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.
12. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 63
International Business Machines Corporation (NYSE:IBM) is among the best DRIP stocks to own right now.
After spending a day at IBM’s (IBM) quantum laboratory and holding discussions with Jay Gambetta, Director of IBM Research, Melius Research reaffirmed its Buy rating on the stock on November 6, as reported by The Fly. The firm noted that International Business Machines Corporation (NYSE:IBM) currently operates the largest number of quantum computers “by far,” and suggested that the company’s potential in quantum computing “looks like it could amount to billions of high-margin annualized revenue” beginning in 2029.
The report highlighted that IBM’s “Starling” series of quantum computers could introduce groundbreaking applications powered by a 200-qubit platform, supported by an error correction rate that “finally allows this technology cross the chasm.” The analyst further remarked that IBM appears to possess “the ingredients to win in Quantum since it arguably has the best hardware roadmap and the mindshare of developers with its Qiskit platform.”
In other news, International Business Machines Corporation (NYSE:IBM) announced plans to reduce its workforce this quarter, a move that could affect thousands of employees as the company intensifies its focus on its high-margin software business. The decision comes amid increased attention from Wall Street on IBM’s efforts to capitalize on AI-driven cloud opportunities.
Recently, the company reported a deceleration in growth within its key cloud software division, sparking concerns among investors who have been counting on the company to capture a greater share of the expanding cloud services market.
International Business Machines Corporation (NYSE:IBM) is a global technology leader providing software, consulting, and infrastructure solutions, with a strategic emphasis on hybrid cloud and artificial intelligence (AI).
11. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 64
3M Company (NYSE:MMM) is among the best DRIP stocks to own right now.
On October 22, RBC Capital’s analyst Deane Dray raised the price target for 3M Company (NYSE:MMM) from $120 to $130 while maintaining an Underperform rating on the stock, according to a report by The Fly. The analyst noted that the company posted a modest yet broad-based operating beat in the third quarter, supported by stronger organic growth and progress in launching new products. However, Dray cautioned that ongoing multi-billion-dollar PFAS litigation, spanning five key categories, remains a significant and underappreciated risk for the company.
3M Company (NYSE:MMM) released its third-quarter 2025 results on October 21, reporting adjusted sales of $6.3 billion, reflecting 3.2% year-over-year organic growth. Adjusted operating margin rose 170 basis points to 24.7%, while adjusted earnings per share (EPS) came in at $2.19, marking a 10% increase from the prior year.
3M Company (NYSE:MMM) generated $1.8 billion in operating cash flow and $1.3 billion in adjusted free cash flow during the quarter. It also raised its 2025 adjusted EPS guidance from the previous range of $7.75 – $8.00 to $7.95–$8.05. In addition, the company returned $0.9 billion to shareholders through dividends and share repurchases.
3M Company (NYSE:MMM) is a diversified technology firm that manufactures a broad portfolio of products used across various industries, including electronics, automotive, and consumer goods. Its product range spans adhesives, abrasives, filtration solutions, safety equipment, and office essentials.
10. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 67
AbbVie Inc. (NYSE:ABBV) is one of the best DRIP stocks to own right now.
On November 5, Piper Sandler analyst David Amsellem raised the price target on AbbVie Inc. (NYSE:ABBV) from $284 to $289 while maintaining an Overweight rating on the stock following its quarterly results, as reported by The Fly. The analyst attributed the increase to stronger long-term expectations for Skyrizi beginning in 2026, along with improved forecasts for key products in AbbVie’s Neuroscience division, which he described as an area that remains somewhat underappreciated by the market.
In the third quarter of 2024, AbbVie Inc. (NYSE:ABBV)’s immunology segment delivered robust earnings of $7.89 billion, up 11.9% on a reported basis and 11.2% on an operational basis. Global sales of Skyrizi rose 46.8% to $4.71 billion, while Rinvoq revenues climbed 35.3% to $2.18 billion. Meanwhile, Humira revenues fell 55.4% to $993 million as the product continued to face biologic similar competition. Total company revenue reached $15.7 billion for the quarter, representing a 9.1% year-over-year increase.
AbbVie Inc. (NYSE:ABBV) is a research-driven biopharmaceutical company engaged in discovering, developing, manufacturing, and marketing innovative medicines and therapies.
9. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 67
The Sherwin-Williams Company (NYSE:SHW) is one of the best DRIP stocks to own right now.
On October 29, Mizuho lifted its price target on The Sherwin-Williams Company (NYSE:SHW) to $400 from $385 while maintaining an Outperform rating, reflecting confidence in the company’s ongoing performance and market positioning, as reported by The Fly.
The Sherwin-Williams Company (NYSE:SHW) delivered another steady quarter, reporting a 3.2% rise in consolidated net sales to $6.36 billion for the third quarter of 2025. Sales from stores in the Paint Stores Group that have been open for more than a year climbed 3.6%, while net income rose 3.3% to $833.1 million, representing 13.1% of total sales. The company also expanded its adjusted EBITDA margin and adjusted diluted EPS, returning $864 million to shareholders through dividends and share buybacks during the quarter.
