In this article, we will take a look at the most profitable dividend stocks to invest in.
In a period marked by market volatility, ongoing policy and geopolitical uncertainty, many investors have been shifting toward fixed-income assets and away from equities in search of stability and reliable income. Even so, this uncertain environment also highlights the appeal of dividend-focused ETFs, which aim to deliver income through dividend-paying stocks while maintaining diversification.
Dividends have played a crucial role in overall equity returns for decades, contributing about one-third of the S&P 500’s total return since 1926. This reliability continues to attract investors who value steady cash flow during uncertain market conditions.
Dan Caps, investment partner at Evelyn Partners, noted that investing in higher-dividend-paying stocks is a long-standing approach that draws a broad range of investors, including retirees, charities, and trusts. He added that the strategy offers not just income but also a degree of predictability, helping to balance the ups and downs that often come with investing in equities.
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 25%, which suggests sound financial health and excellent cost management. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
13. Johnson & Johnson (NYSE:JNJ)
Net Profit Margin: 25.1%
Johnson & Johnson (NYSE:JNJ) is one of America’s most recognizable healthcare companies, with operations that now center on pharmaceuticals and medical devices. After spinning off its consumer health unit, which included familiar names like Tylenol, Neutrogena, and Listerine, into a separate company called Kenvue, the company narrowed its focus to pharmaceuticals and medical technology. These two areas now power the business, with 26 products or platforms each bringing in more than $1 billion a year, forming the bulk of its revenue and cash flow.
Johnson & Johnson (NYSE:JNJ) continues to bring in strong cash flows, much of which is poured back into research and development to keep growth on track. The rest goes toward shareholder returns. In 2024, J&J invested about $17 billion in R&D and paid $11.8 billion in dividends. The dividend is also its strength, which the company has already grown for 63 consecutive years. With a quarterly dividend of $1.30 per share, JNJ has a dividend yield of 2.77%, as of October 6.
In its pharmaceutical arm, J&J has its sights set on leading the oncology market, aiming for $50 billion in sales. Treatments like Darzalex and Carvykti are expected to drive that effort. The company’s $14.6 billion purchase of Intra-Cellular Therapies also added Caplyta, a growing antipsychotic drug, which it believes could eventually bring in $5 billion annually. On the medical technology front, innovation in robotic surgery and cardiovascular care remains central to its next phase of growth.
12. Merck & Co., Inc. (NYSE:MRK)
Net Profit Margin: 25.81%
An American multinational pharmaceutical company, Merck & Co., Inc. (NYSE:MRK) is one of the most profitable stocks that pay dividends, with a trailing twelve-month net profit margin of 25.8%. Finding new medicines is a complex process, and progress rarely follows a straight path. At the moment, some investors are worried that Merck’s existing patents could expire before the company introduces another major hit to take their place. The concern makes sense, given that a large part of the company’s revenue currently depends on one key product, the cancer drug Keytruda.
Still, this kind of situation isn’t out of the ordinary in the pharmaceutical world. Most drugmakers face similar cycles as older treatments lose exclusivity and new ones are developed. What sets Merck & Co., Inc. (NYSE:MRK) apart is its strong research foundation and considerable scale, which give it the flexibility to acquire smaller biotech firms when it needs to strengthen its drug pipeline. This steady approach has helped the company perform well over the long run and maintain a history of consistent dividend growth, even if the increases haven’t occurred every single year.
Merck & Co., Inc. (NYSE:MRK)’s dividend growth streak of 16 years is hard to neglect for income investors. The company’s quarterly dividend comes in at $0.81 per share, offering an attractive dividend yield of 3.65%, as of October 6.
11. Mid-America Apartment Communities, Inc. (NYSE:MAA)
Net Profit Margin: 26.57%
Mid-America Apartment Communities, Inc. (NYSE:MAA) is one of the country’s largest apartment owners, though it tends to fly under the radar unless you live in the southern United States. The real estate investment trust manages more than 104,000 units spread across major Sun Belt cities such as Atlanta and Dallas, as well as smaller, fast-growing markets like Charleston and Savannah. While it may not be as popular as landlords with properties in big coastal hubs, it remains a major player in its region.
Unlike many developers that have pulled back on new projects, Mid-America Apartment Communities, Inc. (NYSE:MAA) has been steadily expanding. The company has recently completed four new apartment communities, which are now in the process of leasing. These developments added over 1,400 units and required an investment of about $385.6 million. They are already close to being fully occupied, with stabilization expected before the year ends.
In addition, Mid-America Apartment Communities, Inc. (NYSE:MAA)’s dividend history offers it stability, which income investors are always looking for. The company has grown its dividends for 15 years in a row and offers a quarterly dividend of $1.515 per share. As of October 5, the stock has a dividend yield of 4.46%.
