In this article, we will take a look at some of the most profitable stocks to invest in 2026.
Dividend stocks have been part of portfolios for a long time, and they are getting renewed attention again. Bank of America expects dividend payouts to move higher in 2026.
Savita Subramanian, the firm’s head of US equity and quant strategy, pointed to a familiar timing pattern. Dividend growth typically trails earnings growth by roughly three quarters. With the S&P 500 likely coming off a strong year for earnings in 2025, dividend increases should follow. She is forecasting dividend growth of about 8% in 2026, up from roughly 7% in 2025.
In a note published on December 31, Subramanian said companies still have plenty of room to raise payouts. The S&P 500 dividend payout ratio sits near a record low of around 30%, which gives management teams flexibility. She also argued that markets have shifted into more of a total return environment, where dividends are likely to play a bigger role in returns than they did over the past decade. In that setting, she favors companies offering yields above the market average without pushing payout levels too far.
Kevin Simpson, founder and chief investment officer of Capital Wealth Planning in Naples, Florida, takes a similar view. He sees dividend-paying stocks as a way to generate income throughout the year, which makes them particularly appealing in the current market. His focus is on businesses that raise dividends because earnings are growing, not because balance sheets are being stretched.
Given this, we will take a look at some of the most profitable dividend stocks.
Our Methodology:
For this list, we screened for stable dividend companies that have strong dividend growth track records. From that group, we picked companies with a net profit margin exceeding 20%, which suggests sound financial health and excellent cost management. Next, we shortlisted companies with net income for the trailing twelve-month period above $1 billion. The stocks are ranked in ascending order of their net profit margin as of the trailing twelve-month period.
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. NextEra Energy, Inc. (NYSE:NEE)
Net Profit Margin: 20.04%
Net Income TTM: $6.50 Billion
On January 21, Morgan Stanley raised its price target on NextEra Energy, Inc. (NYSE:NEE) to $104 from $95 and kept an Overweight rating. The firm said the move comes as it refreshes its view on regulated and diversified utilities and independent power producers across North America. Utilities lagged the S&P 500 in December, the analyst noted, which has reset expectations across the group.
The stock also picked up support from other analysts as well. In a January 20 report published by CNBC, Sean Russo of Ritholtz Wealth Management pointed to several strengths in NextEra’s business.
Russo said the company’s long-standing push into clean energy continues to pay off. Florida Power & Light has locked in a multiyear regulatory plan starting in 2026, with an allowed return on equity of about 11%. That agreement gives investors clearer visibility into regulated cash flows while still leaving room to keep investing in solar and battery projects.
He further said that at the same time, NextEra Energy Resources is adding momentum on the growth side. The unit has signed large renewable and storage deals with major technology companies, including Alphabet and Meta. The company expects roughly 15 gigawatts of incremental power demand tied to AI customers by 2035.
NextEra Energy, Inc. (NYSE:NEE) is an electric power and energy infrastructure company. Its operations run through Florida Power & Light and its energy resources and transmission businesses, which together form the core of its regulated and renewable platforms.
11. CSX Corporation (NASDAQ:CSX)
Net Profit Margin: 20.55%
Net Income TTM: $2.0 Billion
On January 23, Susquehanna lifted its price target on CSX Corporation (NASDAQ:CSX) to $39 from $38 and kept a Neutral rating. The update came after the company’s fourth-quarter results. Under new CEO Steve Angel, the firm said CSX is focusing on the basics that tend to matter over time, including lower costs, better returns on invested capital, and stronger cash flow. If management delivers, that groundwork could also improve long-term strategic flexibility.
CSX reported its earnings a day earlier, and the quarter was mixed. Revenue and profit both missed expectations as weaker industrial demand and lower export coal volumes offset pricing gains and solid intermodal traffic. That backdrop is not unique to CSX. Rail operators across the US have been dealing with soft industrial activity and uneven freight volumes, forcing a sharper focus on expenses and operating efficiency.
