As in previous years, the dividend stocks are proving their value in 2025 by delivering returns at a comparatively higher rate than the benchmark index. Following a standout 2024, the market has also been facing a lot of turbulence in the past few weeks. However, some dividend-paying companies are holding themselves strong against this headwind, managing to reward the stockholders with income growth and capital appreciation. Thinking about the possibility of economic uncertainty leads investors to prioritize stability, and our list holds the 10 dividend stocks, which they may just be looking for.
The previous decade witnessed the growth stocks dominating the headlines, mainly as tech leaders delivering astounding returns. The tightening monetary policies and elevated interest rates have been pushing investors to shift their focus instead toward income-generating assets in recent years. A report by S&P Global anticipates a 7% increase in the total U.S. dividends in 2025, reaching a value of $784 billion, making the cash flows from the dividend stocks more appealing in an unpredictable economic environment.
Historically, dividend stocks have been the go-to investment for investors when there is an economic slowdown. For instance, during the 2008 financial crisis and even the Covid-19 downturn, the dividend payers cushioned the impact of market volatility. Once again, such resilience, demonstrated by the dividend stocks, helps in understanding why investors are leaning toward reliable dividend payers in 2025. This preference for stability, however, is not solely driven by historical precedent, with the current economic climate also playing a significant role.
Interest rate changes have been among the significant factors driving the success of dividend stocks. An increase in the interest rates in 2022 and 2023 made borrowing expensive. However, with the cautious stance of the Federal Reserve in 2025, companies with more substantial balance sheets and sustainable dividends are increasingly thriving. Though this indicates the worthiness of dividend-paying stocks, it also cautions the investors against risky stocks, thereby raising the question of distinguishing between thriving dividend-payers and those posing potential risk.
Of course, not all dividend stocks are created equal. While some companies offer high but unsustainable yields, some show consistent payout growth, making the latter more attractive for long-term investments. Hence, the dividend growth, payout ratio, financial health, current operational status, future potentials, and the analyst’s outlook for the company must all be considered before deciding on a worthy investment.
Applying these rigorous criteria, 2025 can be an exceptional year for a select group of dividend-paying stocks. The companies on our list are not just paying dividends. They are growing them. Without further ado, we will dive into 10 dividend stocks outperforming the market this year. Stick with us as we count these stocks from 10 to 1 and highlight why they stand out in the investment market. The top five hold a few unexpected contenders.
Our Methodology
We set a few key criteria to find the best dividend stocks outperforming the market in 2025. First, we only considered companies with a market cap of at least $1 billion. This is to make sure that the companies in our list are financially strong. Next, we looked for stocks with a year-to-date (YTD) return higher than 1.46%. Also, each stock had to offer a dividend yield of at least 4%, since we wanted our list to be appealing for income-focused investors. In addition to these criteria, while exploring the stocks, we looked into dividend yield, payout ratio, and the number of hedge funds holding to create a list that would benefit the readers. The stocks are ranked according to their dividend yields.
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).
A rooftop view of a bustling downtown area, emphasizing the company's investments in the real estate sector.
Simon Property Group, Inc. (NYSE:SPG) is an American-based investment trust engaged in owning, developing, managing, leasing, acquiring, and expanding income-producing retail real estate assets like shopping malls, outlets, and lifestyle centers. Their portfolio includes national and internationally renowned assets, including Simon Premium Outlets, The Mills, and Taubman Portfolio.
Simon Property Group, Inc. (NYSE:SPG) saw its year-to-date increase to 8.06% as of February 28, 2025. The adjusted EBITDA of the company declined by 12.8% year-over-year in the last quarter of 2024 due to economic and market conditions, tenant bankruptcies, and competitive pressures. However, Simon Property Group, Inc. (NYSE:SPG) reported a 2.5% average base minimum rent increase. Part of its report also disclosed higher retailer sales per square foot at $739. The company has further signed leases for over 21 million square feet. The leases are expected to generate revenue of over $1 billion, increasing their cash flow visibility and leading to the current positive outlook.
Simon Property Group, Inc. (NYSE:SPG) maintains a 4.51% dividend yield with a payout ratio of 111.57%. The latter suggests a slight reliance on outside funds to support the dividend payments. However, institutional interest remains strong, with 53 hedge funds from Insider Monkey's database holding positions in Q4 2024.
Analysts have issued a consensus Hold rating. The 1-year median price target of $192 suggests a limited 3.18% upside. Investors interested in the upcoming dividend payment must purchase shares before March 10, 2025.
Overall SPG ranks 5th on our list of the dividend stocks that are outperforming the market in 2025. While we acknowledge the potential for SPG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SPG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
