In this article, we will take a look at some of the best dividend stocks with sustainable payout ratios.
Dividend-paying stocks have remained popular among investors due to their strong historical performance. This sustained interest has led many companies to maintain their dividend payouts, raise them, or introduce new dividend policies altogether.
According to data from S&P Dow Jones Indices, US domestic common stocks saw a net dividend increase of $15.3 billion in the first quarter of 2025, which is an improvement over the $11.7 billion increase seen in the previous quarter. Over the 12 months ending in March 2025, dividend hikes amounted to $68.2 billion, just above the $68.1 billion reported the year before. Meanwhile, dividend cuts dropped significantly, totaling $15.6 billion, compared to $25.2 billion in the prior 12-month period.
The same report noted that overall dividend payments climbed by roughly 6% to 7%, though this was slightly below the pre-2025 expectation of 8%. In comparison, dividend payouts rose by 6.4% in 2024 and 5.1% in 2023.
Additional data from S&P Dow Jones Indices showed that 758 companies raised or initiated dividend payments in Q1 2025, which is a slight decline from 796 in the same period last year, reflecting a 4.8% year-over-year drop. Despite this, the total value of these increases amounted to $19.5 billion for the quarter. Over the 12-month period ending in March 2025, a total of 2,412 companies raised their dividend payments, marking a slight uptick from the 2,411 companies that did so in the same period the previous year. The total value of these dividend increases reached $68.2 billion, just edging past the $68.1 billion recorded during the prior 12-month stretch.
Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices, expressed continued optimism about the overall outlook for dividends. However, he also acknowledged some uncertainty ahead, given the current market conditions. He made the following comment about the situation.
“Dividend growth typically is strongest in Q1, as most companies finish their fiscal year and prepare for their shareholder meeting. For Q1 2025, growth, while noticeably slower, did continue and was in line with expectations given the current economic uncertainties. This uncertainty however did not appear to stop increases, though it did limit them, as forward commitment levels appeared shy.”
Despite some caution, analysts remain positive on dividend stocks, pointing out that US companies are well-positioned to sustain their payouts thanks to strong cash reserves. Nuveen, a financial planning firm based in Illinois, noted that an increasing number of companies are likely to roll out dividend policies, supported by the current cash-rich environment, which could drive stronger-than-expected dividend growth in 2025.
The report mentioned that as of September 30, 2024, corporate cash holdings stood at $1.8 trillion, which was close to their highest levels in the past 20 years. With equity valuations running above historical norms, Nuveen believes that companies may lean more toward boosting dividend payments as a way to return value to shareholders, rather than relying on stock buybacks, which may be less attractive in a higher-valuation landscape.
Analysts generally consider a payout ratio in the range of 30% to 50% to be optimal because it indicates that a company is returning a healthy portion of its earnings to shareholders while still retaining enough profits to reinvest in its business and support future growth. Given this, we will take a look at some of the best dividend stocks with sustainable payout ratios.
Our Methodology
For this article, we screened for companies that consistently distribute dividends to their shareholders. From this initial selection, we narrowed down the list to include only those companies with a 5-year average payout ratio below 50%, indicating a robust cash position. Subsequently, we identified the top 10 companies meeting these criteria and arranged them in ascending order of the number of hedge funds that held stakes in each of them, as per Insider Monkey’s database of Q4 2024.
At Insider Monkey, we are obsessed with hedge funds. 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).
10. Walmart Inc. (NYSE:WMT)
5-Year Average Payout Ratio: 45.8%
Walmart Inc. (NYSE:WMT) is an American retail corporation, headquartered in Arkansas. The company operates a chain of hypermarkets, discount stores, and grocery stores across the country. The company was built on a foundation of keeping both costs and prices extremely low, and that strategy is still very much in place. Leadership continues to pour resources into technology that blends its brick-and-mortar presence with online shopping to enhance convenience and speed up delivery. For example, nearly all Walmart locations in the US now provide same-day pickup and delivery services. A few years ago, the company also introduced Walmart+, a subscription program offering perks like free shipping, fuel discounts, and a faster checkout experience. The stock has outperformed the market significantly in the past 12 months, generating returns of over 56%.
In the fourth quarter of 2024, Walmart Inc. (NYSE:WMT) posted a 4.1% increase in revenue compared to the same period the previous year, reaching $180.6 billion. On a constant currency basis, revenue growth was even stronger at 5.3%. Operating income rose by 8.3%, driven by improved gross margins, increased membership income, and solid gains in its e-commerce segment.
