In this article, we will take a look at some of the best debt free stocks that pay dividends.
Debt financing is not necessarily a bad thing; its effect is determined by how efficiently it is handled. When used wisely, it can generate strong cash flow and boost shareholder returns. On the other hand, ineffective debt management can undermine a company’s financial health. According to data from S&P Global Market Intelligence, the total debt among US nonfinancial companies with credit ratings from S&P Global Ratings hit a new high in the third quarter. The combined debt for these rated nonfinancial firms grew by approximately 0.5% during the period, reaching $8.453 trillion and surpassing the previous record of $8.431 trillion set in the first quarter. The rise was primarily driven by investment-grade companies—those rated BBB- and above—which saw their total debt climb to $6.628 trillion in the third quarter, up from $6.493 trillion in the previous quarter.
The report further mentioned that debt levels among non-investment-grade companies rose across six sectors while declining in four. Among lower-rated firms, consumer staples companies saw the largest increase in leverage during the quarter, with total debt climbing to $88.80 billion from $58.70 billion in the previous quarter.
Also read: 13 Best Warren Buffett Dividend Stocks To Invest In Right Now
With borrowing costs on the rise, companies are increasingly turning to equity markets as a way to reduce debt. According to Bloomberg data, debt repayment was listed as a purpose for proceeds in over $28 billion worth of IPOs completed in the 12 months leading up to April, marking a 56% increase from the previous year. While bankers initially expected an even greater number of debt-driven stock offerings, many companies had secured favorable borrowing terms during the pandemic, reducing the urgency for such moves. However, asset managers note that as central banks delay interest rate cuts, higher borrowing costs are beginning to take a toll. This may prompt more companies to capitalize on strong equity markets to ease financial risk.
Although many US companies have solid balance sheets, a notable portion of defaults has come from lower-rated firms struggling with negative cash flow, high debt burdens, and limited liquidity. These highly leveraged businesses, often labeled as “zombies,” barely manage to cover their interest payments and remain highly vulnerable to even minor financial pressures. According to an Associated Press analysis, nearly 7,000 publicly traded companies worldwide—including 2,000 in the US—fall into this category. Many of these firms took on substantial debt at low interest rates over the years, only to face mounting pressure as persistent inflation drove borrowing costs to their highest levels in a decade. Instead of using borrowed funds for expansion, hiring, or technological upgrades, a significant portion was allocated to stock buybacks.
Relying on debt to sustain dividend payments is generally viewed negatively, particularly given the practices seen during the 2020 pandemic. During that period, many private companies resorted to dividend recapitalization, borrowing funds to continue distributing dividends. This trend carried over into 2024. By September 30, US companies—including those without private equity backing—had raised a record $70.2 billion in leveraged loans for dividend recapitalizations, according to PitchBook data. This figure exceeds the previous peak of $67.2 billion set in 2021.
Nevertheless, many companies have kept their balance sheets stable, with US firms regularly reaching new highs in dividend payouts each year. Given this, we will take a look at some of the best debt free stocks that pay dividends.
Photo by Annie Spratt on Unsplash
Our Methodology:
To create this list, we first used a screener and identified companies with minimal or no debt. From this pool, we selected those that consistently pay dividends to shareholders and compared their enterprise value (EV) to their market capitalization to gauge which ones are debt-free. We then narrowed down the list by including stocks that had sustainable dividend yields. From that list, we picked 10 companies with the highest number of hedge funds having stakes in them, as per Insider Monkey’s database of Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Weyco Group, Inc. (NASDAQ:WEYS)
Number of Hedge Fund Holders: 2
Market Cap as of December 7: $345.5 million
Enterprise Value as of December 7: $282.04 million
Weyco Group, Inc. (NASDAQ:WEYS) is an American footwear company that offers some of the best footwear brands in the industry. The recent quarter presented challenges for the company’s North American operations. All wholesale brands faced the impact of weak consumer demand, driven by reduced discretionary spending. Additionally, BOGS experienced softer-than-expected performance in both at-once orders and e-commerce sales, largely due to an unseasonably mild start to the fall season. While uncertainty persists in the retail environment, the company expressed confidence in the strength of its brands, emphasizing that each remains well-positioned within its respective market to capitalize on future growth opportunities as conditions improve. In the past 12 months, the stock has surged by over 10%.
