In this article, we will take a look at some of the best must-buy dividend stocks to invest in.
Companies that consistently raise their dividends are often strong, profitable, and financially stable, traits that can be especially valuable when the economy slows down. Firms with a long record of dividend growth also tend to have durable competitive advantages, which help them maintain profit margins even during periods of high inflation by passing rising costs on to customers. In addition, dividend-growth stocks usually experience less volatility than the broader market, making them appealing for investors seeking a more defensive position.
Dan Lefkovitz, a strategist with Morningstar Indexes, made the following comment about dividend stocks:
“Dividend-payers may lag during market environments led by hot growth stocks, but in down periods like 2022 and 2018, they show resilience.”
A report by WisdomTree highlighted that since 1957, dividends have grown at an average annual rate of 5.7%, which is more than 2% higher than the average inflation rate. Over the past 68 years, dividend payouts have declined in only six of those years, and just once did the drop exceed 5%. In comparison, stock prices fell in 18 of those years, with the worst yearly decline surpassing 40% and an average drop of more than 11%.
The report also noted that stock prices were more than twice as volatile as their dividend cash flows, since investor sentiment tends to influence short-term price movements more than the steady cash flows that drive long-term value. Given this, we will take a look at some must-buy dividend stocks to invest in.
Our Methodology
For this list, we scanned the list of year-to-date highest-returning stocks and selected dividend stocks with the highest stock price returns in 2025, as of October 9. The stocks are ranked according to their YTD returns.
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. Fastenal Company (NASDAQ:FAST)
YTD Return as of October 9: 31.55%
Fastenal Company (NASDAQ:FAST), a leading industrial supply company, provides products and solutions to construction and manufacturing businesses, making its performance closely linked to the overall health of the US and global economies. While economic downturns are a normal part of the cycle, they tend to be brief, lasting around 10 months on average, compared to multiyear periods of expansion that support the company’s long-term growth. With a YTD return of over 31%, FAST is among the must-buy stocks that pay dividends.
Beyond benefiting from economic trends, Fastenal Company (NASDAQ:FAST)’s success also comes from its innovation and customer-focused approach. Its managed inventory systems, such as FASTVend vending machines and FASTBin tracking technology, allow the company to better anticipate and meet client supply needs.
Financially, Fastenal Company (NASDAQ:FAST) remains a strong dividend stock. It recently earned its place among Dividend Aristocrats, marking 26 consecutive years of dividend increases in 2025. Currently, it offers a quarterly dividend of $0.22 per share and has a dividend yield of 1.88%, as of October 9.
11. General Dynamics Corporation (NYSE:GD)
YTD Return as of October 9: 31.7%
General Dynamics Corporation (NYSE:GD) stands among the top US military shipbuilders and is a key supplier of tanks and armored vehicles for the Army. Alongside its manufacturing operations, the company runs one of the largest defense-oriented IT and services divisions, which helps provide stable revenue even when defense equipment spending slows. The company has lagged in performance in recent years for reasons unrelated to its defense operations. However, the stock has surged by nearly 32% since the start of 2025, which makes it one of the must-buy stocks to invest in.
General Dynamics Corporation (NYSE:GD) has drawn investor interest for its strong performance and consistent dividend growth, having raised its payout for 28 consecutive years. Its quarterly dividend comes in at $1.50 per share and has a dividend yield of 1.75%, as of October 9.
While shipbuilding projects can take years and lead to fluctuations in quarterly revenue, General Dynamics Corporation (NYSE:GD) balances this with its steady IT operations, helping to smooth out results over time.
10. Cardinal Health, Inc. (NYSE:CAH)
YTD Return as of October 9: 33.7%
Cardinal Health, Inc. (NYSE:CAH) is a major distributor of branded and generic drugs, specialty medicines, over-the-counter healthcare products, and consumer goods, serving a broad customer base that includes hospitals, pharmacies, and medical offices. The company also supports pharmaceutical clients through data analytics and supply chain management services.
In addition to distribution, Cardinal Health, Inc. (NYSE:CAH) produces and markets its own line of medical and surgical supplies such as gloves, surgical wear, and fluid management products. It also runs a large network of radiopharmacies and provides a range of services including hospital pharmacy support, home care solutions, and logistics management.
Cardinal Health, Inc. (NYSE:CAH)’s financial position is also very strong to support its dividend payments. In FY25, the company generated an adjusted free cash flow of $2.5 billion. For FY26, it expects its adjusted free cash flow to be in the range of $2.75 billion and $3.25 billion. Due to this healthy cash position, the company managed to increase its payouts for 39 consecutive years, which makes it one of the best must-buy stocks. It currently offers a quarterly dividend of $0.5107 per share and has a dividend yield of 1.30%, as of October 9.
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