10 Dividend Aristocrats with Payout Ratio Less than 55%

Published August 30, 2021 at 1:31 pm EDT Updated September 7, 2026 at 1:34 pm EDT

In this article, we will be taking a look at 10 dividend aristocrats with payout ratio less than 55%.

The coronavirus pandemic has resulted in the stock market and dividend stocks like Hormel Foods Corporation (NYSE: HRL), AbbVie Inc. (NYSE: ABBV), Abbott Laboratories (NYSE: ABT), and Verizon Communications (NYSE: VZ), among others, taking massive hits. CNBC estimated, for instance, that global dividends declined by about 12.2% last year to about $1.26 trillion because of the pandemic. Dividend cuts, at the time, totaled about $220 billion between the second quarter of 2020 and the fourth quarter of 2020. However, despite the initially worrisome situation, two things were observed: first, that US dividends remained resilient, and second, that more reliable dividend stocks like the dividend aristocrats retained their popularity among investors especially after the economy bounced back.

What is a Dividend Aristocrat?

Dividend aristocrats are publicly traded S&P 500 companies that have managed to raise their dividends consistently for at least the past 25 years. These stocks are among some of the best dividend investment options, and currently, about 65 companies are on the list of dividend aristocrats one can invest in.

On the above point, while it was true that dividend stocks suffered like all others in light of the pandemic, it should be noted, as was done by Janus Henderson, that between April and December 2020, about $965.2 billion were still successfully paid out in dividends. These payments came from about 1,200 large firms, categorized as large on the basis of their market capitalization. Secondly, the fact that within the US, dividend payouts were on a rise rather than a decline, managed to breathe hope into income investor circles in any case.

For instance, it was estimated that dividend payouts in the US rose by about 2.6% on a headline basis throughout 2020. Hence, it was concluded that not all hope was lost for dividend stocks, provided one carefully took into account a range of factors before settling on one investment or another. One such key metric we can take into account is the payout ratio, signifying how much a company reinvests in its own growth, and how much it pays out to its shareholders, from its earnings.

Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Joshua Hoehne on Unsplash

Without further ado, let’s take a look at the 10 dividend aristocrats with payout ratio less than 55%.

Our Methodology

We have selected dividend aristocrat stocks with yields of 2% and above, and payout ratios of about 55% and below for our list. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield, payout ratio, and the number of hedge fund holders holding a stake in it, ranking them from the lowest to the highest payout ratio. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.

Dividend Aristocrats with Payout Ratio Less than 55%

10. McDonald’s Corporation (NYSE: MCD)

Number of Hedge Fund Holders: 66
Dividend Yield: 2.18%
Number of Years of Consistent Dividend Increases: 45

Payout Ratio: 55%

McDonald’s Corporation is a food and beverage industry renowned for its chain of multinational fast-food restaurants. The company ranks 10th on our list of dividend aristocrats with payout ratio less than 55%

RBC Capital raised the price target on shares of McDonald’s Corporation from $263 to $268 this July, while reiterating an Outperform rating on the stock.

In the second quarter of 2021, McDonald’s Corporation had an EPS of $2.37, beating estimates by $0.25. The company’s revenue was $5.89 billion, up 56.53% year over year and beating estimates by $319.30 million. McDonald’s Corporation has gained 14.04% in the past 6 months and 12.97% year to date.

By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in McDonald’s Corporation worth roughly $2.7 billion. This is compared to 67 hedge funds in the previous quarter with a total stake value of approximately $3.8 billion.

Like Hormel Foods Corporation, AbbVie Inc., Abbott Laboratories, and Verizon Communications, McDonald’s Corporation is a good stock to invest in.

9. Leggett & Platt, Incorporated (NYSE: LEG)

Number of Hedge Fund Holders: 14
Dividend Yield: 3.4%
Number of Years of Consistent Dividend Increases: 48

Payout Ratio: 53.5%

Leggett & Platt, Incorporated, a home furnishings company, is next on our list of dividend aristocrats with payout ratio less than 55%. The company operates through its Bedding Products, Specialized Products, and Furniture, Flooring & Textile Products segments. It ranks 9th on our list.

