In this article, we will take a look at some of the most promising stocks that pay dividends.
For many years, growth stocks have largely driven market performance, while dividend-paying stocks received less attention from investors.
In recent years, however, the situation has shifted. Rising inflation, prolonged higher interest rates, and persistent market volatility have led many investors, especially those with long-term goals and a lower tolerance for risk, to seek ways to protect their portfolios while still pursuing potential gains. As a result, dividend-paying stocks, which can help reduce volatility and enhance returns, have gained renewed appeal.
According to Morningstar, global assets under management in dividend-focused ETFs reached nearly $600 billion as of December 31, 2024, more than twice the amount recorded in December 2020. This sharp increase highlights the growing popularity of dividend investing.
During uncertain market conditions, investors may benefit from focusing more on the quality of dividends, which involves assessing factors such as free cash flow and interest expenses. Given this, we will take a look at some of the most promising dividend stocks.
Our Methodology:
To compile this article, we first scanned a list of 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 further refined our selection criteria by identifying stocks with a projected upside potential of over 10% based on analyst price targets, as of October 8. The stocks are ranked according to their upside potential.
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. Verizon Communications Inc. (NYSE:VZ)
Analyst Upside Potential as of October 8: 10.49%
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications company that also offers home internet services to its consumers. Considering the company’s scale, its revenue hasn’t grown above 6% in the last 15 years, which isn’t working in its favor. In addition, analysts are expecting a modest increase of about 3% in its revenue this year and the next.
That said, Verizon Communications Inc. (NYSE:VZ) has other positive aspects worth noting. In the second quarter of 2025, the company added 278,000 new fixed wireless access subscribers, bringing its total to more than 5.1 million. With this momentum, it appears on track to reach its next goal of 8 to 9 million subscribers by 2028. Its cash position is also stable, as it generated nearly $9 billion in free cash flow in the first half of 2025. The company now expects its free cash flow to be in the range of $19.5 billion to $20.5 billion for FY25. This projected cash flow would be able to cover the company’s dividend comfortably, which makes it a strong option for income investors. Moreover, it would also strengthen the company’s position in terms of its debt.
Verizon Communications Inc. (NYSE:VZ)’s dividend is already growing. In fact, the company has raised its dividend for 19 years in a row. Its dividend payments amount to nearly $12 billion annually, which demonstrates its ability to continue shareholder returns. Verizon offers a quarterly dividend of $0.69 per share and has a dividend yield of 6.68%, as of October 8.
11. PepsiCo, Inc. (NASDAQ:PEP)
Analyst Upside Potential as of October 8: 12.13%
PepsiCo, Inc. (NASDAQ:PEP) is one of the most recognized names in the world and a major force in the global snacks and beverages market. The company leads the savory snack segment and ranks as the second-largest beverage maker after Coca-Cola.
One of PepsiCo, Inc. (NASDAQ:PEP)’s strengths lies in its diversified portfolio, which includes carbonated drinks, bottled water, sports and energy beverages, and ready-to-eat snacks, together accounting for about 55% of its revenue. The company also has a strong global presence, with international operations contributing roughly 40% of total sales and operating profits in 2024.
To boost efficiency and support long-term growth, PepsiCo, Inc. (NASDAQ:PEP) has been closing underutilized plants, enhancing its enterprise resource planning (ERP) systems, and adopting artificial intelligence to streamline operations. It is also finding cost savings in procurement to free up capital for reinvestment in new product innovation. These efforts reflect a disciplined approach aimed at improving margins while maintaining growth potential.
PepsiCo, Inc. (NASDAQ:PEP) also stands out for its dividend consistency. The company has raised its dividend for 53 consecutive years and currently offers a quarterly payout of $1.4225 per share, yielding about 4.10% as of October 8.
10. The Sherwin-Williams Company (NYSE:SHW)
Analyst Upside Potential as of October 8: 12.32%
The Sherwin-Williams Company (NYSE:SHW) traces its roots back to 1866, and during this time, the company has built a long-standing legacy that extends well beyond its reputation as a reliable dividend payer. What began as a modest paint business has grown into a major player in the coatings industry, offering products for automotive and marine use, industrial wood finishes, and various other applications. The company’s vast network includes more than 5,400 stores and branches, along with over 140 manufacturing and distribution centers.
The Sherwin-Williams Company (NYSE:SHW)’s appeal as an income stock lies in the consistency and sustainability of its dividends. Over the past decade, it has maintained a conservative payout ratio of about 26.6%, supported by strong free cash flow that easily covers its distributions.
For 46 consecutive years, The Sherwin-Williams Company (NYSE:SHW) has rewarded shareholders with steady dividend increases. If it continues this trend for another four years, the company will join the elite group of Dividend Kings. The company pays a quarterly dividend of $0.79 per share, translating to a yield of roughly 0.94%, as of October 8.
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