Over the full year, Walmart Inc. (NYSE:WMT) generated $36.4 billion in operating cash flow and finished with $9 billion in cash and cash equivalents. The company also returned $4.5 billion to shareholders through share buybacks and announced a 13% hike in its quarterly dividend to $0.235 per share—the largest dividend increase it has announced in over ten years. It currently offers a quarterly dividend of $0.235 per share and has a dividend yield of 1.01%, as of April 17. The company has raised its dividends for 52 consecutive years, which makes it one of the best dividend stocks.
9. Comcast Corporation (NASDAQ:CMCSA)
5-Year Average Payout Ratio: 43.5%
Comcast Corporation (NASDAQ:CMCSA) is a Pennsylvania-based multinational mass media company that offers a wide range of mobile phone and cable TV services. The company is expanding into the wireless phone market as a way to counter declining revenue from its cable business. The strategy has gained momentum, especially through bundling offers, and the company has now surpassed 7 million wireless subscribers.
In the fourth quarter of 2024, Comcast Corporation (NASDAQ:CMCSA) reported nearly $32 billion in revenue, marking a 2.1% year-over-year increase. This growth was supported by solid performance across all six of its main business divisions. Connectivity revenue climbed 5%, and the mobile segment expanded with 1.2 million new lines added. Despite facing intense competition, Business Services also delivered a 5% revenue gain.
Comcast Corporation (NASDAQ:CMCSA) pays a quarterly dividend of $0.33 per share, offering a yield of 3.88%, as of April 17. The company maintained a strong financial position, generating over $8 billion in operating cash flow, up from $6 billion the previous year. Free cash flow more than doubled to $3.26 billion, compared to $1.7 billion a year earlier. Comcast also returned $1.2 billion to shareholders through dividend payments. In the past five years, its average payout ratio came in at 43.5%, which makes it one of the best dividend stocks with sustainable payout ratios. The company has raised its payouts for 21 consecutive years.
8. Caterpillar Inc. (NYSE:CAT)
5-Year Average Payout Ratio: 39.72%
Caterpillar Inc. (NYSE:CAT) ranks eighth on our list of the best dividend stocks with sustainable payout ratios. The company, known for producing construction and mining equipment along with off-highway diesel and natural gas engines and gas turbines, has weathered larger challenges over its century-long history and has expanded significantly in recent years. Notably, its free cash flow has doubled over the past five years, giving the company a strong foundation to continue raising its dividend.
In the fourth quarter of 2024, Caterpillar Inc. (NYSE:CAT) reported revenue of $16.2 billion, which showed a 5% decline from the prior year. This drop was mainly due to an $859 million decrease in sales volume, driven by lower dealer inventories and reduced demand from end users. Dealer inventory levels shrank by $1.3 billion during the quarter, a sharper decline than the $900 million reduction seen in Q4 2023. Still, earnings per share climbed to $5.78, up from $5.28 a year earlier.
Caterpillar Inc. (NYSE:CAT) maintained strong financial health throughout 2024, generating $12.0 billion in operating cash flow and closing the year with $6.9 billion in cash. Over the past year, the company returned a combined $10.3 billion to shareholders—$7.7 billion through stock buybacks and $2.6 billion in dividends. Its consistent cash flow has supported 30 straight years of dividend growth. Moreover, its average payout ratio in the past five years comes in at nearly 40%. The company’s quarterly dividend comes in at $1.41 per share for a dividend yield of 1.92%, as recorded on April 17.
7. The Bank of New York Mellon Corporation (NYSE:BK)
5-Year Average Payout Ratio: 35.77%
The Bank of New York Mellon Corporation (NYSE:BK) is an American financial services company, headquartered in New York. The company reported solid earnings in the first quarter of 2025. Its revenue came in at $4.8 billion, which showed a 6% growth from the same period last year. The company reported average deposits of $283 billion, reflecting a 1% increase compared to the previous year and a 1% decrease from the previous quarter. In addition, its Tier 1 leverage ratio stood at 6.2%, marking a 35 basis point year-over-year improvement and a 50 basis point increase from the prior quarter.
The Bank of New York Mellon Corporation (NYSE:BK) was formed in 2007 through the merger of the Bank of New York and Mellon Financial Corporation, and it became the world’s largest custodian bank. Unlike traditional banks that offer services like accepting deposits and issuing loans, BNY Mellon specializes in providing security services to asset owners, including other financial institutions. In the past 12 months, the stock has surged by over 40%.
