield of 6.65%, as of September 22.

2. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 54

Target Corporation (NYSE:TGT) ranks among the largest retailers in the US and is one of the few national chains offering a broad range of products. Throughout most of its history, it has been a reliable growth driver. The company operates across urban, suburban, and rural areas, with stores in all 50 states.

Although Target Corporation (NYSE:TGT) has faced challenges recently, the company still holds significant long-term growth potential in both physical retail and e-commerce. Its same-day services, including curbside pickup through Drive Up and delivery via Shipt, add to its competitive edge. The company is aiming for a 15% increase in sales over the next five years, and based on its current valuation, the stock could be a strong performer if it meets that target.

Target Corporation (NYSE:TGT) is also popular among investors because of its strong dividend history. The company is a Dividend King, boasting 54 consecutive years of dividend growth. Currently, it offers a quarterly dividend of $1.14 per share and has a dividend yield of 5.27%, as recorded on September 22.

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

Number of Hedge Fund Holders: 67

Bristol-Myers Squibb Company (NYSE:BMY) is a global biopharmaceutical company that many consider worth investing in and holding long-term. Its history dates back to the early 1800s, shaped by decades of drug innovation and strategic mergers. Today, the company focuses on treatments in oncology, cardiovascular health, immunology, neuroscience, and blood disorders.

In recent years, Bristol-Myers Squibb Company (NYSE:BMY) has invested roughly $100 billion in acquisitions to prepare for revenue losses from key drugs approaching patent expiration.

Bristol-Myers Squibb Company (NYSE:BMY) is a strong dividend company. On September 17, the company declared a quarterly dividend of $0.62 per share, which was in line with its previous dividend. Overall, it holds a 16-year track record of dividend growth, which makes it one of the best stocks for passive income. As of September 22, the stock has a dividend yield of 5.51%.

While we acknowledge the potential of BMY 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 BMY and that has 100x upside potential, check out our report about this cheapest AI stock.

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