CEO Steve Angel said the quarter reflected that environment, along with steps already taken to adjust the cost base. He added that the company plans to lean harder into productivity, cost control, and capital discipline in 2026.
Management also forecast operating margin expansion of 200 to 300 basis points in 2026 compared with adjusted 2025 levels. That outlook was enough to lift the stock about 3.2% in extended trading.
CSX posted an operating margin of 31.6% for the quarter, up 30 basis points from a year earlier. Revenue totaled $3.50 billion, falling short of the $3.54 billion analysts were expecting.
CSX Corporation (NASDAQ:CSX) is a transportation company that provides rail, intermodal, and rail-to-truck transload services across its network.
10. Garmin Ltd. (NYSE:GRMN)
Net Profit Margin: 22.63%
Net Income TTM: $1.57 Billion
On January 16, Barclays upgraded Garmin Ltd. (NYSE:GRMN) to Equal Weight from Underweight and raised its price target to $217 from $208. The shift reflects a more constructive view on the stock, driven by what the firm described as an “undemanding” valuation, Garmin’s diversified business lines, and steady momentum in wearables, “that continues to benefit from positive secular trends around wellness.”
The call followed fresh product news earlier in the month. On January 6, Garmin and Meta unveiled an automotive OEM proof-of-concept that blends Meta’s Neural Band and electromyography technology with Garmin’s Unified Cabin in-vehicle platform.
The concept was introduced at CES 2026. It allows passengers to control select infotainment features through simple hand gestures detected by the EMG band, using movements of the thumb, index, and middle fingers. The idea is to move beyond touchscreens and create a more relaxed, intuitive in-car experience, especially for passengers rather than drivers.
Meta’s Neural Band is a different take on wearables. It reads subtle neural signals from muscles in the wrist and converts them into digital commands. By relying on EMG technology, the device can pick up a wide range of gestures, making interaction with computers and vehicles feel more fluid and natural.
Garmin Ltd. (NYSE:GRMN) is a Switzerland-based company best known for its GPS navigation products, wearables, and wireless devices, serving consumers across automotive, fitness, aviation, marine, and outdoor markets.
9. Atmos Energy Corporation (NYSE:ATO)
Net Profit Margin: 25.49%
Net Income TTM: $1.20 Billion
On January 21, Morgan Stanley raised its price target on Atmos Energy Corporation (NYSE:ATO) to $180 from $172. The firm kept an Equal Weight rating. The move came as the firm refreshed its coverage of regulated and diversified utilities and independent power producers in North America. Utilities lagged the S&P 500 in December, the analyst noted, which has shaped recent expectations for the group.
Atmos Energy operates as a regulated natural gas utility, serving roughly three million customers across eight states. The business is built around steady, government-approved returns tied to essential services that homes and businesses use every day. That predictability is a key part of the appeal.
Scale also works in the company’s favor. Its footprint gives it leverage in regulatory discussions and helps support ongoing investments in safety and system capacity. Those upgrades are not optional in this business. They are part of keeping the network reliable.
With about seventy thousand miles of transmission and distribution lines, Atmos controls an infrastructure network that would be expensive and difficult to replicate today. That physical reach acts as a barrier to entry and anchors the company’s long-term position in its service territories.
Atmos Energy Corporation (NYSE:ATO) is a natural gas-only distributor, delivering fuel to more than 3.3 million customers across over 1,400 communities, primarily in the southern US.
8. Canadian National Railway Company (NYSE:CNI)
Net Profit Margin: 26.89%
Net Income TTM: $4.62 Billion
On January 21, Scotiabank raised its price target on Canadian National Railway Company (NYSE:CNI) to C$163 from C$160. The firm kept an Outperform rating. The call reflects continued confidence in the company’s long-term positioning rather than any short-term catalyst.
One of the clearest reasons investors keep coming back to Canadian National is the sheer scale of its network. Spanning roughly 32,000 kilometres, the rail system runs coast to coast across Canada and extends deep into the US Midwest and down to the Gulf. That footprint is not just large, it is also strategic.
