In this article, we will take a look at some of the best value stocks that pay dividends.
In just a few weeks, investor sentiment has shifted dramatically—from optimism after the elections to concerns about an economic slowdown, and even fears of a possible recession. As of April 21, the broader market had dropped more than 12%, and it’s now down over 16% from its February peak. Though the market is flirting with the bear market territory, analysts note that such declines tend to occur every few years, and while recoveries vary in pace, markets have historically bounced back over time. For context, the last major pullback was in 2022 (−28%), preceded by 2020 (−35%) and 2018 (−20%).
A report by Fidelity Investments pointed out that the current market correction has been both swift and sharp. Encouragingly, when compared to past declines, the downturn seems to have already reached the lower end of the typical range in terms of both depth and speed, hinting that markets might stabilize in the near future.
As stock prices decline, many investors are taking advantage of the dip, aiming to benefit from the ongoing market sell-off. Analysts, for their part, have generally favored value stocks, citing their historically strong performance. A report by Dimensional Fund Advisors supports this view, noting that value stocks—typically those trading at lower relative prices—have consistently delivered higher expected returns than growth stocks in the US market.
The report further mentioned that although there have been periods when value stocks underperformed, the core principle remains unchanged: lower relative prices tend to be linked with better long-term returns. The value premium has often surfaced suddenly and in significant amounts. For instance, in years when value outpaced growth, the average outperformance was close to 15%. Between 1927 and 2023, US value stocks have, on average, delivered an annual return that was 4.4 percentage points higher than that of growth stocks.
Dividend paying companies, in addition to value stocks, are also reliable options in the current market environment. Many reports have highlighted that investors often gravitate toward companies with high dividend yields and low valuation multiples. A report from S&P Dow Jones Indices highlights that the Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, offers a balanced mix of both value and growth traits. Since 1999, the index has typically included about 60.5% value-oriented stocks and 39.5% growth-oriented stocks, indicating a neutral stance between the two investment styles.
Analysts emphasized that a portfolio focused on solid dividend yields, steady dividend increases, and dependable payouts remains a timeless strategy. They added that even without depending on shifts in market valuation, the combination of income and its consistent growth could drive nominal gross returns of over 10% per year. Given this, we will take a look at some of the best value stocks that also pay dividends.
Our Methodology
To compile this list, we thoroughly reviewed reputable sources such as Forbes, Morningstar, Barron’s, and Business Insider. From their latest articles, we gathered the value stocks they collectively favored. From that selection, we picked 10 stocks with forward P/E ratios below 20, as of April 21. These stocks are ranked in descending order of their P/E ratios.
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. L3Harris Technologies, Inc. (NYSE:LHX)
Forward P/E Ratios: 20.24
L3Harris Technologies, Inc. (NYSE:LHX) is an American defense technology company that operates in various segments of the defense and aerospace industries. significantly broadened its space-focused operations following the 2023 acquisition of Aerojet Rocketdyne—one of just two US firms producing engines capable of launching large payloads into space. Even before this deal, L3Harris had deep roots in the space domain, particularly through its legacy Harris division, a key provider of communication tools for the Pentagon, ranging from radios to satellite systems. With the acquisition, the company now offers not only space access but also an expanded suite of capabilities, including advanced electronics, missile warning systems, and space-based intelligence solutions.
In the fourth quarter of 2024, L3Harris Technologies, Inc. (NYSE:LHX) reported $5.52 billion in revenue, marking a 4% increase year-over-year. It also set a new company record with a $34 billion backlog, reflecting strong momentum and its reputation as an innovative and dependable player in the defense industry. The company’s LHX NeXt cost-efficiency program exceeded expectations, achieving $800 million in savings for 2024 and raising its overall target to $1.2 billion. The stock has a forward P/E of 20.24, which makes it one of the best value stocks that pay dividends.
Financially, L3Harris Technologies, Inc. (NYSE:LHX) remained solid, ending FY24 with $2.6 billion in operating cash flow and $2.3 billion in free cash flow. The company currently offers a quarterly dividend of $1.20 per share, having raised it by 3.4% in February this year. This was its 23rd consecutive year of dividend growth. The stock has a dividend yield of 2.24%, as of April 21.
