10 Best Debt Free Dividend Stocks to Buy

Published on May 4, 2023 at 6:13 am by Muhammad Jamal Akbar in Dividend Stocks, Hedge Funds

In this article, we will take a look at the 10 best debt free dividend stocks to buy.

Dividend stocks provide dual sources of income: a share in the income of the company in the form of dividends, and capital appreciation from the appreciation of share price. This makes the dividend stocks an attractive investment option especially in times of uncertainty and unrest in the markets.

Despite the recent events that have led to a bearish trend in the markets in the recent past, some of the leading companies have kept up their dividend payouts as well as increases in the dividend amounts paid out to shareholders. According to a Wall Street Journal report, companies in the S&P 500 distributed over $561 billion in dividends last year, compared with $511.2 billion in 2021. The dividend payouts for the index constituents are expected to increase by 5% in 2023, according to the report.

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Debt free stocks have more cash and other liquid assets than debt on their balance sheets. Low debt on balance sheets bodes well for the future possibility of the company remaining operational through existing financial resources as well as a comparatively greater ability to raise debt, if required, in the future at competitive rates. These companies are also better off in periods of economic downturn as they have low financial obligations to meet.

The latest event that has caused turmoil in the financial markets stems from the high interest environment across the world that was enforced by the respective governments to curtail inflation. It has led to the banking crisis which began earlier this year in March with the failure of Silicon Valley Bank. This has led to a domino effect across the banking industry and caused a rout in the share prices of several regional banks across the United States as well as a few of the European banks.

Photo by Dan Dennis on Unsplash

Methodology

We used stock screeners to identify debt free companies by screening for companies that had zero (or very close to zero) debt to equity and zero long term debt to equity ratios according to Finviz.com. We then filtered the list and retained companies with strong product pipelines, growth catalysts, and positive market sentiment. The final step involved the ranking of the identified list of stocks based on their popularity among the top hedge funds tracked by Insider Monkey.

10. La-Z-Boy Incorporated (NYSE:LZB)

Number of Hedge Fund Holders: 18

Dividend Yield as of April 19: 2.56%

La-Z-Boy Incorporated (NYSE:LZB), based in Monroe, Michigan, is the leading global producer of reclining chairs and the second largest manufacturer/distributor of residential furniture in the United States. It manufactures, markets, imports, exports, distributes, and retails upholstery furniture products under the La-Z-Boy, England, Kincaid, and Joybird tradenames.

On February 21, La-Z-Boy Incorporated (NYSE:LZB) released its financial results for the quarter ended January 28, 2023. Its revenues remained nearly constant y-o-y at $573 million, while net income increased by 11% y-o-y to $32 million.

As of December 31, La-Z-Boy Incorporated (NYSE:LZB) shares were held by 18 hedge funds out of the 943 prominent hedge funds tracked by Insider Monkey. Mario Gabelli’s GAMCO Investors was its largest hedge fund shareholder with ownership of 0.28 million shares valued at $6.7 million.

9. Autohome Inc. (NYSE:ATHM)

Number of Hedge Fund Holders: 19

Dividend Yield as of April 19: 1.94%

Autohome Inc. (NYSE:ATHM) is the leading online destination for automobile consumers in China operating three websites: autohome.com.cn, che168.com and ttpai.cn. The company delivers content and tools to automobile consumers as well as services to automakers and dealers and mainly generates revenue from media services, leads generation services, and online marketplace.

Autohome Inc. (NYSE:ATHM) generated a revenue of $275 million and a net income of $86 million in Q4 2022. This translated to a normalized EPS of $0.79 which exceeded the analyst consensus by $0.11.

The board of directors of Autohome Inc. (NYSE:ATHM) approved an amendment to its dividend policy that the company will pay a fixed amount of at least RMB 500 million in cash dividends, which further supports its policy to increase shareholder returns. It currently pays an annual dividend of $0.58 per ADS.

As of Q4 2022, Autohome Inc. (NYSE:ATHM) shares were held by 19 prominent hedge funds with a total value of $162 million. Polunin Capital was its largest hedge fund shareholder with ownership of 0.9 million shares valued at $26 million.

