Hedge funds are strategically positioning themselves for growth in 2025, with a focus on dividend stocks demonstrating robust performance. A report from Business Insider dated October 30 highlights that hedge funds are on track for their strongest annual results since the pandemic, despite economic and political volatility. In the first three quarters of 2025, hedge funds averaged gains of 16.6% and attracted over $40 billion in net inflows, according to data from Citco.
The hedge fund industry is gearing up for its best year since 2020, with average gains in the third quarter of 5.2% across core strategies. Remarkably, 80% of funds reported an increase in returns. Multistrategy funds led the way with gains averaging 19.3%, while equity funds followed closely at 17.1%. Notably, major players such as Citadel and Millennium have reported increases of 5% and 6%, respectively, through September.
Market analysts are observing a shift in hedge fund investment strategies. A report by Goldman Sachs on November 10 noted that hedge funds had posted gains exceeding 13% as of the end of October. These funds have remained invested in global stocks for the second consecutive month, indicating a favorable long-term outlook. However, systematic and quant funds did not perform as well, likely due to their exposure to short bets.
Top Dividend Stocks Favored by Hedge Funds
In light of these developments, we have identified the top ten dividend stocks currently favored by hedge funds. Our analysis is based on the Q3 database from Insider Monkey, which includes data from 978 hedge funds. We focused on stocks held by the highest number of hedge fund managers with at least 10 years of consistent dividend payouts.
1. **Bank of America Corporation (NYSE:BAC)**
– Number of Hedge Fund Holders: 111
– Years of Dividend Payouts: 20
Bank of America has emerged as a leading dividend stock. Analyst Chris Kotowski from Oppenheimer reiterated a Buy recommendation for BAC on November 19, setting a price target of $55. The bank’s annual spending has surged by 44% over the past decade, reaching $4 billion in 2025. This increase is largely due to tech initiatives, particularly in artificial intelligence.
2. **Eli Lilly and Company (NYSE:LLY)**
– Number of Hedge Fund Holders: 114
– Years of Dividend Payouts: 53
Eli Lilly continues to attract hedge fund interest. On November 23, Terence Flynn from Morgan Stanley maintained a Buy rating with a price target of $1,290. The company is preparing to present new data at the upcoming San Antonio Breast Cancer Symposium in December.
3. **JPMorgan Chase & Co. (NYSE:JPM)**
– Number of Hedge Fund Holders: 120
– Years of Dividend Payouts: 25
JPMorgan remains a solid choice for dividend investors. Analyst Betsy Graseck from Morgan Stanley reaffirmed a Hold recommendation on November 24. Notably, the bank plans to build a new tower in Canary Wharf, potentially boosting the British economy by £10 billion.
4. **Thermo Fisher Scientific Inc. (NYSE:TMO)**
– Number of Hedge Fund Holders: 121
– Years of Dividend Payouts: 13
On November 25, Thermo Fisher announced a €2.1 billion offering of euro-dominated notes to support corporate expenditures. Analyst Daniel Arias from Stifel Nicolaus maintained a Buy recommendation, with a target price of $583.
5. **Oracle Corporation (NYSE:ORCL)**
– Number of Hedge Fund Holders: 122
– Years of Dividend Payouts: 16
Oracle continues to make headlines with ambitious plans to invest in OpenAI data centers. Analyst sentiment remains mixed, as seen in a report from Baird on November 18, which led to a revised target price of $315.
6. **Capital One Financial Corporation (NYSE:COF)**
– Number of Hedge Fund Holders: 129
– Years of Dividend Payouts: 30
Despite facing legal challenges over a $425 million settlement, Capital One remains a key dividend stock. Analyst Vincent Caintic from BTIG assigned a Buy rating on November 21, with a target price of $264.
7. **Mastercard Incorporated (NYSE:MA)**
– Number of Hedge Fund Holders: 136
– Years of Dividend Payouts: 19
Mastercard is expanding its services with the introduction of Agent Pay in the UAE, marking its first international transaction. The company has also partnered with Zenith Bank to enhance digital payments in Nigeria.
8. **UnitedHealth Group Incorporated (NYSE:UNH)**
– Number of Hedge Fund Holders: 140
– Years of Dividend Payouts: 35
UnitedHealth is focused on maintaining its network amidst negotiations with TriHealth. Analyst Stephen Baxter from Wells Fargo issued a Buy rating on November 12.
9. **Visa Inc. (NYSE:V)**
– Number of Hedge Fund Holders: 179
– Years of Dividend Payouts: 17
Visa is actively enhancing its stablecoin capabilities in the CEMEA region, indicating strong demand for efficient international transactions.
10. **Microsoft Corporation (NASDAQ:MSFT)**
– Number of Hedge Fund Holders: 312
– Years of Dividend Payouts: 21
Despite facing legal scrutiny in France, Microsoft remains a significant player in the hedge fund landscape. The company is also navigating complex human rights discussions, particularly in relation to its tools used in surveillance.
As hedge funds continue to navigate a complex market landscape, these dividend stocks represent a strategic focus for potential growth in the coming year. Investors may find value in following hedge fund sentiment as they make their investment decisions in 2025.