Raymond James analysts, as of this February, have an Outperform rating on shares of Leggett & Platt, Incorporated.

In the second quarter of 2021, Leggett & Platt, Incorporated had an EPS of $0.66, beating estimates by $0.12. The company’s revenue was $1.27 billion, up 50.23% year over year and beating estimates by $41.90 million. Leggett & Platt, Incorporated has gained 12.24% in the past 6 months and 14.07% year to date.

By the end of the second quarter of 2021, 14 hedge funds out of the 873 tracked by Insider Monkey held stakes in Leggett & Platt, Incorporated worth roughly $106 million. This is compared to 24 hedge funds in the previous quarter with a total stake value of approximately $83 million.

Like Hormel Foods Corporation, AbbVie Inc., Abbott Laboratories, and Verizon Communications, Leggett & Platt, Incorporated is a good stock to invest in.

8. Caterpillar Inc. (NYSE: CAT)

Number of Hedge Fund Holders: 62
Dividend Yield: 2.1%
Number of Years of Consistent Dividend Increases: 28

Payout Ratio: 52.3%

Caterpillar Inc. (NYSE: CAT), a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, ranks 8th on our list of dividend aristocrats with payout ratio less than 55%. The company operates internationally.

This August, Baird reiterated an Outperform rating and $270 price target on shares of Caterpillar Inc., led by analyst Mircea Dobre.

In the second quarter of 2021, Caterpillar Inc. had an EPS of $2.60, beating estimates by $0.19. The company’s revenue was $12.89 billion, up 28.93% year over year and beating estimates by $360.55 million. Caterpillar Inc. has gained 16.84% year to date and 48.18% in the past year.

By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in Caterpillar Inc. worth roughly $5.3 billion. This is compared to 53 hedge funds in the previous quarter with a total stake value of approximately $5 billion.

Like Hormel Foods Corporation, AbbVie Inc., Abbott Laboratories, and Verizon Communications, Caterpillar Inc. is a good stock to invest in.

7. Cardinal Health, Inc. (NYSE: CAH)

Number of Hedge Fund Holders: 40
Dividend Yield: 3.7%
Number of Years of Consistent Dividend Increases: 34

Payout Ratio: 48.8%

Cardinal Health, Inc. (NYSE: CAH), an integrated healthcare services and products company, ranks 7th on our list of dividend aristocrats with payout ratio less than 55%. The company is based in Ohio.

Deutsche Bank has a Hold rating on shares of Cardinal Health, Inc., alongside a price target of $51 as of this August.

In the fiscal fourth quarter of 2021, Cardinal Health, Inc. had an EPS of $0.77, missing estimates by $0.43. The company’s revenue was $42.59 billion, up 16.07% year over year and beating estimates by $2.37 billion. Cardinal Health, Inc. has also gained 2.46% in the past year.

By the end of the second quarter of 2021, 40 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cardinal Health, Inc. worth roughly $897 million. This is compared to 39 hedge funds in the previous quarter with a total stake value of approximately $967 million.

Like Hormel Foods Corporation, AbbVie Inc., Abbott Laboratories, and Verizon Communications, Cardinal Health, Inc. is a good stock to invest in.

6. Atmos Energy Corporation (NYSE: ATO)

Number of Hedge Fund Holders: 18
Dividend Yield: 2.6%
Number of Years of Consistent Dividend Increases: 37
Payout Ratio: 45.6%

Atmos Energy Corporation (NYSE: ATO) is a participant in the regulated natural gas distribution, and pipeline and storage businesses in the US. The company ranks 6th on our list of dividend aristocrats with payout ratio less than 55%, and operates through its Distribution, and Pipeline and Storage segments.

This August, Mizuho raised its price target on shares of Atmos Energy Corporation from $109 to $110. The firm also reiterated a Buy rating on the stock.

In the fiscal third quarter of 2021, Atmos Energy Corporation had an EPS of $0.78, beating estimates by $0.04. The company’s revenue was $605.55 million, up 22.83% year over year and beating estimates by $22.82 million. Atmos Energy Corporation has gained 13.56% in the past 6 months and 3.56% year to date.

