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.
9. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 68
Texas Instruments Incorporated (NASDAQ:TXN) is a long-standing player in the semiconductor space, specializing in analog and embedded chips. While it isn’t positioned as a pure artificial intelligence (AI) company, its broad and diverse operations give it an edge. The firm is well-placed to capitalize on the rise of edge AI, where computing and AI functions happen directly on devices rather than being processed in the cloud.
Its Analog division, the biggest revenue driver, supplies chips that regulate power and convert real-world inputs like sound, temperature, and pressure into usable signals. Meanwhile, the Embedded Processing unit offers microcontrollers and processors that act as the “brains” behind many electronic devices. With a vast catalog of products and a customer base exceeding 100,000, Texas Instruments Incorporated (NASDAQ:TXN) enjoys a stable and diversified revenue stream, making it less reliant on any single client or industry.
In addition, Texas Instruments Incorporated (NASDAQ:TXN) is a solid dividend company with 21 consecutive years of dividend growth. The company offers a quarterly dividend of $1.36 per share and has a dividend yield of 3.01%, as recorded on September 18.
8. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 68
PepsiCo, Inc. (NASDAQ:PEP) drew attention on Sept. 2 when activist investor Elliott Investment Management revealed a $4 billion position in the snack and beverage leader, representing about a 2% ownership stake.
Shares of PepsiCo, Inc. (NASDAQ:PEP) have slipped nearly 6% since the beginning of 2025, reflecting stalled earnings growth and limited momentum in recent quarters. Elliott’s move has fueled speculation, but the broader investment case hinges more on what the company could achieve going forward rather than its current performance. As a result, some investors may choose to remain cautious and adopt a wait-and-see stance.
In this environment, PepsiCo, Inc. (NASDAQ:PEP)’s dividend offers relief to income investors. The company is a Dividend King, having raised its dividends for 53 consecutive years. It currently offers a quarterly dividend of $1.4225 per share and has a dividend yield of 4.02%, as of September 18.
7. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 71
Verizon Communications Inc. (NYSE:VZ) continues to draw attention for its steady business model and attractive dividend yield. In recent years, the company has sharpened its focus on its core operations, and those efforts appear to be paying off.
During the second quarter, Verizon Communications Inc. (NYSE:VZ) added 300,000 net mobile and broadband subscribers, while revenue climbed 5.2% year over year to $34.5 billion. Earnings per share also improved, rising from $1.09 to $1.18. In 2024, the company sold its portfolio of more than 6,300 wireless towers across all 50 states and Washington, D.C., to Vertical Bridge in a $3.3 billion deal, with Verizon retaining its role as the anchor tenant on those sites.
Verizon Communications Inc. (NYSE:VZ) is also gaining the attention of income investors because of its strong dividend history. On September 5, the company declared a 1.8% hike in its quarterly dividend to $0.69 per share. This marked the company’s 19th consecutive year of dividend growth, which makes VZ one of the best stocks for a dividend stock portfolio. As of September 18, the stock has a dividend yield of 6.31%.
6. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 73
Lockheed Martin Corporation (NYSE:LMT) is an American defense and aerospace manufacturing company. It continues to channel significant resources into research and development, fueling innovation and strengthening its ability to deliver cutting-edge defense technologies that address shifting customer needs. For instance, the company is putting capital into next-generation programs such as America’s Golden Dome initiative. These efforts not only enhance its technological edge but also lay the groundwork for long-term growth in both cash flow and shareholder dividends.
Lockheed Martin Corporation (NYSE:LMT) maintains considerable flexibility within its portfolio. Its missile systems, now playing a growing role in US defense strategy, offer a steady source of momentum. Sales of upgraded F-16 fighter jets remain robust, and the potential revival of the F-22 program is often overlooked. At the same time, with international rivals struggling with production and cost challenges, the F-35 stands out as the only widely scalable fifth-generation aircraft option available to most nations.
Lockheed Martin Corporation (NYSE:LMT) has a strong dividend history. The company has been rewarding shareholders with growing dividends for the past 22 years and currently pays a quarterly dividend of $3.30 per share. The stock supports a dividend yield of 2.79%, as of September 18.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 75
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement company that serves both DIY customers and professional builders, offering a broad selection of products such as building supplies, tools, appliances, and outdoor and garden items. Its strong brand reputation, efficient supply chain, and well-executed omnichannel strategy reinforce its position as a leader in the home improvement space. With solid business operations and a disciplined financial approach, the company appears well-positioned to continue delivering steady dividend growth over the long run.
For the fiscal year ending in January, Lowe’s Companies, Inc. (NYSE:LOW) expects comparable sales to range from flat to a modest 1% increase. While not indicative of major growth, it also signals that revenue declines aren’t anticipated. This stability is encouraging for dividend-focused investors, as it shows the company’s ability to hold steady even in difficult economic conditions, a reflection of its resilience and diversified business model.