In the third quarter of 2024, Weyco Group, Inc. (NASDAQ:WEYS) reported net sales of $74.3 million for the quarter, reflecting a 12% decline from $84.2 million in the same period last year. Gross earnings as a percentage of net sales improved to 44.3%, up from 43.0% in the third quarter of 2023. However, earnings from operations fell by 18% to $10.2 million, compared to $12.4 million a year ago. Net earnings also saw a decline, decreasing 14% to $8.1 million from $9.3 million in the prior-year quarter.
Though Weyco Group, Inc. (NASDAQ:WEYS)’s earnings did not meet investors’ expectations, the company’s cash position provided them a much-needed relief. The company ended the quarter with over $75.4 million available in cash and cash equivalents. It also generated $17.3 million in operating cash flow.
In November, Weyco Group, Inc. (NASDAQ:WEYS) announced a special one-time cash dividend of $2.00 per share, supplementing its regular dividend. Based on the current number of outstanding shares, the total payout amounts to approximately $19 million. The company currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 2.84%, as of February 11.
9. Epsilon Energy Ltd. (NASDAQ:EPSN)
Number of Hedge Fund Holders: 7
Market Cap as of December 7: $132.24 million
Enterprise Value as of December 7: $124.4 million
Epsilon Energy Ltd. (NASDAQ:EPSN) is a Texas-based independent oil and natural gas company that specializes in the acquisition, development, gathering, and production of natural gas and oil reserves. In the third quarter of 2024, the company reported revenue of $7.29 million, reflecting an increase from $6.31 million in the same period the previous year. The figure also surpassed analysts’ expectations by approximately $403,000. Capital expenditures for the quarter, which ended on September 30, 2024, totaled $3.9 million. These costs were primarily associated with completing one gross (0.25 net) well in Ector County, Texas, and drilling two gross (1 net) wells in Alberta, Canada.
In the most recent quarter, Epsilon Energy Ltd. (NASDAQ:EPSN) announced its fourth consecutive quarter of growth in liquid volume, revenue, and cash flow from its Permian assets, which has helped mitigate the effects of current natural gas prices. In Pennsylvania, both production and cash flow are anticipated to rise in the fourth quarter and continue improving into the following year, driven by a more favorable natural gas market. With a diversified and growing asset portfolio, the company remains well-positioned for continued expansion in both volume and cash flow in 2025. In the past 12 months, the stock has delivered a nearly 19% return to shareholders.
In addition to its strong earnings and returns, Epsilon Energy Ltd. (NASDAQ:EPSN) showcased solid cash generation, producing more than $11.8 million in operating cash flow during the first nine months of the year. By the end of the quarter, the company held over $8.3 million in cash and cash equivalents. Moreover, it returned $2 million to shareholders through dividends and share buybacks. The company offers a quarterly dividend of $0.0625 per share for a dividend yield of 4.21%, as of February 11.
8. FinVolution Group (NYSE:FINV)
Number of Hedge Fund Holders: 10
Market Cap as of December 7: $2.15 billion
Enterprise Value as of December 7: $919.9 billion
FinVolution Group (NYSE:FINV) is a China-based fintech platform that offers a wide range of related services, including credit risk assessment, loan transactions, and fraud detection. In the third quarter of 2024, the company’s total registered users reached 166.8 million, representing a 9.3% increase from the same period in 2023. Meanwhile, the number of cumulative borrowers rose to 26.3 million, reflecting a 6.0% year-over-year growth.
In addition, FinVolution Group (NYSE:FINV) saw an increase in international revenue, which climbed to RMB635.5 million—an 8.7% rise from the previous year—accounting for 19.4% of total net revenues. Moreover, international transaction volume surged by 22.7% year-over-year, reaching RMB2.7 billion. Overall, transaction volume amounted to RMB49.5 billion, up 0.8% compared to the same period in 2023.