By the end of the second quarter of 2021, 18 hedge funds out of the 873 tracked by Insider Monkey held stakes in Atmos Energy Corporation worth roughly $84 million. This is compared to 15 hedge funds in the previous quarter with a total stake value of approximately $172 million.

Like Hormel Foods Corporation, AbbVie Inc., Abbott Laboratories, and Verizon Communications, Atmos Energy Corporation is a good stock to invest in.

5. Franklin Resources, Inc. (NYSE: BEN)

Number of Hedge Fund Holders: 30
Dividend Yield: 3.4%
Number of Years of Consistent Dividend Increases: 41

Payout Ratio: 45.2%

Franklin Resources, Inc. (NYSE: BEN), an American multinational investment firm, launches equity, fixed income, balanced, and multi-asset mutual funds. The company also invests in public equity, fixed income, and alternative markets. It ranks 5th on our list of dividend aristocrats with payout ratio less than 55%

Deutsche Bank has a Hold rating on shares of Franklin Resources, Inc., alongside a raised price target of $33, as of this May.

In the fiscal third quarter of 2021, Franklin Resources, Inc. had an EPS of $0.96, beating estimates by $0.18. The company’s revenue was $2.17 billion, up 82.89% year over year and beating estimates by $43.73 million. Franklin Resources, Inc. has gained 21.10% in the past 6 months and 35.33% year to date.

By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in Franklin Resources, Inc. worth roughly $205 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $198 million.

4. General Dynamics Corporation (NYSE: GD)

Number of Hedge Fund Holders: 37
Dividend Yield: 2.4%
Number of Years of Consistent Dividend Increases: 30

Payout Ratio: 39.5%

General Dynamics Corporation (NYSE: GD), an aerospace and defense company, ranks 4th on our list of dividend aristocrats with payout ratio less than 55%. The company operates through its Aerospace, Marine Systems, Combat Systems, and Technologies segments.

This July, Credit Suisse raised its price target on shares of General Dynamics Corporation from $182 to $198. The firm also holds a Neutral rating on the stock.

In the second quarter of 2021, General Dynamics Corporation had an EPS of $2.61, beating estimates by $0.06. The company’s revenue was $9.22 billion, but missing estimates by $97.44 million. General Dynamics Corporation has gained 19.55% in the past 6 months and 36.85% year to date.

By the end of the second quarter of 2021, 37 hedge funds out of the 873 tracked by Insider Monkey held stakes in General Dynamics Corporation worth roughly $6.2 billion. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $5.9 billion.

Oakmark Funds, an investment management firm, mentioned General Dynamics Corporation in its first-quarter 2021 investor letter. Here’s what they said:

“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated product. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”

3. Archer-Daniels-Midland Company (NYSE: ADM)

Number of Hedge Fund Holders: 41
Dividend Yield: 2.5%
Number of Years of Consistent Dividend Increases: 46

Payout Ratio: 35.3%

Archer-Daniels-Midland Company (NYSE: ADM) works to procure, transport, store, process, and merchandise agricultural commodities, products, and ingredients in the United States and internationally. The company ranks 3rd on our list of dividend aristocrats with payout ratio less than 55%.

Jefferies has a hold rating on shares of Archer-Daniels-Midland Company as of this July. The firm also holds a $55 price target on Archer-Daniels-Midland Company shares.

In the second quarter of 2021, Archer-Daniels-Midland Company had an EPS of $1.33, beating estimates by $0.30. The company’s revenue was $22.93 billion, up 40.81% year over year and beating estimates by $4.59 billion. Archer-Daniels-Midland Company has gained 5.71% in the past 6 months and 21.46% year to date.

By the end of the second quarter of 2021, 41 hedge funds out of the 873 tracked by Insider Monkey held stakes in Archer-Daniels-Midland Company worth roughly $837 million. This is compared to 34 hedge funds in the previous quarter with a total stake value of approximately $696 million.