9. Nordson Corporation (NASDAQ:NDSN)
Forward P/E Ratios: 18.25
Nordson Corporation (NASDAQ:NDSN) is an Ohio-based multinational company that designs and produces dispensing equipment used for applying adhesives, sealants, coatings, and other materials. The company operates under a business model that thrives on strategic acquisitions and collaborations. In May, the company revealed plans to acquire Atrion in an all-cash deal valued at around $800 million, offering $460 per share. This move is intended to expand Nordson’s presence in the medical field by tapping into new markets and treatment areas.
In fiscal Q1 2025, Nordson Corporation (NASDAQ:NDSN) posted mixed financial results. Revenue for the quarter came in at $615.4 million, reflecting a 2.8% decrease from the same period last year. Although acquisitions added 8% to sales, this gain was outweighed by a 9% decline in organic sales and a 2% headwind from unfavorable currency exchange rates. Net income dropped to $95 million, or $1.65 per diluted share, down from $110 million, or $1.90 per diluted share, a year earlier. The stock has a P/E ratio of 18.25, which makes NDSN one of the best value stocks to invest in.
By quarter’s end, Nordson Corporation (NASDAQ:NDSN) held $130.4 million in cash and cash equivalents, an increase from $116 million the previous year. The company generated $160 million in operating cash flow and reported $137.7 million in free cash flow. This strong financial footing has enabled Nordson to raise its dividend for 61 consecutive years. Currently, the company offers a quarterly dividend of $0.78 per share and has a dividend yield of 1.76%, as of April 21.
8. NextEra Energy, Inc. (NYSE:NEE)
Forward P/E Ratios: 18.18
NextEra Energy, Inc. (NYSE:NEE) is an American renewable energy company. The company continues to make substantial investments in upgrading and expanding its energy infrastructure, positioning itself as one of the nation’s top capital investors, particularly in the renewable energy space. These efforts have been instrumental in driving consistent earnings growth. Looking ahead, NextEra Energy aims to increase its adjusted earnings per share at or near the upper end of its 6% to 8% annual growth target through at least 2027.
NextEra Energy, Inc. (NYSE:NEE) posted mixed results for the fourth quarter of 2024. While its adjusted earnings per share met expectations at $0.53, revenue came in lower than anticipated, dropping 21.7% year-over-year to $5.39 billion, falling short by $2.53 billion. Still, the company reported more than 8% growth in adjusted EPS for the full year, continuing its strong performance. Since 2021, NextEra has delivered a compound annual EPS growth rate exceeding 10%, ranking it among the top 10 power producers.
NextEra Energy, Inc. (NYSE:NEE) generated $13.2 billion in operating cash flow for fiscal 2024, underscoring its appeal to income-seeking investors. It also aims to grow its annual dividend by approximately 10% through 2026. In February, the company raised its quarterly dividend by 10% to $0.5665 per share, marking its 29th consecutive year of dividend increases. The stock supports a dividend yield of 3.5%, as of April 21.
7. Chevron Corporation (NYSE:CVX)
Forward P/E Ratios: 14.62
Chevron Corporation (NYSE:CVX) ranks seventh on our list of the best value stocks according to the media. The American leading oil and gas company has built a strong financial foundation, providing a buffer against extended downturns in the oil and gas sector. The company has taken advantage of robust profits in recent years to reduce its debt load and reward shareholders with dividends and stock repurchases. As of now, it holds just $17.2 billion in net long-term debt, with a notably low debt-to-capital ratio of 13.6%, reflecting a capital structure that relies minimally on borrowing.
Chevron Corporation (NYSE:CVX) delivered solid fourth-quarter results for 2024, posting revenue of $52.23 billion, which showed a 10.7% increase from the same quarter in the previous year and beating analyst estimates by more than $3.8 billion. This growth was largely fueled by a 7% increase in global output and a 19% jump in US production, both setting new records for the year.
Chevron Corporation (NYSE:CVX) also brought in nearly $8 billion from asset sales, maintaining a healthy financial position with a year-end net debt ratio of just 10%. Chevron’s steady cash reserves have supported its dividend strategy over time. For fiscal 2024, the company reported $31.5 billion in operating cash flow and $15 billion in free cash flow. Thanks to this strong cash generation, it returned $12 billion to shareholders through dividends and repurchased over $15 billion in stock, underscoring its continued focus on shareholder returns.
Chevron Corporation (NYSE:CVX) currently offers a quarterly dividend of $1.71 per share and has a dividend yield of 5.11%, as of April 21. The company has been rewarding shareholders with growing dividends for the past 38 consecutive years.