In other news, The Sherwin-Williams Company (NYSE:SHW) announced on November 3 that Benjamin E. Meisenzahl will assume the role of Chief Financial Officer starting January 1, 2026. Meisenzahl, 44, has served as Senior Vice President of Finance and has been with the company for over two decades.
Recognized as a global leader in paints and coatings, The Sherwin-Williams Company (NYSE:SHW) continues to serve a broad range of professional, industrial, commercial, and retail customers around the world.
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 68
Texas Instruments Incorporated (NASDAQ:TXN) is among the best DRIP stocks to own right now.
On October 22, Mizuho trimmed its price target on Texas Instruments Incorporated (NASDAQ:TXN) from $150 to $145 while maintaining an Underperform rating, as reported by The Fly. The firm adjusted its estimates after the latest earnings release, noting that the stock’s valuation appears somewhat inflated.
Even so, Texas Instruments Incorporated (NASDAQ:TXN) delivered a solid third-quarter performance for 2025, reporting on October 21 that revenue climbed 14% year-over-year to $4.74 billion, with growth seen across all major end markets. Operating cash flow over the past 12 months reached $6.9 billion, reflecting the strength of the company’s business model, the resilience of its product lineup, and the efficiency of its 300mm production operations. Free cash flow for the same period stood at $2.4 billion.
During the past year, the company invested $3.9 billion in R&D and SG&A, spent $4.8 billion on capital projects, and returned $6.6 billion to shareholders.
Texas Instruments Incorporated (NASDAQ:TXN) is a leading global semiconductor manufacturer specializing in analog and embedded processing chips that serve a broad range of industries.
7. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 68
PepsiCo, Inc. (NASDAQ:PEP) is one of the best DRIP stocks to own right now.
On October 21, DZ Bank analyst Axel Herlinghaus upgraded PepsiCo, Inc. (NASDAQ:PEP) from Hold to Buy and set a price target of $167, citing confidence in the company’s outlook, according to a report by The Fly.
PepsiCo, Inc. (NASDAQ:PEP) delivered a strong third-quarter performance, posting revenue of $23.9 billion, 2.7% year-over-year increase and about $90 million ahead of analyst expectations. Looking ahead to 2025, the company anticipates low single-digit growth in organic revenue. It also plans to return roughly $8.6 billion to shareholders through $7.6 billion in dividends and $1 billion in share repurchases.
A hallmark of stability, PepsiCo, Inc. (NASDAQ:PEP) has increased its dividend for 53 consecutive years, underscoring its consistent shareholder commitment.
PepsiCo, Inc. (NASDAQ:PEP) operates as a global food and beverage leader, producing and marketing a diverse portfolio of well-known brands, including Pepsi-Cola, Lay’s, Doritos, Gatorade, and Quaker Oats.
6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 71
Verizon Communications Inc. (NYSE:VZ) is among the best DRIP stocks to own right now.
On October 30, BofA analyst Michael Funk trimmed the price target on Verizon Communications Inc. (NYSE:VZ) to $45 from $49 while maintaining a Neutral rating on the stock, according to a report by The Fly. The analyst noted that the company’s recent results were “better than feared,” particularly regarding consumer postpaid phone net losses, pricing strategy to gain market share, and dividend stability. BofA adjusted its 2026 free cash flow multiple to reflect potential execution risks as Verizon moves through its restructuring phase and ramps up marketing initiatives.
In its third-quarter earnings update, CEO and Director Daniel Schulman discussed Verizon Communications Inc. (NYSE:VZ)’s shift from a technology-focused to a customer-centric growth strategy. He also outlined plans to strengthen the company’s network foundation through greater investment in cybersecurity and convergence, emphasizing the pending acquisition of Frontier, which is expected to close early next year. Verizon reaffirmed its 2025 cash flow guidance in the range of $19.5 billion to $20.5 billion and expects to generate stronger cash flows in 2026.
Verizon Communications Inc. (NYSE:VZ) is a leading global telecommunications provider, offering a broad suite of products and services to consumers, businesses, and government clients worldwide.
5. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 78
McDonald’s Corporation (NYSE:MCD) is among the best DRIP stocks to own right now.
On November 6, Baird raised its price target on McDonald’s Corporation (NYSE:MCD) to $325 from $322 while maintaining a Neutral rating, updating its model following the company’s Q3 results and positive outlook, as reported by The Fly.
McDonald’s Corporation (NYSE:MCD) reported a mixed third quarter for 2025. Earnings per share came in at $3.22, falling short by $0.11, and revenue reached $7.08 billion, up 2.98% year-over-year but missing estimates by $11.48 million. Despite the shortfalls, global systemwide sales grew 6%, and comparable sales increased across all segments, highlighting the company’s ability to sustain growth even in a challenging environment.
The company also mentioned that loyalty program members contributed approximately $34 billion in systemwide sales over the trailing twelve months, with more than $9 billion generated in the quarter alone across 60 loyalty markets.
McDonald’s Corporation (NYSE:MCD) is the world’s largest food service retailer, operating over 44,000 restaurants in more than 100 countries, with roughly 95% of its locations owned and run by independent local business operators.
4. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 83
AT&T Inc. (NYSE:T) is among the best DRIP stocks to own right now.
On October 23, TD Cowen analyst Gregory Williams raised AT&T Inc. (NYSE:T) price target from $32 to $33 while maintaining a Hold rating, citing solid growth in postpaid phone, fiber, and fixed wireless access (FWA) subscriber additions, according to a report by The Fly.
The firm also noted that the company reaffirmed both near-term and long-term guidance, although concerns over ARPU, wireless margins, and aggressive competition from Verizon could pose challenges in 2026.
AT&T Inc. (NYSE:T) reported mixed third-quarter results for 2025, with revenue increasing 2% year-over-year to $30.7 billion. Operating cash flow remained steady at $10.2 billion, while capital expenditures totaled $4.9 billion and overall capital investment reached $5.3 billion. Free cash flow rose to $4.9 billion from $4.6 billion a year earlier.
For the full year, AT&T Inc. (NYSE:T) reiterated its guidance, projecting low-single-digit growth in consolidated service revenue, mobility service revenue growth of 3% or more, and mid-to-high-teens growth in consumer fiber broadband revenue. Adjusted EBITDA is expected to grow by 3% or more, with mobility EBITDA around 3%.
AT&T Inc. (NYSE:T) is a leading telecommunications conglomerate that provides wireless (5G) and wireline (fiber) services, along with business solutions and entertainment offerings, operating a vast network that serves both consumers and businesses with mobile, internet, and television services.
3. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 84
The Coca-Cola Company (NYSE:KO) is one of the best DRIP stocks to own right now.
On October 31, Freedom Capital analyst Georgy Vashchenko raised the price target for The Coca-Cola Company (NYSE:KO) from $73.20 to $78 while maintaining a Hold rating. The analyst noted that the investment thesis for the company remains unchanged, but the new target suggests roughly 14% upside potential, reflecting expectations for stronger operating profitability over the forecast period.
In its third-quarter earnings report, Chairman and CEO James Quincey highlighted ongoing volume growth despite a challenging operating environment, noting that The Coca-Cola Company (NYSE:KO) achieved value share gains across all segments for the 18th consecutive quarter and made steady progress with its all-weather strategy.
The company posted third-quarter comparable EPS of $0.82, up 6% year-over-year, despite facing a 6% currency headwind, higher net interest expenses, and an increased effective tax rate. Free cash flow, excluding fairlife contingent consideration, reached $8.5 billion, while net debt leverage stood at 1.8 times EBITDA.
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 92
Merck & Co., Inc. (NYSE:MRK) is one of the best DRIP stocks to own right now.
On November 3, Morgan Stanley analyst Terence Flynn raised the price target for Merck & Co., Inc. (NYSE:MRK) from $98 to $100 while maintaining an Equal Weight rating. He noted that third-quarter results beat expectations, largely due to one-time items and strong Januvia performance, while Keytruda and Winrevair sales fell short of forecasts. Looking ahead, Merck projects “solid” top-line growth in 2026 driven by new product launches, though the company expects operating expenses to accelerate. Flynn models 2026 EPS at $9.44.
In Q3 2025, Keytruda sales rose 10% to $8.1 billion, and Animal Health sales grew 9% to $1.6 billion. Overall revenue reached $17.28 billion, up nearly 4% from the prior year. For 2025, Merck & Co., Inc. (NYSE:MRK) now expects worldwide sales between $64.5 billion and $65.0 billion and has raised and narrowed its non-GAAP EPS guidance to a range of $8.93 to $8.98.
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company focused on delivering innovative medicines, vaccines, biologic therapies, and animal health products.
1. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 106
S&P Global Inc. (NYSE:SPGI) is one of the best DRIP stocks to own right now.
On October 31, Evercore ISI raised its price target on S&P Global Inc. (NYSE:SPGI) to $629 from $619 while maintaining an Outperform rating on the stock. The analyst noted that the company delivered a strong quarter, offering valuable insights ahead of its upcoming investor day, which is expected to be the key event for those looking for updates on growth targets and margins. Although the latest results were impressive, the firm emphasized that investor attention remains centered on the event scheduled for November 13.
During the third quarter of 2025, S&P Global Inc. (NYSE:SPGI) reported revenue of $3.89 billion, marking an 8.76% year-over-year increase and exceeding estimates by $63 million. GAAP net income climbed 21% to $1.176 billion, with diluted earnings per share rising 24% to $3.86. On an adjusted basis, net income rose 19% to $1.442 billion, and adjusted diluted earnings per share grew 22% to $4.73.
In addition, the company announced plans to acquire With Intelligence for $1.8 billion earlier in October. The acquisition is expected to further boost growth in its Market Intelligence segment and enhance its private markets solutions across divisions through both strategic expansion and continued innovation.
S&P Global Inc. (NYSE:SPGI) is known for providing financial intelligence and analytics across global capital, commodity, and automotive markets.
While we acknowledge the potential of SPGI 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 SPGI and that has 100x upside potential, check out our report about this cheapest AI stock.
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