From a logistics standpoint, the network functions like a toll bridge. It is essential infrastructure, and it cannot realistically be replicated. Building a competing system of similar reach would take decades and hundreds of billions in capital, making the barrier to entry effectively insurmountable. Canadian National has reinforced that advantage over time. The company has secured exclusive port access, including at Prince Rupert, and invested heavily in intermodal hubs that tie customers more tightly into its network. Those moves are not cosmetic as they help drive efficiency and keep volumes sticky.
The result shows up in the numbers as operating ratios around 62% place Canadian National among the most efficient rail operators in North America.
Canadian National Railway Company (NYSE:CNI) runs one of the continent’s largest rail networks, with access to three coastlines. That geographic reach remains a defining part of its competitive moat.
7. Johnson & Johnson (NYSE:JNJ)
Net Profit Margin: 27.26%
Net Income TTM: $25.12 Billion
On January 23, Guggenheim analyst Vamil Divan raised his price target on Johnson & Johnson (NYSE:JNJ) to $240 from $227. The firm reiterated a Buy rating. The move followed what he described as “solid” fourth-quarter results, along with initial 2026 guidance that came in slightly ahead of sell-side expectations.
After the quarter, Divan said he made several tweaks to his model. Those included lifting near-term forecasts for Tremfya, factoring in faster erosion for Stelara, and raising estimates for a number of newer products. Even with those adjustments, Johnson & Johnson remains a Top Pick in the large-cap biopharma space in his view.
The company reported its fourth-quarter 2025 earnings on January 21 and paired the release with a 2026 outlook that landed above Wall Street’s expectations. What stood out was that the guidance held up despite a few meaningful headwinds. Among them are a recent drug pricing agreement with the Trump administration and roughly $500 million in tariff-related costs tied to the medical devices business.
Johnson & Johnson said the pricing deal reached earlier this month, which is intended to lower costs for certain prescription drugs, could end up costing the company “hundreds of millions of dollars.”
Even with that pressure baked in, management is forecasting 2026 sales between $99.5 billion and $100.5 billion. That compares with analyst expectations of about $98.9 billion, according to LSEG. On earnings, the company expects full-year profit of $11.43 to $11.63 per share, slightly ahead of the Street’s $11.45 estimate.
Johnson & Johnson (NYSE:JNJ) operates across healthcare through its Innovative Medicine and MedTech segments, spanning drug development, medical devices, and a broad portfolio of products sold globally.
6. Zoetis Inc. (NYSE:ZTS)
Net Profit Margin: 28.21%
Net Income TTM: $2.65 Billion
On January 22, Piper Sandler downgraded Zoetis Inc. (NYSE:ZTS) to Neutral from Overweight. It also slashed its price target to $135 from $190. The firm said it still likes Zoetis’ product portfolio over the long run, but sees too much uncertainty in the next couple of years. Until more new products actually reach the market, Piper is hesitant to lean on current forecasts.
The analyst described the company as being in an innovation lull, saying Zoetis “is in an innovation air pocket that could last one to two years.” Piper also questioned whether the current consumer spending backdrop supports the price points tied to the company’s planned 2026 launches, especially when viewed through a value-for-money lens.
That caution stands in contrast to how Zoetis has been positioning itself. During its Innovation Webcast on December 2, the company emphasized the breadth of its pipeline, which spans multiple species, therapeutic areas, and stages of development. Management pointed to 12 candidates with blockbuster potential, including programs targeting chronic kidney disease, oncology, and cardiology. The pipeline also includes next-generation treatments in established franchises such as osteoarthritis pain and dermatology.
Looking further out, Zoetis highlighted work underway in areas like anxiety and metabolic diseases, including diabetes and obesity. The strategy is deliberately balanced, combining geographic expansion, lifecycle extensions, and entirely new products. Management framed this approach as a way to both strengthen existing franchises and push the industry forward.
Zoetis Inc. (NYSE:ZTS) is a global animal health company focused on developing and commercializing medicines, vaccines, diagnostics, biodevices, genetic tests, and precision health tools for animals.