Lowe’s Companies, Inc. (NYSE:LOW) is also a Dividend King with 60 consecutive years of dividend growth. The company’s quarterly dividend comes in at $1.20 per share and has a dividend yield of 1.78%, as of September 18.
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM), headquartered in California, is a global leader in semiconductors, software, and services tied to wireless communications. The company has become increasingly attractive to dividend-focused investors, thanks to its ability to balance innovation with consistent income generation.
Once a dominant name in the chip industry throughout the 2000s and 2010s, QUALCOMM Incorporated (NASDAQ:QCOM) gained prominence by fueling the smartphone revolution. While the smartphone sector has since matured and slowed in growth, the rollout of 5G networks gave the company a renewed boost.
In recent years, QUALCOMM Incorporated (NASDAQ:QCOM) has broadened its scope beyond mobile phones. Its portfolio now includes components for network infrastructure, industrial equipment, smart home devices, virtual reality systems, and a rapidly expanding automotive technology division, adding further strength to its long-term growth prospects.
Moreover, the diverse revenue streams have also supported QUALCOMM Incorporated (NASDAQ:QCOM)’s dividends over the years. The company’s dividend growth streak spans 21 years, which makes it one of the best stocks for a dividend stock portfolio. Currently, it offers a quarterly dividend of $0.89 per share and has a dividend yield of 2.14%, as of September 18.
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 78
McDonald’s Corporation (NYSE:MCD) is an American multinational fast food company. With a largely franchised model and strong operating margins, the company is able to turn a significant portion of its revenue into profit and cash flow, funding both dividends and share buybacks. Recent results also underscored the strength of its customer base, as sales from loyalty members reached about $33 billion over the past year, showcasing the staying power of its growth drivers.
In the second quarter of 2025, McDonald’s Corporation (NYSE:MCD)’s global comparable sales advanced 3.8%, including a 2.5% increase in the US market. Consolidated revenue climbed 5%, while earnings per share grew 12% year-over-year (or 7% on an adjusted basis). Commenting on the quarter’s results, CEO Chris Kempczinski pointed to value, marketing strategies, and menu innovation as key contributors, while also highlighting how effectively the company is scaling its digital initiatives.
McDonald’s Corporation (NYSE:MCD)’s dividend growth streak often grabs investors’ attention. The company has been raising its dividends for 48 years in a row. It currently offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.34%, as of September 18.
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 88
Exxon Mobil Corporation (NYSE:XOM) stands as a global powerhouse in liquefied natural gas (LNG), with stakes in multiple projects worldwide that collectively produce around 23 million tons annually. Its portfolio includes major interests in Gorgon LNG, Papua New Guinea LNG, and several LNG facilities in Qatar.
LNG is one of the company’s four core strategic priorities through 2027, and Exxon Mobil Corporation (NYSE:XOM) is actively expanding in this area. Among its largest undertakings is the Golden Pass LNG project in the US, a more than $10 billion joint venture with QatarEnergy that is expected to begin exports by late 2025, with capacity for about 18 million tons per year.
Exxon Mobil Corporation (NYSE:XOM) is also partnering with QatarEnergy, Shell, TotalEnergies, and others on the massive North Field expansion in Qatar. This two-phase project will add six LNG trains, increasing total capacity from 77 million tons to 126 million tons annually by 2027, with the first phase carrying an estimated $30 billion price tag.
With these initiatives, Exxon Mobil Corporation (NYSE:XOM) is positioning itself to nearly double its LNG business to around 40 million tons per year by 2030, reinforcing its leadership in the global energy market. Moreover, the company has been rewarding shareholders with growing dividends for the past 42 years. It currently pays a quarterly dividend of $0.99 per share and has a dividend yield of 3.47%, as of September 18.
1. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 93
The Home Depot, Inc. (NYSE:HD) is a household name and a dominant force in the home improvement market. With more than 2,000 locations across the US, the retailer has easy access to a vast share of the nation’s consumers.
Regardless of interest rate movements, The Home Depot, Inc. (NYSE:HD) remains well-positioned. The home improvement sector is enormous— valued at roughly $1 trillion— and highly fragmented. This gives the company a competitive edge over smaller players, supported by its strong brand recognition, extensive product selection, and seamless omnichannel platform.
For fiscal 2025, The Home Depot, Inc. (NYSE:HD) is planning to open 13 new stores. While physical expansion is no longer the main growth driver, the company’s long-term prospects remain solid. Over the next five years, revenue is expected to climb further. Although growth may not match past highs, the company still has plenty of runway left.
The Home Depot, Inc. (NYSE:HD) holds a 16-year streak of consistent dividend growth, which makes it one of the best stocks for a dividend stock portfolio. The company offers a quarterly dividend of $2.30 per share and has a dividend yield of 2.20%, as recorded on September 18.
While we acknowledge the potential of HD 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 HD and that has 100x upside potential, check out our report about this cheapest AI stock.
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