In this article, we will take a look at some of the best debt-free stocks to invest in.
Debt was once avoided by most S&P 500 technology companies. That mindset is changing. The push into artificial intelligence is forcing companies to spend heavily on data centers, and many are borrowing to keep up. That shift has started to make some investors uneasy.
According to CNBC, US equities have been unsteady lately as investors pull back from AI-related stocks, especially those tied to infrastructure. The concern is straightforward, as companies are taking on large amounts of debt to fund multibillion-dollar AI investments, and the payoff is not guaranteed.
Oracle offers a clear example. On December 24, the company said it would need to raise capital expenditures by an additional $15 billion in the current fiscal year. It also plans to increase lease commitments tied to data centers. To cover those costs, Oracle is leaning on debt.
Separate reporting from Reuters shows this is part of a much broader trend. Global technology firms have issued debt at record levels this year as the race to build AI capacity accelerates. Even companies with strong cash positions are borrowing to fund expansion.
Dealogic data cited by Reuters shows global tech firms issued $428.3 billion of bonds in 2025 through the first week of December. US companies accounted for $341.8 billion of that total. European firms issued $49.1 billion, while Asian companies added $33 billion. For years, large tech firms relied mainly on internal cash flow. That has shifted as borrowing costs stayed low and investor appetite for bonds remained strong.
Michelle Connell, president of Portia Capital Management, said debt-funded AI spending reflects a bigger structural change. Rapid tech obsolescence and short chip lifecycles leave companies little choice but to reinvest again and again. The volume of issuance is starting to show up on balance sheets. Leverage is rising, and coverage ratios are slipping for some firms. That raises a harder question about resilience if AI investments fall short of expectations.
Even so, most large technology companies remain profitable. They hold sizable cash reserves, and many still rank among the most valuable companies in the world by market capitalization.
Given this, we will take a look at some of the best debt-free stocks that offer dividends.
Our Methodology:
To create this list, we first used a screener and identified companies with minimal or no debt. From this pool, we selected those that consistently pay dividends to shareholders and compared their enterprise value (EV) to their market capitalization to gauge which ones are debt-free. We then narrowed down the list by including stocks that had sustainable dividend yields. From that list, we picked 10 companies with the highest number of hedge funds having stakes in them, as per Insider Monkey’s database of Q3 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. RPC, Inc. (NYSE:RES)
Number of Hedge Fund Holders: 16
Market Cap: $1.20 billion
Enterprise Value: $1.12 billion
RPC, Inc. (NYSE:RES) is one of the best debt-free stocks that pay dividends.
On December 18, Piper Sandler analyst Derek Podhaizer raised the firm’s price target on RPC, Inc. (NYSE:RES) to $5 from $4 and maintained an Underweight rating. The firm stated that, although 2025 proved challenging, the industry demonstrated resilience once again. Companies turned inward, focused on execution, and leaned into new growth paths.
Looking ahead to 2026, Piper remains selective. Still, it sees early signs of improvement. Cyclical tailwinds are starting to build, including Saudi Arabia and Mexico returning to work, and signs that the US land market may be finding a floor. Offshore activity is viewed as more of a 2027 story.
In its third-quarter 2025 earnings, RPC, Inc. (NYSE:RES) reported sequential revenue growth. Most segments contributed, with the strongest results coming from pressure pumping, coiled tubing, and downhole tools. Service lines outside of pressure pumping accounted for 72% of total revenue and posted a 3% sequential increase. Management pointed to Thru-Tubing Solutions as a leader in downhole technology. The A10 downhole motor has now logged more than 100 runs with major operators and is helping the company gain share.
Full-year 2025 capital spending is expected to range from $170 million to $190 million. Most of that is earmarked for maintenance, selective asset purchases, and upgrades to IT systems. In the fourth quarter, RPC, Inc. (NYSE:RES) plans to liquidate its terminated supplemental executive retirement plan. That move is expected to result in about $8 million of net cash and a one-time increase in the effective tax rate.
RPC, Inc. (NYSE:RES) offers a wide range of specialized oilfield services and equipment. Its customers include both independent and major oilfield companies involved in the exploration, production, and development of oil and gas properties across selected US and international markets.
9. Cincinnati Financial Corporation (NASDAQ:CINF)
Number of Hedge Fund Holders: 25
Market Cap: $25.8 billion
Enterprise Value: $25.29 billion
Cincinnati Financial Corporation (NASDAQ:CINF) is among the best debt-free stocks to invest in.
On December 22, Piper Sandler raised its price target on Cincinnati Financial Corporation (NASDAQ:CINF) to $157 from $150 and kept a Neutral rating. Looking across the sector, the firm expects fourth-quarter results to be uneven. Favorable weather should support strong, and in some cases better-than-expected, results for many insurers. Pricing commentary, though, may sound more cautious. One thing to watch is whether insurers still believe they are achieving rate increases that outpace claims inflation.
Cincinnati Financial Corporation (NASDAQ:CINF) operates in the property and casualty insurance business. It is not flashy, but it is steady. The company stands out for how it balances risk while pricing policies with discipline. Its long record of dividend growth and consistent profitability shows that the approach has worked, even during difficult periods.
The company tends to perform well during periods of economic growth or inflation. As the economy expands, premiums rise gradually and support earnings. When inflation increases, management can see the pressure building and adjust pricing. That ability gives the company pricing power at a time when costs are moving higher.
Cincinnati Financial Corporation (NASDAQ:CINF) is a property and casualty insurer. Its coverage spans commercial casualty, commercial property, commercial auto, workers’ compensation, personal auto, and life insurance.
Hedge Fund Resource Center