5. Union Pacific Corporation (NYSE:UNP)
Net Profit Margin: 28.73%
Net Income TTM: $7.05 Billion
On January 19, Susquehanna said it expects Union Pacific Corporation (NYSE:UNP) shares to trade modestly lower on Tuesday after the US Surface Transportation Board rejected the company’s proposed merger with Norfolk Southern. The decision was issued “without prejudice,” meaning the door is still open. The board invited the companies to resubmit the application once the gaps are addressed, according to the analyst’s note. Susquehanna said it still believes the deal will eventually get approved and kept a Buy rating on Union Pacific.
The regulatory pushback was confirmed in a Reuters report. The STB sent Union Pacific’s proposed $85 billion merger back for revision, saying the filing lacked required information. The review comes as regulators revisit what enhanced competition should look like under stricter merger rules adopted in 2001.
In its ruling, the board said the December application was incomplete. It cited missing projections around market share and competitive impact. By rejecting the filing without prejudice, the STB left room for the railroads to refile once those issues are addressed.
The decision also follows a January submission from Canadian National, which argued the application fell short on key competitive disclosures. That included how the companies identified routes where two rail lines funnel into one, as well as full lists of shippers that could be affected. Without that information, stakeholders would struggle to properly assess the merger’s impact, CN said.
Union Pacific and Norfolk Southern filed their nearly 7,000-page application on December 19. In it, they argued the combination would improve service reliability, shift freight from trucks to rail, preserve shipper choice, and deliver broad public benefits, all while protecting union jobs.
Union Pacific Corporation (NYSE:UNP) operates one of the largest rail networks in the US, spanning more than 23 states across the western two-thirds of the country. Its rail system plays a central role in moving goods through the domestic and global supply chain.
4. M&T Bank Corporation (NYSE:MTB)
Net Profit Margin: 29.02%
Net Income TTM: $2.63 Billion
On January 20, Truist raised its price target on M&T Bank Corporation (NYSE:MTB) to $230 from $217 and kept a Hold rating after the bank posted a fourth-quarter earnings beat. The analyst noted that expenses ran a bit above the midpoint of management’s guidance. Buybacks also came in slightly below what the firm had modeled based on CET1 levels. Even so, those moving pieces were enough to nudge Truist’s 2027 EPS estimate up to $22 from $21.
M&T reported higher profit for the fourth quarter on January 16, helped by stronger interest income and a rebound in mortgage banking. Rate cuts from the Federal Reserve have started to loosen things up again. Borrowing activity picked up, loan balances grew, and banks found some relief on the funding side as deposit costs eased.
Net interest income rose nearly 3% from a year earlier to $1.78 billion. Net interest margin expanded to 3.69%, up from 3.58%, showing the bank is still managing spreads well even in a lower-rate environment.
Looking ahead, M&T expects net interest income of $7.2 billion to $7.35 billion in 2026. The midpoint of that range lines up closely with the Street’s estimate of about $7.27 billion, based on LSEG data.
Non-interest income also moved higher, rising about 6% to $696 million for the quarter. Mortgage banking was a key driver. Revenue in that segment jumped 32%, fueled by higher servicing income on residential loans and stronger gains from commercial mortgage loan sales. Fees from deposit accounts and trust services also helped.
On the credit side, the bank set aside $125 million in provisions for potential loan losses, down from $140 million a year earlier. That suggests credit quality remains steady for now.
M&T Bank Corporation (NYSE:MTB) is a financial holding company whose main subsidiary, M&T Bank, operates a broad branch and ATM network across the eastern US, stretching from Maine down through Virginia and Washington, D.C.
3. Texas Instruments Incorporated (NASDAQ:TXN)
Net Profit Margin: 29.21%
Net Income TTM: $5.02 Billion
On January 22, Susquehanna analyst Christopher Rolland raised his price target on Texas Instruments Incorporated (NASDAQ:TXN) to $225 from $200 and kept a Positive rating. The update came as the firm reset expectations across the semiconductor group ahead of earnings.
