In this article, we will take a look at some of the best DRIP stocks to own.
One of the most effective ways for investors to grow their portfolios is by harnessing the power of compounding returns. When investors reinvest the dividends they earn, their portfolio value can expand at a faster pace over time, benefiting from the cumulative growth effect of compounding.
A popular approach to take advantage of this principle is through a dividend reinvestment plan, commonly known as a DRIP. This plan automatically reinvests dividends and capital gains distributions to purchase additional shares of the same stock, often at no extra cost. Over time, this process can create a snowball effect that helps accelerate portfolio growth while requiring little effort from the investor.
Research from Hartford Funds showed that dividends have been a major driver of investment returns over the decades. Since 1960, about 85% of the S&P 500’s total cumulative return has come from reinvested dividends and the effects of compounding.
Similarly, a report by S&P Dow Jones Indices found that dividends have historically made up roughly 31% of the S&P 500’s total return. Between 1926 and February 2025, dividend income accounted for nearly one-third of the index’s monthly total return, with the rest coming from capital appreciation. In some periods, such as the 1940s and 1970s, dividends contributed more than half of total returns, while in the 1990s, their share fell to about 14%.
Given this, we will take a look at some of the best DRIP stocks to own right now.
Our Methodology:
For this article, we used a consensus-based approach and identified companies offering dividend reinvestment plans (DRIPs) from reputable online sources. After filtering, we narrowed down the selection to companies with robust and consistent dividend track records. The stocks are ranked in ascending order of the number of hedge funds having stakes in them, as of Q2 2025, as per Insider Monkey’s database.
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).
15. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 27
Realty Income Corporation (NYSE:O) is among the best DRIP stocks to own now.
On November 4, Stifel revised its price target for Realty Income Corporation (NYSE:O), trimming it slightly from $68 to $67.50, while maintaining a Buy rating on the stock, as reported by The Fly. The move followed the company’s third-quarter results, which showed AFFO per share of $1.08, coming in one cent ahead of both Stifel’s and the Street’s estimates, mainly due to higher lease termination income.
During the quarter, Realty Income Corporation (NYSE:O) generated revenue of $1.47 billion, an increase from $1.33 billion in the same period a year earlier. Reflecting its solid performance, the company raised its full-year 2025 AFFO per share outlook to between $4.25 and $4.27 and projected an investment volume of roughly $5.5 billion for the year.
Realty Income Corporation (NYSE:O) is recognized as one of the world’s largest real estate investment trusts (REITs), with a diversified portfolio spanning retail, industrial, gaming, and other sectors. Most of its assets are leased to leading global companies, and its net-lease model continues to provide the firm with a steady and predictable stream of rental income.
14. Hormel Foods Corporation (NYSE:HRL)
Number of Hedge Fund Holders: 38
Hormel Foods Corporation (NYSE:HRL) is one of the best DRIP stocks to own right now.
On November 6, Piper Sandler analyst Michael Lavery trimmed the firm’s price target on Hormel Foods Corporation (NYSE:HRL) from $26 to $25, while maintaining a Neutral rating on the stock, according to a report by The Fly. The revision follows the company’s updated outlook, which now calls for 2025 EPS to come in 8 to 9 cents below its earlier guidance of $1.43–$1.45.
The shortfall reflects several challenges, including the impact of highly pathogenic avian influenza (HPAI) on its poultry operations, a chicken recall in its Foodservice division, a fire at its nut butter facility, and persistent commodity cost pressures. The revised earnings outlook also excludes an expected impairment charge, which Piper Sandler anticipates will be adjusted out of results.
In other news, Hormel Foods Corporation (NYSE:HRL) announced a restructuring plan that includes cutting roughly 250 positions. The company said it will reduce its workforce through a voluntary early-retirement program, in addition to layoffs and the closure of certain open roles. The restructuring is projected to cost more than $20 million, covering pensions, severance, and other employee-related expenses, which will be recognized from the fourth quarter of fiscal 2025 through the first quarter of fiscal 2026.
Hormel Foods Corporation (NYSE:HRL) is a leading American food manufacturer that develops, processes, and markets a wide range of branded products, including meats, nut-based items, and other food products, serving both retail and foodservice customers.
13. Illinois Tool Works Inc. (NYSE:ITW)
Number of Hedge Fund Holders: 44
Illinois Tool Works Inc. (NYSE:ITW) is one of the best DRIP stocks to own right now.
On October 27, Baird raised its price target on Illinois Tool Works Inc. (NYSE:ITW) to $265 from $258, while maintaining a Neutral rating on the stock, as reported by The Fly. The firm updated its financial model after the company’s third-quarter results, which reflected modestly positive organic growth, a sign of gradual improvement in performance.
A couple of days later, on October 29, Illinois Tool Works Inc. (NYSE:ITW) declared a quarterly dividend of $1.61 per share, consistent with its previous payout. The company continues to uphold its reputation as a Dividend King, boasting an impressive 53 consecutive years of dividend increases. For the third quarter of 2025, the company reported revenue of $4.1 billion, up 2% year over year, including 1% organic growth.
Illinois Tool Works Inc. (NYSE:ITW) is a global diversified manufacturer engaged in producing specialized industrial equipment, consumables, and related services across a wide range of end markets.
