In this article, we will take a look at some of the best options for a dividend stock portfolio.
Dividends have long been a magnet for investors. A Wall Street Journal report noted that many shareholders said they didn’t rely on dividend income right now but believed dividend-paying stocks tend to offer stronger returns with lower volatility.
History backs up that view. Research from Ned Davis covering the past 50 years shows that S&P 500 companies paying dividends delivered annualized returns of 9.2%, more than double the 4.3% posted by non-dividend payers, and with smoother performance.
Over that half-century, dividend payers would have built investors’ wealth to about 10 times more (before taxes) compared with nonpayers, while also outperforming an equal-weighted basket of all stocks in the index.
A “quality”-oriented investment strategy often carries defensive traits. Businesses that consistently raise their shareholder payouts are typically viewed as financially sound, with competitive advantages that are either solid or improving. Dividend growth stocks also have a reputation for being less volatile than the broader market. These qualities have funneled billions of dollars into funds built around the “dividend growth” theme, making such stocks a popular choice for investors seeking stable income portfolios.
Given this, we will take a look at some of the best stocks for a dividend stock portfolio.
Image by Steve Buissinne from Pixabay
Our Methodology
For this list, we first used a stock screener to pick companies that have raised their dividends for at least 10 consecutive years or more. From that list, we narrowed down our options to companies with dividend yields of around 1%, as of September 18, demonstrating robust financial standings and consistent cash flow, which are indicative of their ability to sustain reliable dividends for passive income. From these companies, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of over 1,000 hedge funds and their holdings as of Q2 2025.
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).
12. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 62
Medtronic plc (NYSE:MDT), one of the leading names in medical devices, has faced some challenges in recent years but has taken measures to address them, with a particular emphasis on strengthening profitability. In the past, the company considered spinning off certain divisions and ultimately decided to separate its diabetes care segment. This unit, being the only consumer-facing business and carrying thinner margins compared to other operations, is expected to support earnings improvement once separated.
At the same time, Medtronic plc (NYSE:MDT)’s core operations remain solid. As one of the largest medical device makers globally, it serves a wide range of therapeutic areas. Its ongoing efforts to develop and launch innovative products have helped drive steady revenue and profit growth.
In addition, Medtronic plc (NYSE:MDT) is a strong dividend company with 48 consecutive years of dividend growth under its belt. This means that the company is just 2 years away from becoming a Dividend King. The company offers a quarterly dividend of $0.71 per share and has a dividend yield of 2.98%, as of September 18.
11. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 66
NextEra Energy, Inc. (NYSE:NEE), the parent company of Florida Power & Light — the largest utility in the U.S. — has also established itself as a global frontrunner in wind and solar energy. The Florida-based firm continues to invest heavily, channeling $2 billion in capital expenditures and bringing an additional 1.1 GW of solar, wind, and storage capacity online in the second quarter of 2025.
Even with federal measures aimed at slowing the expansion of renewable energy, NextEra Energy, Inc. (NYSE:NEE) secured another 3.2 GW of projects during the same period. This pushed its development backlog to nearly 30 GW, a figure that comes close to the 38 GW of total operating capacity reported by its energy resources division at the end of March 2025.
NextEra Energy, Inc. (NYSE:NEE) is also popular among income investors because of its stable dividend history. The company has raised its payouts for 29 years in a row, which makes it one of the best stocks for dividend stock portfolio. Currently, it offers a quarterly dividend of $0.5665 per share and has a dividend yield of 3.20%, as of September 18.
10. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 67
Bristol-Myers Squibb Company (NYSE:BMY) is a pharmaceutical company focused on developing treatments across cancer, blood disorders, cardiovascular disease, immunology, and neuroscience. Its portfolio includes widely recognized therapies such as Opdivo for oncology and Eliquis for preventing blood clots, alongside a growing pipeline in cell therapy and immunology.
In recent years, Bristol-Myers Squibb Company (NYSE:BMY) has concentrated on expanding its “Growth Portfolio” by launching new medicines and strengthening its global presence, while also adding assets through acquisitions and partnerships. A major challenge lies in balancing this growth with revenue declines from its “Legacy Portfolio,” as older drugs lose patent protection and face generic competition. To address this, Bristol Myers Squibb continues to prioritize research and development, build strategic collaborations, and navigate regulatory and pricing pressures across international markets.
Bristol-Myers Squibb Company (NYSE:BMY) is one of the best stocks for a dividend stock portfolio, as the company has grown its payouts for 16 consecutive years. On September 17, the company declared a quarterly dividend of $0.62 per share, which was in line with its previous dividend. The stock supports a dividend yield of 5.42%, as of September 18.