Rolland said the sector appears to be settling into a more stable upcycle. He expects fourth-quarter results to land mostly in line, with room for some upside. The AI infrastructure buildout is also broadening, which is starting to lift parts of the supply chain. Industrial demand is showing signs of improvement, though auto remains more of a drag for now.
Texas Instruments touches many of those end markets. In AI-focused data centers, its chips play a behind-the-scenes role, handling networking, power delivery, and thermal management. These are not headline components, but they are critical to keeping large systems running efficiently.
Automotive is another major area. Cars rely heavily on analog chips to manage electrical systems, powertrains, and infotainment. As vehicles move toward more advanced features like automatic braking, driver assistance, and eventually autonomous driving, the need for additional sensors and supporting electronics continues to rise.
Texas Instruments Incorporated (NASDAQ:TXN) is a global semiconductor company that designs and sells analog and embedded processing chips used across industrial, automotive, personal electronics, communications equipment, and enterprise systems.
2. Moody’s Corporation (NYSE:MCO)
Net Profit Margin: 29.94%
Net Income TTM: $2.24 Billion
On January 22, Morgan Stanley analyst Toni Kaplan raised her price target on Moody’s Corporation (NYSE:MCO) to $526 from $520 and kept an Equal Weight rating. The move followed a stronger-than-expected finish to the quarter. Kaplan said solid issuance in December capped off what she described as “a strong issuance quarter,” coming in well ahead of earlier expectations.
Moody’s runs a business built largely on data, analytics, and other intangible assets. That structure drives high profitability. Governments and companies are almost always in the market to borrow, which gives the revenue stream a steady feel, even when conditions shift.
The company has also built a consistent track record on shareholder returns. Moody’s has paid and increased its dividend for 15 straight years. The payout remains conservative, sitting at roughly 25% of the estimated 2025 earnings, which leaves plenty of room for future growth.
On the strategy side, the company has continued to add capabilities through acquisitions. In 2024, Moody’s bought Numerated Growth Technologies to expand its lending technology tools across the credit lifecycle. Earlier this year, it followed up with the acquisition of CAPE Analytics, which provides geospatial AI for residential and commercial properties. That deal adds property risk intelligence to Moody’s insurance risk modeling platform.
Moody’s Corporation (NYSE:MCO) operates as a global risk assessment company, providing research, data, analytics, and decision tools that help organizations assess risk and make informed decisions.
1. Abbott Laboratories (NYSE:ABT)
Net Profit Margin: 31.88%
Net Income TTM: $13.98 Billion
On January 23, Evercore ISI trimmed its price target on Abbott Laboratories (NYSE:ABT) to $138 from $144. However, it kept an Outperform rating. The firm acknowledged the recent stumbles that led to a quarterly miss and a more cautious outlook for the second half, but said the bigger picture has not changed. Growth drivers are still in place, and the analyst pointed to “promising growth levers that could drive future performance.”
The market reaction was swift. Abbott shares slid about 7% after the company missed Wall Street’s revenue expectations and guided current-quarter profit below estimates. The pressure came mainly from the nutrition and diagnostics businesses, which both underperformed.
The nutrition unit has been under strain for several quarters. The pediatric business was hit by increased competition after Abbott lost a major U.S. government supply contract last year. At the same time, manufacturing costs for consumer packaged goods moved higher, squeezing margins and complicating pricing decisions.
CEO Robert Ford said rising production costs forced the company to raise prices, which weighed on demand as consumers became more price-conscious. The slowdown showed up across the board. All four business segments came in below expectations for the quarter.
Sales in the nutrition segment fell 8.9% from a year earlier to $1.94 billion. Diagnostics revenue declined 2.5% to $2.46 billion, adding to concerns around near-term momentum.
Abbott Laboratories (NYSE:ABT) is a global healthcare company with a broad portfolio spanning diagnostics, medical devices, nutrition, and branded generic medicines.
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