FinVolution Group (NYSE:FINV) is generating solid returns, surging by over 68% in the past 12 months. The company’s cash position also makes it a reliable investment option among income investors. At the end of the quarter, the company had $727.4 million available in cash and cash equivalents. It currently offers an annual dividend of $0.237 per share and has a dividend yield of 2.97%, as of February 11. FINV is one of the best debt free dividend stocks on our list as the company has been growing its payouts for four consecutive years.
7. RPC, Inc. (NYSE:RES)
Number of Hedge Fund Holders: 14
Market Cap as of December 7: $1.28 billion
Enterprise Value as of December 7: $990.3 million
RPC, Inc. (NYSE:RES) ranks seventh on our list of the best debt free stocks that pay dividends. The American oil and gas services company offers a wide range of related products and services to its consumers. The company concluded 2024 with a modest sequential improvement in pressure pumping performance, while overall business activity remained subdued due to the typically lower customer activity in the fourth quarter. The increased utilization of pressure pumping assets, following a weaker third quarter, was largely driven by demand for Tier 4 dual fuel equipment.
For 2025, RPC, Inc. (NYSE:RES) intends to continue investing in innovation across its operations, with projected capital expenditures ranging between $150 million and $200 million for the year. Expanding through acquisitions remains a key strategic focus, with an emphasis on acquiring high-cash-flow, profitable businesses with strong customer bases. The company maintains a debt-free balance sheet as it ended the year with over $300 million in cash, providing ample liquidity to support organic investments, potential acquisitions, and capital returns to shareholders.
In FY24, RPC, Inc. (NYSE:RES) reported an operating cash flow of $349.4 million and its free cash flow came in at $129.5 million. Moreover, it returned $34.4 million to shareholders through dividends. The company’s quarterly dividend comes in at $0.04 per share and has a dividend yield of 2.62%, as of February 11. It has been making regular dividends to shareholders for nearly 30 years.
6. Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC)
Number of Hedge Fund Holders: 19
Market Cap as of December 7: $2.21 billion
Enterprise Value as of December 7: $1.71 billion
Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) is a Singapore-based semiconductor manufacturing company that specializes in cutting-edge semiconductors and electronics assembly solutions. The company reported strong earnings in the fourth quarter of 2024. It reported revenue of $166.1 million, which fell by 3% from the same period last year. However, the revenue beat analysts’ estimates by $1.1 million. Moreover, its income from operations of $86.6 million grew by 5,081% on a YoY basis. The company’s net income came in at $81.6 million, up significantly by 778.5 million from a prior year period.
Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) highlighted in its earnings call that it expects core-market demand to gradually improve and remains focused on delivering new systems and features within its Ball, Wedge, and Advanced Solutions segments. Over the next few quarters, it anticipates continued market adoption of its unique Fluxless Thermo-Compression (FTC), Vertical Fan-Out (VFO), and emerging battery assembly solutions.
As next-generation memory and logic applications, fueled by artificial intelligence, cloud computing, and connected devices, create demand for new semiconductor packaging, the company’s advanced packaging solutions—such as FTC and VFO—are well-positioned to meet these evolving industry needs in the long term.
Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) demonstrated a solid cash position in the most recent quarter. The company ended the quarter with $538.3 million available in cash and cash equivalents. Its operating cash flow and free cash flow came in at $18.9 million and $8.7 million, respectively. The company offers a quarterly dividend of $0.205 per share and has a dividend yield of 1.99%, as recorded on February 11. KLIC is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past five years.
5. A10 Networks, Inc. (NYSE:ATEN)
Number of Hedge Fund Holders: 20
Market Cap as of December 7: $1.51 billion
Enterprise Value as of December 7: $1.34 billion
A10 Networks, Inc. (NYSE:ATEN) is a California-based company that specializes in providing application networking solutions that help organizations maintain the availability, performance, and security of their data center applications and networks. The company offers a range of services, including cloud storage, enterprise solutions, security products, data center support, application delivery, load balancing, and protection against distributed denial of service (DDoS) attacks.