The Bank of New York Mellon Corporation (NYSE:BK) is a solid dividend payer and has always remained committed to returning value to shareholders. In the most recent quarter, the company distributed $1.1 billion to shareholders, including $343 million in dividends. Currently, its dividend amounts to $0.47 per share for a dividend yield of 2.46%, as of April 17. The company has raised its dividend payments for 14 years in a row.
6. UnitedHealth Group Incorporated (NYSE:UNH)
5-Year Average Payout Ratio: 34.34%
UnitedHealth Group Incorporated (NYSE:UNH) is an American health insurance company. Healthcare is generally seen as a recession-proof sector, but health insurance is even more resilient since people require coverage no matter the economic conditions. Given this, it’s no surprise that investors flocked to the stock in March and have continued to do so, even amidst the tariff-related turmoil in April. The stock surged by over 9% in March.
UnitedHealth Group Incorporated (NYSE:UNH) recently announced its Q1 2025 earnings, with revenues coming in at $109.5 billion, which showed a 9.8% growth from the same period last year. The company expanded its reach by serving an additional 780,000 consumers so far this year. Meanwhile, Optum Health maintained its outlook to serve 650,000 new patients under value-based care models in 2025. Company leadership noted that they are actively tackling current challenges to strengthen their position for the future, aiming to return to their long-term earnings growth target of 13% to 16%.
UnitedHealth Group Incorporated (NYSE:UNH) also reported a strong cash position with an operating cash flow of $5.5 billion in the most recent quarter. The company also returned approximately $5 billion to shareholders through dividends and share repurchases. It has been making regular dividend payments to shareholders since 2010. Its payout ratio in the past five years averages at over 34%. Currently, it offers a quarterly dividend of $2.10 per share and has a dividend yield of 1.85%, as of April 17.
5. The Kroger Co. (NYSE:KR)
5-Year Average Payout Ratio: 32.8%
The Kroger Co. (NYSE:KR) ranks fifth on our list of the best dividend stocks with sustainable payout ratios. The American retail company operates a network of supermarkets and multi-department stores across the US. In fiscal Q4 2025, it reported $34.3 billion in revenue, reflecting a 7% year-over-year decline and falling short of analysts’ expectations of $34.7 billion. Operating profit also took a hit, dropping more than 27% compared to the same period the previous year.
On a brighter note, The Kroger Co. (NYSE:KR) Alternative Profit Businesses—which include advertising and data services—delivered $1.35 billion in operating profit, supported by a 17% rise in media-related revenue. Digital sales rose by 11%, underscoring the company’s continued efforts to improve the customer experience. Kroger also rolled out over 900 new products under its “Our Brands” lineup, highlighting its push to grow private-label offerings and strengthen profitability.
The Kroger Co. (NYSE:KR) maintained a solid cash position, reinforcing its reputation as a dependable dividend payer. In fiscal year 2024, the company generated $5.8 billion in operating cash flow and returned $883 million to shareholders through dividend payments. Its strong cash position resulted in the company’s low payout ratio of nearly 33% in the past five years. It currently pays a quarterly dividend of $0.32 per share and has a dividend yield of 1.8%, as of April 17. The company also holds an 18-year streak of consistent dividend growth.
4. JPMorgan Chase & Co. (NYSE:JPM)
5-Year Average Payout Ratio: 30.44%
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services and banking company. The company has a broad presence across several important areas of the financial industry. It owns a prominent bank that serves both individuals and businesses, operates an investment banking division that helps firms raise capital, and runs a wealth management branch that handles investments for affluent clients. Aside from insurance, its operations span nearly all major segments of the finance sector.
In the first quarter of 2025, JPMorgan Chase & Co. (NYSE:JPM) reported revenue of $46 billion, which showed a 9.6% growth from the same period last year. CEO Jamie Dimon acknowledged that macroeconomic and regulatory headwinds remained, pointing to the effects of ongoing geopolitical tensions and inflationary pressures. Despite these challenges, the firm upheld a solid capital foundation, with a CET1 Capital Ratio of 15.4%, reflecting its careful yet strategic approach to managing finances in a shifting economic environment.
JPMorgan Chase & Co. (NYSE:JPM) also remained committed to its shareholder return, as it distributed $3.9 billion to shareholders through dividends in the most recent quarter. The company’s quarterly dividend comes in at $1.40 per share for a dividend yield of 2.41%, as of April 17. Its payout ratio in the past five years averaged at over 30%, which makes it one of the best dividend stocks with sustainable payout ratios.