8. RPC, Inc. (NYSE:RES)

Number of Hedge Fund Holders: 20

Dividend Yield as of April 19: 2.09%

Atlanta, Georgia-based RPC, Inc. (NYSE:RES) is a provides oilfield services and equipment to independent and major oilfield companies in exploration, production and development of oil and gas properties.

RPC, Inc. (NYSE:RES) managed to beat analyst consensus estimates for revenue as well as EPS in Q4 2022. It generated a revenue of $482 million and a net income of $87 million for the quarter which translated to an EPS of $0.40, $0.12 more than the consensus.

On January 25, the board of directors of RPC, Inc. (NYSE:RES) declared a $0.02 per share increase in its quarterly dividend to bring the dividend to $0.04 per share. Its shares had a dividend yield of 2.09% as of April 19.

As of Q4 2022, 20 hedged funds held RPC, Inc. (NYSE:RES) shares with a total value of $96 million, compared to 18 hedge funds in the previous quarter. Israel Englander’s Millennium Management was its largest hedge fund shareholder with ownership of 4.2 million shares valued at $37 million.

7. Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC)

Number of Hedge Fund Holders: 21

Dividend Yield as of April 19: 1.58%

Singapore-based Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) specializes in developing cutting-edge semiconductor and electronics assembly solutions. It offers equipment solutions, aftermarket products and services supporting a comprehensive set of interconnect technologies including wire bonding, advanced packaging, lithography, mini and micro LED transfer and electronics assembly.

On February 1, Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) released its financial results for Q1 2023. It generated a revenue of $176 million and a net income of $14.6 million, which translated to an EPS of $0.37, $0.13 in excess of the consensus estimates.

As of Q4 2022, 21 leading hedge funds tracked by Insider Monkey owned shares of Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC), with a total value of $162 million. Its largest shareholder was Chuck Royce’s Royce & Associates with ownership of 1.1 million shares valued at $47 million.

6. A10 Networks, Inc. (NYSE:ATEN)

Number of Hedge Fund Holders: 22

Dividend Yield as of April 19: 1.64%

San Jose, California-based A10 Networks, Inc. (NYSE:ATEN) provides secure, scalable application services for on-premises, cloud, and edge-cloud environments. Its customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises.

On April 3, A10 Networks, Inc. (NYSE:ATEN) reported preliminary results for Q1 2023. The company expects revenues to be between $56 million to $58 million and reiterated guidance for full-year earnings.

As of December 31, 22 prominent hedge funds held shares of A10 Networks, Inc. (NYSE:ATEN) with a total value of $129 million. Notable investors include Jim Simmons’ Renaissance Technologies, and Israel Englander’s Millennium Management, among others.

This is what Richie Capital Group, an equity investment firm, had to say about A10 Networks, Inc. (NYSE:ATEN) in its Q1 2023 investor letter:

“Despite near term headwinds, we view the company as an attractively priced cybersecurity market leader with attractive margins and high returns on capital. The company continues to outpace their peers in the Application Delivery Controller (ADC) market and expects double digit earnings growth for the full year 2023.”

5. Garmin Ltd. (NASDAQ:GRMN)

Number of Hedge Fund Holders: 23

Dividend Yield as of April 19: 2.94%

Based in Olathe, Kansas, Garmin Ltd. (NASDAQ:GRMN) is a technology company focused on wireless devices. Its portfolio serves five primary markets: fitness, outdoor, aviation, marine, and auto, and includes hand-held, wearable, portable, and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products.

On February 22, Garmin Ltd. (NASDAQ:GRMN) reported the financial results for Q4 2022. The company had a strong quarterly performance with $1.3 billion revenues and $293 million in net income. It currently pays a quarterly dividend of $0.73 per share which translates to a dividend yield of 2.94% as of April 19.

According to the Insider Monkey data on 943 leading hedge funds, 23 hedge funds were long Garmin Ltd. (NASDAQ:GRMN) shares as of Q4 2022, with the total shares held by hedge funds valued at $449 million. Robert Joseph Caruso’s Select Equity Group was the largest shareholder on record with ownership of 0.9 million shares valued at $83 million. The hedge fund increased its shareholding in the company by 41% during the quarter.