A10 Networks, Inc. (NYSE:ATEN) reported revenue of $74.2 million for the fourth quarter of 2024, up 5% from $70.4 million in the fourth quarter of 2023. Enterprise revenue saw an 8% year-over-year increase, while service provider revenue grew by 4%. GAAP net income was $18.3 million, or 24.7% of revenue, equating to $0.24 per diluted share. This compares to net income of $17.9 million, or 25.4% of revenue, and $0.24 per diluted share in the same quarter of the previous year.
The stock has surged by over 56% in the past 12 months, outperforming the market. The reason for this growth could be that AI remains a key driver of overall spending, particularly for A10 Networks, Inc. (NYSE:ATEN)’s customers, due to the efficiency of the company’s high-throughput, low-latency solutions across various operating environments. These solutions reduce the total cost of ownership by consuming less power and incorporating integrated security features, providing a strong competitive edge in energy-intensive AI data centers.
A10 Networks, Inc. (NYSE:ATEN) ended the quarter with cash and investments totaling $195.6 million, an increase from $159.3 million as of December 31, 2023. The company generated $25.7 million in operating cash flow during the quarter. Moreover, it returned $10.2 million to investors, including $4.4 million in cash dividends during the quarter. ATEN is one of the best dividend stocks on our list as the company started paying dividends in 2021 and has paid regular dividends to shareholders since then. Currently, it pays a quarterly dividend of $0.06 per share and has a dividend yield of 1.16%, as of February 11.
4. Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Holders: 24
Market Cap as of December 7: $5.36 billion
Enterprise Value as of December 7: $4.57 billion
Cal-Maine Foods, Inc. (NASDAQ:CALM) ranks fourth on our list of the best debt free stocks that pay dividends. The company is the leading producer and distributor of fresh shell eggs in the US. It reported a strong financial and operational performance in the second quarter of fiscal 2025. The company experienced robust demand for shell eggs, leading to a significant increase in dozens sold during the quarter, which included the seasonal boost leading up to Thanksgiving and sales from a recent acquisition completed in June. The results also benefited from higher market prices, which have continued to rise this fiscal year due to restricted supply levels of shell eggs caused by recent outbreaks of highly pathogenic avian influenza (HPAI). The stock has surged by over 103% in the past 12 months.
In fiscal Q2 2025, Cal-Maine Foods, Inc. (NASDAQ:CALM) reported revenue of $954.7 million, which showed a significant 82.4% growth from the same period last year. The company’s net income for the quarter came in at over $219 million. It currently has around $60 million allocated to new capital projects aimed at expanding its cage-free capacity, including the $40 million in projects announced in October. These projects involve the addition of five new cage-free layer houses and two pullet houses across the company’s locations in Florida, Georgia, Utah, and Texas.
Upon completion, Cal-Maine Foods, Inc. (NASDAQ:CALM) expects these projects to provide additional production capacity for approximately 1.1 million cage-free layer hens and 250,000 pullets by late summer 2025. Additionally, the company is investing $15 million to expand its egg products processing facility in Blackshear, Georgia, to include extended shelf-life liquid egg products.
During the quarter, Cal-Maine Foods, Inc. (NASDAQ:CALM) paid $73 million to shareholders through dividends. On January 9, the company declared a quarterly dividend of $1.49 per share, compared to its previous dividend of $1.02 per share. With a dividend yield of 3.75% as of February 11, CALM is one of the best debt free stocks that pay dividends.
3. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Number of Hedge Fund Holders: 26
Market Cap as of December 7: $24.4 billion
Enterprise Value as of December 7: $21.5 billion
T. Rowe Price Group, Inc. (NASDAQ:TROW) is an American asset management company that offers a wide range of products and services to its consumers. The company recently announced a 3.6% decrease in its assets under management in December, bringing the total to $1.61 trillion. This decline was driven by net outflows of $10.9 billion and a drop in equity markets. However, the company views this as a temporary setback and is actively exploring new opportunities.
