In this article, we will take a look at some of the best value stocks that pay dividends.
Over the long term, investors who bought stocks at lower valuations have generally been rewarded. Economists Eugene Fama and Ken French define value stocks as those with a low price-to-book ratio, and by that measure, US value shares have outpaced growth stocks, which have high price-to-book ratios, by an average of 2.5% annually since 1926. Research from the UBS Global Investment Returns Yearbook, prepared by Elroy Dimson, Paul Marsh, and Mike Staunton, shows that value has also outperformed in many international markets. That trend broke down around the global financial crisis, as growth outshone value between 2007 and 2020. Value stocks regained some traction in 2020 but lost ground again once the “Magnificent Seven” tech giants surged in late 2022.
Joseph H. Davis, global chief economist at Vanguard and author of Coming Into View: How A.I. and Other Megatrends Will Shape Your Investments, noted that investors do not need to gamble on one future over another. He suggested that broad diversification, with an added focus on undervalued stocks, offers protection regardless of how transformative artificial intelligence becomes. “You don’t have to pick sides, you don’t have to be a hero,” he remarked.
Given this, we will take a look at some of the best value stocks with dividends.
Our Methodology
For this article, we scanned Insider Monkey’s Q2 2025 proprietary database of hedge funds’ stock holdings and identified dividend stocks from the list. From that group, we picked dividend stocks with forward P/E ratios below 25, as of September 26. The stocks are ranked according to the number of hedge funds having stakes in them.
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).
11. Eli Lilly and Company (NYSE:LLY)
Forward P/E as of September 26: 23.70
Eli Lilly and Company (NYSE:LLY) , which has been around since the late 1800s, has built a strong track record in developing and selling drugs for diabetes, cancer, and immunology, including treatments for rheumatoid arthritis and other conditions.
Three of its products, Mounjaro, Zepbound, and Verzenio, make up 65% of the company’s second-quarter revenue of 15.6 billion dollars. These drugs address type 2 diabetes, obesity, and breast cancer, and each delivered revenue growth ranging from 12% to 172%. They continue to be the main drivers of the company’s sales momentum.
Eli Lilly and Company (NYSE:LLY) continues to spend heavily on innovation, with research and development costs increasing 23% from the prior year to 3.3 billion dollars in the second quarter. This represents the company’s largest expense category, accounting for over 21% of revenue.
In addition to strong earnings, Eli Lilly and Company (NYSE:LLY) has also been returning value to shareholders for years. The company has raised its dividends for 11 consecutive years and currently offers a quarterly dividend of $1.50 per share. The stock has a dividend yield of 0.83%, as of September 26.
10. Abbott Laboratories (NYSE:ABT)
Forward P/E as of September 26: 23.42
Abbott Laboratories (NYSE:ABT) produces a wide range of healthcare products and medical devices, with its business divided into four main areas: established pharmaceuticals, diagnostics, nutrition, and medical devices.
On September 19, Abbott Laboratories (NYSE:ABT) declared a quarterly dividend of $0.59 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 53 years straight, which makes it one of the best value stocks with dividends. The stock supports a dividend yield of 1.77%, as of September 26.
The pandemic gave Abbott Laboratories (NYSE:ABT) a major lift through strong demand for its rapid COVID-19 tests. While sales in this category have since dropped, the company’s core operations continue to perform well. One of its standout products is the FreeStyle Libre, the world’s best-selling continuous glucose monitoring system, which has become a major driver of growth thanks to its rapidly increasing sales.
9. Illinois Tool Works Inc. (NYSE:ITW)
Forward P/E as of September 26: 22.47
Illinois Tool Works Inc. (NYSE:ITW) is a leading player in the global industrial manufacturing industry, operating across seven segments that range from automotive components to food service equipment. Its business model is centered on the “80/20 Front-to-Back” strategy, which focuses on the most profitable customers and products while driving ongoing operational improvements.
In recent years, Illinois Tool Works Inc. (NYSE:ITW) has emphasized efficiency, customer-driven innovation, and disciplined portfolio management. It sells off non-core units to sharpen its focus and allows its divisions the flexibility to create solutions tailored to customer needs. The company’s success depends on achieving growth above market levels in key areas, cutting costs effectively, and using capital in ways that deliver strong returns to shareholders.
On August 4, Illinois Tool Works Inc. (NYSE:ITW) declared a 7.3% hike in its quarterly dividend to $1.61 per share. Through this increase, the company stretched its dividend growth streak to 53 years, which makes it one of the best value stocks with dividends. The stock has a dividend yield of 2.47%, as of September 26.
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