3. Dover Corporation (NYSE:DOV)
5-Year Average Payout Ratio: 30.05%
Dover Corporation (NYSE:DOV) is an Illinois-based US manufacturer that produces a wide array of industrial equipment and components. The company continues to evolve alongside changes in the industrial landscape, adapting to shifting market conditions and refining its strategic approach. With an eye on long-term growth, investors and analysts closely monitor its financial results and key initiatives to assess its current standing and future prospects.
In the fourth quarter of 2024, Dover Corporation (NYSE:DOV) posted $1.9 billion in revenue, marking a modest 1% increase year-over-year. However, GAAP earnings from continuing operations fell 8% to $238 million, and GAAP diluted EPS declined 7% to $1.72. On an adjusted basis, earnings from continuing operations held steady at $305 million, while adjusted diluted EPS rose slightly by 1% to $2.20.
Dover Corporation (NYSE:DOV) closed the quarter with a robust cash balance of over $1.8 billion in cash and equivalents, a notable increase from $400 million in the prior year. For the full year, the company generated more than $1 billion in operating cash flow, underscoring its strong financial footing. It currently offers a quarterly dividend of $0.515 per share and has a dividend yield of 1.28%, as of April 17. The company holds one of the longest dividend growth streaks in the market, spanning 68 years.
2. The Goldman Sachs Group, Inc. (NYSE:GS)
5-Year Average Payout Ratio: 27.45%
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based multinational investment bank. In the first quarter of 2025, the company posted solid financial results, demonstrating strength across its main business segments despite ongoing macroeconomic challenges. Net revenues reached $15.06 billion, representing a 6% increase from the same period the previous year. Net earnings came in at $4.74 billion, with earnings per share at $14.12, surpassing both Q1 and Q4 of 2024. These results reflected a strong return on equity (ROE) of 16.9% and return on tangible equity (ROTE) of 18.0%. The company’s operational efficiency also improved, with an efficiency ratio of 60.6%, slightly better than the prior year, even as operating expenses rose by 5%, largely driven by higher compensation linked to stronger performance.
The Goldman Sachs Group, Inc. (NYSE:GS)’s cash position also came in strong as it ended the quarter with $167 billion available in cash and cash equivalents. The company also returned $5.34 billion to shareholders, including $976 million in dividends. Due to this cash generation, it has been able to maintain dividend payments since 1999. Its quarterly dividend comes in at $3.00 per share for a dividend yield of 2.36%, as of April 17.
The number of hedge funds tracked by Insider Monkey at the end of Q4 2024 owning stakes in The Goldman Sachs Group, Inc. (NYSE:GS) jumped to 81, up from 72 in the previous quarter. The consolidated value of these stakes is over $5.8 billion. With over 6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q4.
1. McKesson Corporation (NYSE:MCK)
5-Year Average Payout Ratio: 15.34%
McKesson Corporation (NYSE:MCK) is a Texas-based healthcare company that focuses on pharmaceutical distribution, medical supplies, health information technology, and healthcare management solutions. In recent years, the company has sharpened its focus on the U.S. and Canadian markets, scaling back its presence in parts of Europe to better concentrate its resources. Its operational strength is underpinned by an expansive distribution network and solid ties with suppliers and customers, enabling efficient service delivery across its core business areas.
During fiscal Q3 2025, McKesson Corporation (NYSE:MCK) reported revenue of $95.3 billion—an 18% increase compared to the same quarter last year. Adjusted operating profit also climbed 16% to $1.5 billion. However, revenue fell slightly short of analyst projections of $96.08 billion, partly due to weaker performance in the U.S. pharmaceutical segment. With a forward P/E ratio of 18.80, the company is considered one of the more attractive value plays in the market.
Following its strong quarterly performance, McKesson Corporation (NYSE:MCK) raised its full-year adjusted EPS guidance to a range of $32.55 to $32.95, reflecting a projected annual growth of 19% to 20%. The company also reaffirmed its focus on rewarding shareholders, distributing $3.1 billion in the first nine months of 2024, including $254 million in dividend payments. Its quarterly dividend comes in at $0.71 per share for a dividend yield of 0.41%, as of April 17. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past eight years.
Overall, McKesson Corporation (NYSE:MCK) ranks first on our list of the best dividend stocks with sustainable payout ratios. While we acknowledge the potential of MCK as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MCK but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