In the fourth quarter of 2024, T. Rowe Price Group, Inc. (NASDAQ:TROW) reported revenue of $1.8 billion, which showed an 11.1% growth from the same period last year. The company’s operating expenses came in at over $1.25 billion, which showed a modest increase of 0.1% from the prior-year period. It is focusing on growing its ETF business and expanding into high-demand sectors like alternative investments. With no long-term debt on its balance sheet, the company has considerable flexibility to adapt and make strategic changes when needed. TROW is one of the best debt free stocks that pay dividends.
On February 11, T. Rowe Price Group, Inc. (NASDAQ:TROW) declared a 2.4% hike in its quarterly dividend to $1.27 per share. Through this increase, the company stretched its dividend growth streak to 39 years. In the most recent quarter, it returned $355 million to shareholders in dividends. As of February 11, the stock has a dividend yield of 4.55%.
2. Mueller Industries, Inc. (NYSE:MLI)
Number of Hedge Fund Holders: 27
Market Cap as of December 7: $9.14 billion
Enterprise Value as of December 7: $8.12 billion
Mueller Industries, Inc. (NYSE:MLI) is an American machinery industry company that manufactures a wide range of products for industrial markets. The company has acquired Nehring Electrical Works Company and its affiliated companies, providing a solid foundation for long-term growth in the electrical and power infrastructure sector. This acquisition complements the company’s existing presence in other critical infrastructure sectors. In addition, the company has acquired Elkhart Products Corporation, which is expected to boost production capacity and potentially contribute to revenue growth.
In the fourth quarter of 2024, Mueller Industries, Inc. (NYSE:MLI) reported revenue of $923.5 million, which showed a 26.1% growth from the same period last year. The increase was mainly driven by sales from businesses acquired in the second half of 2024 and higher unit volumes in US construction-related products. In addition, the increase in net sales was supported by higher net selling prices, with COMEX copper averaging $4.22 per pound during the quarter, which was 13% higher than the same period last year. The company’s operating income came in at $170.3 million, up 26% on a YoY basis. Its net income of $137.7 million showed a 15.4% growth from the prior-year period.
Mueller Industries, Inc. (NYSE:MLI) also reported a strong cash position, which makes it one of the best debt free stocks that pay dividends. The company generated over $140 million in operating cash flow. It ended the quarter with over $1 billion available in cash and cash equivalents. The company currently offers a quarterly dividend of $0.20 per share and has a dividend yield of 0.99%, as of February 11. It has been rewarding shareholders with growing dividends for the past four years.
1. Janus Henderson Group plc (NYSE:JHG)
Number of Hedge Fund Holders: 29
Market Cap as of December 7: $7.12 billion
Enterprise Value as of December 7: $6.3 billion
Janus Henderson Group plc (NYSE:JHG) is an asset management company, headquartered in the UK. The company recently reported its Q4 2024 earnings, posting revenue of $708.3 million, which saw a 25% growth from the same period last year. As of December 31, 2024, the company’s assets under management (AUM) increased by 13% year over year, reaching $378.7 billion. The company was encouraged by $2.4 billion in net inflows in 2024, which contributed to new revenue generation in the second half of the year. With the acquisitions of NBK Capital Partners, Victory Park Capital, and Tabula, the company has expanded its private market capabilities and gained early access to the rapidly growing active ETF market in Europe.
With a 90-year legacy, Janus Henderson Group plc (NYSE:JHG) has helped over 60 million individuals secure their financial futures. This long history has cultivated a strong research-driven culture and a client-focused approach, enabling people to reach exceptional financial goals. From 2015 to the fourth quarter of 2024, the company grew its assets under management (AUM) from $190 billion to approximately $380 billion.
Janus Henderson Group plc (NYSE:JHG) maintained a strong balance sheet and solid cash generation in 2024, ending the year with around $1.2 billion in cash and cash equivalents and generating $695 million in operating cash flow. In addition, the Board of Directors declared a quarterly dividend of $0.39 per share, returning a total of $458 million to shareholders through dividends and share buybacks during the year. The stock supports a dividend yield of 3.56%, as of February 11.
Overall Janus Henderson Group plc (NYSE:JHG) ranks first on our list of the best debt free stocks that pay dividends. While we acknowledge the potential for JHG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JHG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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