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.
9. Applied Materials, Inc. (NYSE:AMAT)
YTD Return as of October 9: 34.1%
Applied Materials, Inc. (NYSE:AMAT), a leading manufacturer of equipment used in chip and display panel production, was one of the semiconductor equipment stocks that saw gains this year. The company’s performance was supported by a combination of positive developments in both the broader economy and the semiconductor industry.
Applied Materials, Inc. (NYSE:AMAT) saw its shares rise after the Federal Reserve cut interest rates by 25 basis points on September 17 and signaled two more cuts ahead, easing borrowing costs for semiconductor manufacturers that buy its equipment. The stock gained further momentum when Nvidia and Intel announced a $5 billion partnership, which is expected to drive new investment in chip-making equipment and strengthen Intel’s long-term outlook. The stock has surged by over 34% since the start of 2025, which makes it one of the must-buy stocks that pay dividends.
Apart from this, Applied Materials, Inc. (NYSE:AMAT) has a steady dividend policy. The company has been growing its payouts for eight consecutive years and currently offers a quarterly dividend of $0.46 per share. As of October 9, the stock has a dividend yield of 0.84%.
8. The Bank of New York Mellon Corporation (NYSE:BK)
YTD Return as of October 9: 37.5%
The Bank of New York Mellon Corporation (NYSE:BK), one of the world’s largest custodians with $55.8 trillion in assets under custody or administration, has been investing in digital assets and blockchain technology for several years. In July, it announced a collaboration with Goldman Sachs to use blockchain for maintaining ownership records of money market funds.
More recently, The Bank of New York Mellon Corporation (NYSE:BK) has begun exploring tokenized deposits that would allow clients to make blockchain-based payments, as part of its broader push to modernize its infrastructure and enhance real-time, instant, and cross-border payment capabilities, according to Carl Slabicki, who leads Treasury Services at BNY.
Despite its growing focus on innovation, The Bank of New York Mellon Corporation (NYSE:BK)’s dividend payments remain a key attraction for investors. The company currently offers a quarterly dividend of $0.53 per share, having raised it by 13% in July this year. Through this increase, the company stretched its dividend growth streak to 15 years. The stock supports a dividend yield of 1.98%, as of October 9.
7. Caterpillar Inc. (NYSE:CAT)
YTD Return as of October 9: 39.3%
Caterpillar Inc. (NYSE:CAT) is a global leader in heavy machinery, producing construction and mining equipment, diesel and natural gas engines, industrial turbines, and diesel-electric locomotives. The company operates worldwide through an extensive dealer network covering every continent.
Over time, Caterpillar Inc. (NYSE:CAT) has broadened its business beyond machinery by licensing its brand for clothing and footwear and offering financing solutions through Cat Financial.
Although tariffs have posed challenges, with costs projected to reach $1.8 billion in 2025, a recent federal appeals court decision deeming many of the Trump-era tariffs illegal has created some uncertainty around their future. Despite these issues, Caterpillar Inc. (NYSE:CAT)’s stock has climbed more than 39% in 2025, reflecting investor confidence in its long-term prospects.
In addition, Caterpillar Inc. (NYSE:CAT)’s 31-year streak of dividend growth also makes it an appealing option for income investors. On October 6, the company declared a quarterly dividend of $1.51 per share, which was in line with its previous dividend. The stock supports a dividend yield of 1.21%, as of October 9.
6. L3Harris Technologies, Inc. (NYSE:LHX)
YTD Return as of October 9: 45.68%
L3Harris Technologies, Inc. (NYSE:LHX) is a major defense contractor that develops advanced communication, surveillance, space, and missile defense systems. Its primary customers include US government agencies, allied military forces, and select commercial clients, with most of its revenue coming from large, long-term contracts with the US Department of Defense.
L3Harris Technologies, Inc. (NYSE:LHX) strengthened its space business in 2023 by acquiring Aerojet Rocketdyne, one of only two US companies that produce engines for launching large payloads into space. The company already had deep expertise in this area, as its legacy Harris division has long supplied the Pentagon with critical communications equipment such as radios and satellites.
Investors are also drawn to L3Harris Technologies, Inc. (NYSE:LHX) because of its strong financials and solid dividend history. The company holds a 23-year track record of dividend growth, which makes it a must-buy stock to buy that pays dividends. Currently, it offers a quarterly dividend of $1.20 per share and has a dividend yield of 1.61%, as of October 9.
5. Constellation Energy Corporation (NASDAQ:CEG)
YTD Return as of October 9: 54.6%
Constellation Energy Corporation (NASDAQ:CEG) is an American energy company. It is the nation’s largest producer of carbon-free electricity and leading supplier of nuclear power, and plays a central role in meeting the growing energy demands of the tech sector. Unlike most utilities, the company operates in an unregulated market, allowing it to sell electricity at market prices rather than fixed government-approved rates. This setup enables Constellation to benefit directly when demand surges— and demand is currently soaring.
Most of Constellation Energy Corporation (NASDAQ:CEG)’s clean energy output comes from its nuclear plants, which have a combined capacity of around 22.2 gigawatts, making it the top nuclear energy provider in the US. This strong position gives the company an edge as the AI boom drives greater need for consistent, around-the-clock power. The company’s recent $26.6 billion acquisition of Calpine could add roughly 25 gigawatts of gas generation capacity, with management projecting an additional $2 billion in annual free cash flow from the deal.