6. AT&T Inc. (NYSE:T)
Forward P/E Ratios: 13.40
AT&T Inc. (NYSE:T) is an American multinational telecommunications company. The company has established itself as a key player in the U.S. digital landscape, thanks to its broad telecom operations that span wireless services, fiber, and 5G broadband, and enterprise solutions like network security and remote work technologies. The stock has surged by over 15% since the start of 2025 and its 12-month return came in at over 61%.
In the fourth quarter of 2024, AT&T Inc. (NYSE:T) posted modest but steady growth, with revenue inching up 0.6% year-over-year to $32.3 billion. The company generated $5.3 billion in operating income and reported $4.4 billion in net income. AT&T added 482,000 postpaid phone customers during the quarter while maintaining a best-in-class postpaid phone churn rate of just 0.85%. Mobility service revenue rose 3.3% from the prior year to reach $16.6 billion. On the broadband side, AT&T Fiber continued to perform strongly, adding 307,000 new subscribers—its 20th straight quarter with over 200,000 net additions.
AT&T Inc. (NYSE:T) also remained focused on rewarding shareholders, backed by a healthy financial footing. It reported $11.9 billion in operating cash flow for the quarter and $4.8 billion in free cash flow. The company currently pays a quarterly dividend of $0.2775 per share and has a dividend yield of 4.22%, as recorded on April 21.
5. United Parcel Service, Inc. (NYSE:UPS)
Forward P/E Ratios: 12.24
United Parcel Service, Inc. (NYSE:UPS) is a Georgia-based multinational shipping and supply chain management company. The company’s leadership is sharpening its focus on more profitable areas of the delivery business, especially targeting small and mid-sized companies as well as the healthcare sector. By deliberately reducing its delivery volume from Amazon, the company aims to redirect its network capacity toward higher-margin shipments. As part of this shift, management has launched a reconfiguration of its network with a goal to cut operating costs by $1 billion.
In the fourth quarter of 2024, United Parcel Service, Inc. (NYSE:UPS) generated $25.3 billion in revenue, reflecting a 1.54% increase from the previous year. The company also reached a tentative agreement with its biggest client to reduce package volume by over half by the second half of 2026. UPS has now taken full control of its SurePost service and is reorganizing its US operations. The move is part of a long-term cost-cutting plan aimed at enhancing efficiency and saving around $1 billion through a broad restructuring effort.
In February, United Parcel Service, Inc. (NYSE:UPS) raised its quarterly dividend by 0.6% to $1.64 per share, continuing its impressive streak of 23 consecutive years of dividend increases. The company’s healthy cash generation supports these shareholder returns. It reported $10.1 billion in operating cash flow and $6.3 billion in free cash flow for 2024. Altogether, UPS returned $5.9 billion to shareholders through dividends and buybacks over the year. The stock supports a dividend yield of 6.82%, as of April 21.
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E Ratios: 11.75
QUALCOMM Incorporated (NASDAQ:QCOM) ranked fourth on our list of the best value stocks that pay dividends. The American semiconductor manufacturing company is headquartered in California. Though best known for its wireless technology, the company also offers a broad portfolio that includes software, processors, and modems. Its Snapdragon system-on-chip (SoC) products power many leading virtual reality (VR) devices currently on the market. One example is Axon’s VR training program, which utilizes the HTC Vive Focus 3 headset, powered by Qualcomm’s Snapdragon XR2 platform.
In the first quarter of fiscal 2025, QUALCOMM Incorporated (NASDAQ:QCOM) posted strong results, reporting $11.7 billion in revenue, a 17.6% year-over-year increase. This marked the company’s third consecutive quarter of double-digit revenue growth and set a new all-time high. Its core chip segment, QCT, generated $10.1 billion, rising 20% year-over-year. Key growth drivers included a 13% increase in smartphone chip revenue to $7.6 billion, a 61% surge in automotive revenue to $961 million, and a 36% jump in Internet of Things (IoT) sales to $1.5 billion.
QUALCOMM Incorporated (NASDAQ:QCOM) ended the quarter with a solid financial position, holding over $3.1 billion in cash and cash equivalents. The company also generated nearly $4.6 billion in operating cash flow and returned $942 million to shareholders via dividend payouts. It currently offers a quarterly dividend of $0.89 per share and has a dividend yield of 2.61%, as of April 21. The company’s dividend growth streak spans 21 years, which makes it a reliable option for income investors.
