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.
8. American Water Works Company, Inc. (NYSE:AWK)
Forward P/E as of September 26: 22.03
American Water Works Company, Inc. (NYSE:AWK) is a regulated utility that delivers water and wastewater services to over 14 million people in 14 states. Most of its revenue comes from its regulated utility operations, which accounted for 92% of operating revenue in 2024.
American Water Works Company, Inc. (NYSE:AWK)’s strategy centers on a few core priorities. These include working with regulators to gain approval for rate changes, investing heavily in modernizing and replacing infrastructure, and pursuing growth through selective acquisitions. Because regulatory approval directly affects customer pricing and the recovery of infrastructure costs, it plays a vital role in the company’s performance. Maintaining efficiency while meeting environmental and health standards is also key to ensuring long-term stability and growth.
American Water Works Company, Inc. (NYSE:AWK)’s dividend policy also makes it an appealing option for income investors. The company has raised its payouts consistently since 2008. Currently, it offers a quarterly dividend of $0.8275 per share and has a dividend yield of 2.43%, as of September 26.
7. Caterpillar Inc. (NYSE:CAT)
Forward P/E as of September 26: 21.98
Caterpillar Inc. (NYSE:CAT) is a global manufacturer of heavy equipment, producing machinery for construction and mining, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. With the help of its worldwide dealer network, the company operates on every continent.
Over time, Caterpillar Inc. (NYSE:CAT) has broadened its business. It licenses its brand for apparel and footwear and also offers financing solutions through Cat Financial. More recently, the company has been working to reduce the ups and downs of its cyclical sales by expanding its services segment, which provides steadier, recurring revenue.
Caterpillar Inc. (NYSE:CAT) currently offers a quarterly dividend of $1.51 per share, having raised it by 7.1% in June this year. This marked the company’s 31st consecutive year of dividend growth. As of September 26, the stock has a dividend yield of 1.30%.
6. W.W. Grainger, Inc. (NYSE:GWW)
Forward P/E as of September 26: 21.64
W.W. Grainger, Inc. (NYSE:GWW) is a leading distributor of industrial supplies, safety equipment, and MRO solutions, serving more than 4.5 million customers worldwide, from small firms to large corporations. The stock has surged by over 82% over the past three years.
W.W. Grainger, Inc. (NYSE:GWW)’s strategy focuses on strengthening technology and supply chain efficiency, with significant investments in eProcurement platforms and system reliability. Its success depends on effectively controlling input costs, adjusting prices when needed, and consistently delivering high fulfillment standards across a broad and diverse customer base.
W.W. Grainger, Inc. (NYSE:GWW) has always grabbed investors’ attention because of its strong dividend policy. The company currently offers a quarterly dividend of $2.26 per share and has a dividend yield of 0.94%, as of September 26. GWW is a Dividend King with 54 consecutive years of dividend growth under its belt.
5. Expeditors International of Washington, Inc. (NYSE:EXPD)
Forward P/E as of September 26: 21.28
Expeditors International of Washington, Inc. (NYSE:EXPD) is a global logistics and freight forwarding firm that provides air, ocean, and customs brokerage services for businesses across industries. It operates as a middleman, purchasing cargo space from carriers and coordinating shipments for its clients. Key priorities include managing carrier relationships, advancing its proprietary technology, staying compliant with regulations, and strengthening its workforce.
Expeditors International of Washington, Inc. (NYSE:EXPD) is also a solid dividend company. Currently, it offers a quarterly dividend of $0.77 per share, having raised it by 5.5% in May. Through this increase, the company stretched its dividend growth streak to 31 years, which makes it one of the best value stocks with dividends. The stock supports a dividend yield of 1.26%, as of September 26.
In recent years, Expeditors International of Washington, Inc. (NYSE:EXPD) has emphasized close collaboration with air and ocean carriers to secure capacity and control costs. It continues to invest heavily in its in-house technology, offering customers shipment tracking and real-time analytics. Its long-term success depends on navigating complex regulatory requirements while upholding a strong, compliance-focused culture that delivers reliable customer service.
