In this article, we will take a look at some of the best Dow stocks according to hedge funds.
The Dow Jones Industrial Average, often called the Dow Jones or just the Dow, is a stock market index that tracks 30 major publicly traded companies in the United States. It’s one of the oldest and most widely recognized benchmarks for the US stock market.
Stocks showed mixed movement on June 11 following the release of inflation figures that came in lower than anticipated, alongside news of a preliminary trade deal between the US and China.
The DJIA gained 158 points, or 0.4%, while the broader market remained mostly unchanged and the Nasdaq Composite slipped by 0.2%. The S&P index has now risen in six of the past seven sessions and is trading less than 2% below its February record high. Earlier this year, it had fallen nearly 20% from that peak.
Meanwhile, the Consumer Price Index (CPI) rose just 0.1% in May compared to April, coming in below the 0.2% increase forecasted by economists. Core CPI, which excludes food and energy, also rose by 0.1%, falling short of expectations.
Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management, made the following comment regarding the current market:
“Inflation in May was lower than anticipated, suggesting the tariffs aren’t having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand. As we wait for the 90-day tariff pause to pass, the market will be caught between inflation and job prints. If inflation stays under control or the job market weakens, the Federal Reserve will likely consider cutting interest rates down the road.”
Given this market situation, we have compiled the list of 20 best Dow stocks according to hedge funds.
Our Methodology
For this list, we scanned a list of 30 Dow stocks and picked 20 that were the most popular among hedge funds. The stocks are ranked in ascending order of hedge funds having stakes in them, as per Insider Monkey’s Q1 2025 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
20. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the best Dow stocks to invest in. On June 10, the company revealed that it’s working on a large-scale, fault-tolerant quantum computer named Quantum Starling as part of its broader quantum roadmap.
A key component of this effort is the upcoming IBM Quantum Nighthawk processor, which is expected to launch later this year, according to a company blog post.
Like several other tech giants and well-funded startups, International Business Machines Corporation (NYSE:IBM) is racing to advance quantum computing. The core challenge they all face lies in qubit reliability—while qubits can perform rapid calculations, they tend to generate significant errors. Researchers often dedicate some qubits to correcting these errors, but that leaves fewer available for practical computation.
International Business Machines Corporation (NYSE:IBM) shifted its strategy in 2019, and now claims it has developed a new algorithm that could dramatically reduce the number of qubits required for error correction.
Jay Gambetta, International Business Machines Corporation (NYSE:IBM) vice president of quantum initiatives, explained that, unlike the company’s earlier approach, where theory dictated chip design, the current strategy focuses on building chips that are feasible first and then designing the error-correction method around them. This more pragmatic path has given IBM the confidence to roll out a series of increasingly advanced systems through 2027, paving the way for much larger quantum machines.
IBM has surged by over 25.6% since the start of 2025.
19. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 65
On June 6, Verizon Communications Inc. (NYSE:VZ) declared a quarterly dividend of $0.6775 per share, which was in line with its previous dividend.
While the company didn’t raise its dividend this time around, it has maintained a consistent track record, increasing it for 18 straight years. This steady growth has been supported, in part, by its strong cash position. In the most recent quarter, Verizon Communications Inc. (NYSE:VZ) posted solid financial results, with operating cash flow rising to $7.8 billion, up from $7.1 billion in the same period last year. Free cash flow also improved, climbing from $2.7 billion to $3.6 billion.
Chairman and CEO Hans Vestberg made the following comment regarding the company’s dividend policy:
“As the nation’s leader in mobility and broadband for consumers and businesses, we create great experiences for a broad and high-quality base of customers. This allows us to continue paying our dividend even in uncertain economic environments, while investing in our business to extend our network leadership, enhance America’s communications infrastructure and meet the present and future needs of all our customers.”
Verizon Communications Inc. (NYSE:VZ) is maintaining a focused and thoughtful strategy to reach its financial objectives by concentrating on specific customer groups and tailoring its services for a more personalized experience. With a solid financial foundation, the company keeps reinvesting in its operations and advancing innovation to enhance customer service.
VZ has surged by nearly 10% since the start of 2025.
18. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 75
McDonald’s Corporation (NYSE:MCD) is one of the best Dow stocks to consider. Morgan Stanley suggested that the company may soon start feeling some of the broader challenges affecting the fast food industry. On June 9, the firm downgraded the stock from “Overweight” to “Equal Weight” and lowered its price target from $329 to $324 per share, indicating a potential upside of about 5% from last Friday’s closing price.
Analyst Brian Harbour made the following comment:
“MCD is a top quality business but hasn’t been, and probably will not be, insulated from some structural pressures on fast food.”
He further said:
“YTD, the stock is up 6% and has behaved defensively, 5% off all time highs despite fundamental headwinds for over a year. Simply, we see more balanced risk/reward skew today, weighing MCD’s leadership position in the [quick service restaurant] segment against what we think are some structural headwinds that could continue.”
The analyst pointed to economic uncertainty affecting lower-income consumers and changing preferences toward health and wellness as key challenges. While McDonald’s Corporation (NYSE:MCD) has outperformed its competitors so far, the firm noted that its momentum may begin to taper off.
MCD is up by nearly 3% since the start of 2025.