Due to this cash projection, Constellation Energy Corporation (NASDAQ:CEG) holds a strong dividend policy. The company initiated its dividends in 2022 and has raised its payouts every year since then. Currently, it offers a quarterly dividend of $0.3878 per share and has a dividend yield of 0.40%, as of October 9.
4. Tapestry, Inc. (NYSE:TPR)
YTD Return as of October 9: 72.79%
Tapestry, Inc. (NYSE:TPR) is a New York-based fashion holding company and is the parent brand of Coach New York and Kate Spade. Each brand under Tapestry runs independently but takes advantage of shared resources in sourcing, supply chain operations, and data analytics. Coach remains the main growth engine, contributing the largest portion of total sales.
In recent years, Tapestry, Inc. (NYSE:TPR) has centered its strategy on four key areas: managing its brand portfolio effectively, strengthening its omni-channel approach by integrating online and in-store retail, expanding into new regions, and driving product innovation. These initiatives are designed to solidify each brand’s market presence, attract younger consumers such as Millennials and Gen Z, and boost profitability through better margins and stronger operational efficiency.
In addition, Tapestry, Inc. (NYSE:TPR)’s dividend also attracts investors. In August, the company declared a 14.3% hike in its quarterly dividend to $0.40 per share. Though the company doesn’t hold any dividend growth track record, its 5-year dividend growth rate stands at over 16.5%, which is commendable in this industry. The stock has a dividend yield of 1.41%, as of October 9.
3. CVS Health Corporation (NYSE:CVS)
YTD Return as of October 9: 74.2%
CVS Health Corporation (NYSE:CVS) stands among the largest pharmacy and retail chains in the United States, with a network of over 9,000 pharmacies and more than 1,000 walk-in clinics. The company’s stock has performed strongly this year, climbing 33% in 2025, marking a notable recovery after a weak performance in 2024.
The company also operates in the health insurance space through its acquisition of Aetna in 2018, which has become an important source of revenue. In the first quarter, the healthcare segment that includes Aetna reported revenue of $34.8 billion, up from $32.2 billion during the same period last year.
In addition, CVS Health Corporation (NYSE:CVS) continues to hold a strong cash position. In the first half of 2025, the company generated an operating cash flow of $6.5 billion and raised its operating cash flow guidance for FY25 to $7.5 billion, from $7 billion. CVS has never missed a dividend since 1997 and currently offers a quarterly dividend of $0.665 per share. The stock has a dividend yield of 3.47%, as of October 9.
2. Corning Incorporated (NYSE:GLW)
YTD Return as of October 9: 85.9%
Corning Incorporated (NYSE:GLW) is an American multinational technology company known for its expertise in glass, ceramics, and advanced materials used in industrial and scientific applications.
While the company has long been recognized for producing the glass used in Apple’s iPhones since 2007, the company is now gaining investor attention for a different reason. It has become a key supplier of high-performance fibre optic cables that connect advanced chips in AI data centers.
The surge in demand for these cables has driven Corning Incorporated (NYSE:GLW)’s stock up by about 86% in 2025, outperforming several other major hardware players in the AI space. Fiber optics have a clear edge over traditional copper cables, offering faster transmission speeds, greater data capacity, and minimal signal loss. Corning’s Contour Flow cables are tailored for AI data centers, capable of holding twice as much fiber within the same cable size as its older Ribbon model, which once set the industry standard.
On the financial side, Corning Incorporated (NYSE:GLW) is also grabbing investors’ attention. The company doesn’t hold any dividend growth track record, but has made consistent payments to shareholders over the years. It currently pays a quarterly dividend of $0.28 per share and has a dividend yield of 1.28%, as of October 9.
1. Micron Technology, Inc. (NASDAQ:MU)
YTD Return as of October 9: 118.7%
Micron Technology, Inc. (NASDAQ:MU) ranks among the world’s largest producers of advanced memory and storage solutions, which are widely used across data centers, personal computers, automobiles, and mobile devices.
The company has been benefiting from robust demand in the AI market, where its high-performance memory chips are in particularly high demand. For the fourth quarter of fiscal 2025, which ended on August 28, Micron Technology, Inc. (NASDAQ:MU) reported revenue of $11.32 billion, marking a 44.7% year-over-year increase. Net income climbed to $3.2 billion, reflecting a 32% rise from the previous year. This strong performance has fueled a remarkable rally in its stock, which has soared nearly 119% since the beginning of 2025.
Looking ahead, Micron Technology, Inc. (NASDAQ:MU) anticipates revenue of about $12.5 billion for the first quarter, with a projected non-GAAP gross margin of roughly 51.5%, which is one of the highest in the company’s history.
Apart from its strong financial results, Micron Technology, Inc. (NASDAQ:MU) has also emerged as a dependable dividend payer. It initiated dividend payments in 2021 and has maintained consistent payouts since then. Currently, it offers a quarterly dividend of $0.115 per share and has a dividend yield of 0.24%, as of October 9.
While we acknowledge the potential of MU 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 MU and that has 100x upside potential, check out our report about this cheapest AI stock.
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