4. Pentair plc (NYSE:PNR)
Forward P/E as of September 26: 20.45
Pentair plc (NYSE:PNR) is an American company that specializes in water treatment solutions. Although its headquarters are in the United States, the firm is incorporated in Ireland and maintains its tax residence in the United Kingdom.
Pentair plc (NYSE:PNR) recently finalized the acquisition of Hydra-Stop LLC from Madison Industries for around $290 million, subject to customary adjustments. Factoring in about $50 million in expected tax benefits, the net purchase price comes to roughly $240 million.
Analysts remain optimistic about Pentair plc (NYSE:PNR). A potential boost from lower interest rates could strengthen the housing market, encouraging more spending on pools and residential as well as commercial water systems. In addition, the company’s ongoing transformation efforts are expected to drive further growth.
Pentair plc (NYSE:PNR) also boasts a strong dividend policy. On September 22, the company declared a quarterly dividend of $0.25 per share, which was in line with its previous dividend. Overall, it has raised its payouts for 49 consecutive years. The stock has a dividend yield of 0.91%, as of September 26.
3. Donaldson Company, Inc. (NYSE:DCI)
Forward P/E as of September 26: 19.92
Donaldson Company, Inc. (NYSE:DCI) is a major producer of filtration systems used in industrial, mobile, and life sciences applications. Its products are designed to remove contaminants from air, liquids, and gases in a wide range of equipment and production processes, serving industries such as trucking, manufacturing, and food and beverage.
Donaldson Company, Inc. (NYSE:DCI) operates through three core divisions: Mobile Solutions, which provides filters for vehicles and equipment; Industrial Solutions, which focuses on air and dust filtration in factories and commercial settings; and Life Sciences, which supplies filtration for food, beverage, and biotech applications. Recently, Donaldson has been prioritizing expansion into new markets, advancing its proprietary technologies like PowerCore and Ultra-Web, and increasing its presence in fast-growing areas such as life sciences filtration.
Donaldson Company, Inc. (NYSE:DCI)’s dividend history makes it an appealing option for income investors. The company has been rewarding shareholders with growing dividends for the past 29 years. It currently offers a quarterly dividend of $0.30 per share and has a dividend yield of 1.48%, as of September 26.
2. Accenture plc (NYSE:ACN)
Forward P/E as of September 26: 16.50
Accenture plc (NYSE:ACN) is a worldwide leader in professional services, offering expertise in consulting, technology, and outsourcing. With a workforce of more than 800,000 people, it stays competitive by providing innovative solutions to clients across diverse industries. The company’s strategy emphasizes integrating advanced technology, pursuing sustainability objectives, and strengthening its capabilities through strategic acquisitions.
Accenture plc (NYSE:ACN)’s success rests on a skilled workforce, technology partnerships, and a strong commitment to sustainable practices. By focusing on creating 360-degree value, the company ensures its services deliver financial benefits while also meeting ethical and environmental goals.
Accenture plc (NYSE:ACN) also holds a solid dividend policy. The company has never missed a dividend since 2005 and has paid a semi-annual dividend until 2019. Moreover, it has raised its dividends consistently for the past 14 years. It currently offers a quarterly dividend of $1.63 per share for a dividend yield of 2.73%, as of September 26.
1. Black Hills Corporation (NYSE:BKH)
Forward P/E as of September 26: 13.70
Black Hills Corporation (NYSE:BKH) is an American diversified energy company that provides electric and gas utility services across South Dakota, Montana, Wyoming, Colorado, Arkansas, Kansas, Nebraska, and Iowa, while also selling power throughout the western states.
Black Hills Corporation (NYSE:BKH) is popular among long-term investors because the company is a Dividend King with 55 years of dividend growth. Currently, the company offers a quarterly dividend of $0.676 per share and has a dividend yield of 4.44%, as recorded on September 26.
Black Hills Corporation (NYSE:BKH) has been expanding its customer base at nearly three times the pace of overall U.S. population growth. This strong growth trend supports its position when seeking regulatory approval for future investments and rate adjustments. Black Hills is targeting long-term annual earnings growth of 4% to 6%, with dividend increases expected to follow that same path.
While we acknowledge the potential of BKH to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than BKH and that has 100x upside potential, check out our report about this cheapest AI stock.
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