2. Aflac Incorporated (NYSE: AFL)

Number of Hedge Fund Holders: 33
Dividend Yield: 2.34%
Number of Years of Consistent Dividend Increases: 39

Payout Ratio: 14.6%

Aflac Incorporated (NYSE: AFL) provides supplemental health and life insurance products. It ranks 2nd on our list of dividend aristocrats with payout ratio less than 55%.

Goldman Sachs raised the price target on shares of Aflac Incorporated to $47 this May.

In the second quarter of 2021, Aflac Incorporated had an EPS of $1.59, beating estimates by $0.31. The company’s revenue was $5.56 billion, up 2.9% year over year and beating estimates by $197.02 million. Aflac Incorporated has gained 17.18% in the past 6 months and 32.18% year to date.

By the end of the second quarter of 2021, 33 hedge funds out of the 873 tracked by Insider Monkey held stakes in Aflac Incorporated worth roughly $268 million. This is compared to 36 hedge funds in the previous quarter with a total stake value of approximately $343 million.

Madison Funds, an investment management firm, mentioned Aflac Incorporated in its second-quarter 2021 investor letter. Here’s what they said:

“This quarter we are highlighting Aflac (AFL) as a relative yield example in the Financial sector. AFL is a leading provider of life and supplemental medical insurance in Japan and the U.S. AFL products offer financial protection against loss of income for policy holders based on qualifying health events. Aflac Japan generates approximately 70% of total revenues, and the company has dominant market share in Japan. In the U.S., AFL provides voluntary insurance for policy holders at businesses with products sold through payroll deduction by its large sales force which sells primarily through face-to-face interactions. We believe AFL’s dominant market position in Japan and its large U.S. sales force create a sustainable competitive advantage for the company.

Our thesis on AFL is that its sales will recover from the impact of the COVID pandemic, and it will return significant amount of capital to shareholders. Sales were negatively impacted in both Japan and the U.S. but appear to be in early stages of recovering. We believe sales will improve further as economies open and new products are introduced in Japan. In the U.S., agents will be able to return to face-to-face interactions as people get vaccinated, something that was restricted last year.

In terms of capital returns, AFL committed to returning $8-9 billion between 2020-2022, which is expected to be 75% of operating earnings. The company returns capital via share buybacks and dividend increases. AFL is a Dividend Aristocrat that has increased its dividend 39 years in a row including 10% annually over the last five years; it also recently announced an 18% dividend increase. Other favorable attributes include an A- rated balance sheet by Standard and Poor’s and an attractive valuation with a relative yield near the high end of its historical range.

We believe its valuation is cheap with its forward expected Price/Earnings (P/E) ratio just 9x and a relative P/E of 0.4x versus the S&P 500 despite an industry leading return on equity. At the time of purchase, AFL had a dividend yield of 2.5% and its relative dividend yield vs. the S&P 500 was 1.8x, as shown. Some risks to the thesis include a prolonged economic downturn, loss of market share due to unsuccessful new product roll outs and potential losses in its investment portfolio.”

1. Cincinnati Financial Corporation (NASDAQ: CINF)

Number of Hedge Fund Holders: 22
Dividend Yield: 2.06%
Number of Years of Consistent Dividend Increases: 60

Payout Ratio: 13.9%

Cincinnati Financial Corporation (NASDAQ: CINF) offers property-casualty insurance products in America. It operates through its Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments segments, and ranks 1st on our list of dividend aristocrats with payout ratio less than 55%.

Wolfe Research holds an Outperform rating on shares of Cincinnati Financial Corporation, alongside a price target of $148 as of this August.

In the second quarter of 2021, Cincinnati Financial Corporation had an EPS of $1.79, beating estimates by $0.81. The company’s revenue was $2.29 billion, also beating estimates by $578.93 million. Cincinnati Financial Corporation has gained 22.97% in the past 6 months and 47.22% year to date.

By the end of the second quarter of 2021, 22 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cincinnati Financial Corporation worth roughly $780 million. This is compared to 22 hedge funds in the previous quarter with a total stake value of approximately $886 million.

Follow Insider Monkey on Twitter