4. Gentex Corporation (NASDAQ:GNTX)

Number of Hedge Fund Holders: 26

Dividend Yield as of April 19: 1.77%

Founded in 1974, Gentex Corporation (NASDAQ:GNTX) is a supplier of automatic-dimming rearview mirrors and electronics to the automotive industry, dimmable aircraft windows for aviation markets, and fire protection products to the fire protection market.

Gentex Corporation (NASDAQ:GNTX) managed to secure solid financial results in Q4 2022. Its revenue increased by 18% y-o-y to $494 million while it generated a net income of $86 million. The company returned $227 million to shareholders during 2022 in the form of dividends and share repurchases.

On April 6, Baird designated Gentex Corporation (NASDAQ:GNTX) as a new Fresh Pick ahead of Q1 earnings and maintained its ‘Outperform’ rating and $35 price target.

As of Q4 2022, Gentex Corporation (NASDAQ:GNTX) shares were held by 26 hedge funds with a total value of $511 million. Notable hedge funds including Renaissance Technologies, and Ray Dalio’s Bridgewater Associates, significantly increased their exposure to Gentex Corporation (NASDAQ:GNTX) during the quarter.

3. Mueller Industries, Inc. (NYSE:MLI)

Number of Hedge Fund Holders: 27

Dividend Yield as of April 19: 1.76%

Mueller Industries, Inc. (NYSE:MLI) is a leading manufacturer of copper, brass, aluminum, and plastic products for a broad range of industries including plumbing, heating, ventilation, air conditioning and refrigeration (HVACR), industrial manufacturing, appliance, transportation, medical, military and defense and electrical.

On April 25, Mueller Industries, Inc. (NYSE:MLI) released its financial results for Q1 2023. Its net revenue declined by 4% y-o-y to $971 million while net income increased by 9% y-o-y to $173 million. The company generated a normalized EPS of $3.07 for the quarter which exceeded consensus estimates by $1.20.

Earlier in February, the board of directors of Mueller Industries, Inc. (NYSE:MLI) increased the regular quarterly dividend by 20% to $0.30 per share which marked the third consecutive double digit increase to the company’s quarterly dividend.

2. Silicon Motion Technology Corp. (NASDAQ:SIMO)

Number of Hedge Fund Holders: 35

Dividend Yield as of April 19: 3.10%

Taiwan-based Silicon Motion Technology Corp. (NASDAQ:SIMO) is a leading developer of NAND flash controllers for SSDs and other solid state storage devices. Its customers include most of the NAND flash vendors, storage device module makers and leading OEMs.

In May 2022, Silicon Motion Technology Corp. (NASDAQ:SIMO) announced that it had entered into a definitive agreement with MaxLinear, Inc. (NYSE:MXL) under which MaxLinear, Inc. (NYSE:MXL) will acquire Silicon Motion Technology Corp. (NASDAQ:SIMO) in a stock and cash transaction that implies a $3.8 billion for the company.

As part of the transaction, MaxLinear, Inc. (NYSE:MXL) will pay a cash consideration of $93.54 and a stock consideration of 0.388 common shares of the company per each American Depositary Share (ADS) of Silicon Motion Technology Corp. (NASDAQ:SIMO).

Based on the share price of MaxLinear, Inc. (NYSE:MXL) as of April 26, this represents a total consideration of $104.93 per ADS of Silicon Motion Technology Corp. (NASDAQ:SIMO) which is 67.4% more than the current price of one ADS.

1. Accenture Plc (NYSE:ACN)

Number of Hedge Fund Holders: 63

Dividend Yield as of April 19: 1.60%

Based in Dublin, Ireland, Accenture Plc (NYSE:ACN) is a global professional services company with leadership positions in providing digital, cloud and security. Accenture Plc (NYSE:ACN) employs more than 700,000 people and serves clients across more than 40 industries in more than 120 countries.

On March 24, RBC Capital raised the price target on Accenture Plc (NYSE:ACN) shares to $340 from $335 but maintained an ‘Outperform’ rating for its shares. The target price raise followed a stronger than expected performance in Q2 for the company as well as the rebounding of bookings growth.

As of Q4 2022, 63 out of the 943 hedge funds tracked by Insider Monkey were long Accenture Plc (NYSE:ACN) shares, for a total value of $2.9 billion. Nikolai Tangen’s Ako Capital is the largest shareholder with ownership of 1.9 million shares valued at $512 million.