3. Diamondback Energy, Inc. (NASDAQ:FANG)
Forward P/E Ratios: 9.76
Diamondback Energy, Inc. (NASDAQ:FANG) is an independent energy company that is mainly engaged in the exploration of hydrocarbons. In the fourth quarter of 2024, the company reported revenue of $3.71 billion, up 66.5% from the same period last year. The revenue also beat analysts’ estimates by $161.7 million. It posted an average daily production of 475.9 thousand barrels of oil (or 883.4 thousand barrels of oil equivalent). During this period, the company drilled a total of 137 gross wells—131 in the Midland Basin and six in the Delaware Basin. It brought 128 operated wells online, including 124 in the Midland Basin and four in the Delaware, with the average lateral length of those wells reaching 11,810 feet.
Diamondback Energy, Inc. (NASDAQ:FANG)’s cash position also remained strong. In the most recent quarter, the company’s operating cash flow came in at $2.3 billion, and its free cash flow was $1.3 billion. It also returned $694 million to shareholders through dividends and share repurchases, which represented 51% of Adjusted Free Cash Flow. In February, the company declared an 11% hike in its quarterly dividend to $1.00 per share. It is one of the best value dividend stocks as the company has raised its payouts multiple times since the initiation of its dividend policy in 2018. The stock supports a dividend yield of 4.69%, as of April 21.
At the end of Q4 2024, 53 hedge funds tracked by Insider Monkey held stakes in Diamondback Energy, Inc. (NASDAQ:FANG), up from 49 in the previous quarter. The consolidated value of these stakes is over $1.7 billion. With over 2.8 million shares, Diamond Hill Capital was the company’s leading stakeholder in Q4.
2. Dell Technologies Inc. (NYSE:DELL)
Forward P/E Ratios: 9.11
Dell Technologies Inc. (NYSE:DELL) is an American multinational tech company, headquartered in Texas. The company specializes in a wide variety of computer hardware and software products. It continues to benefit from its well-rounded business model, which spans both enterprise-grade solutions and consumer technology products.
In the fourth quarter of fiscal 2025, Dell Technologies Inc. (NYSE:DELL) posted revenue of $23.9 billion, marking a 7% increase from the same period last year. Operating income climbed 40% year-over-year to $2.2 billion. Dell also reported strong cash generation, with operating cash flow exceeding $4.5 billion and free cash flow topping $3 billion. With a P/E ratio of 9.11, DELL is one of the best value stocks that pay dividends.
On March 18, Dell Technologies Inc. (NYSE:DELL) announced an 18% increase in its annual cash dividend, raising it to $2.10 per common share. The first quarterly dividend of $0.525 per share is set to be paid on May 2, 2025, to shareholders of record as of April 22. In addition, Dell’s board approved a $10 billion expansion of its share buyback program. As of April 21, the stock has a dividend yield of 2.55%.
1. Macy’s, Inc. (NYSE:M)
Forward P/E Ratios: 5.15
Macy’s, Inc. (NYSE:M) is a New York-based holding company of department stores. The company oversees a portfolio of three major retail brands—Macy’s, Bloomingdale’s, and Bluemercury—which offer a wide range of products such as clothing, accessories, home goods, and other consumer items. Its retail presence spans across 43 states in the US, as well as in Washington, D.C., Guam, and Puerto Rico.
In the fourth quarter of 2024, Macy’s, Inc. (NYSE:M) reported revenue of $7.77 billion, which fell by 4.3% from the same period last year. However, the revenue beat analysts’ estimates by $12.5 million. As the first year of the Bold New Chapter strategy concluded, the company credited its customer experience investments for driving its strongest comparable sales of the year and marking its best performance in nearly three years. The First 50 locations posted sales growth for four consecutive quarters, while its luxury brands, Bloomingdale’s and Bluemercury, recorded faster annual sales growth.
Macy’s, Inc. (NYSE:M) also reported a solid cash position, which makes it a great investment for income investors. The company ended the year with $1.3 billion of cash on its balance sheet. Its operating cash flow for the year came in at $1.3 billion, and its free cash flow amounted to $679 million. In February, the company hiked its quarterly dividend by 5% to $0.1824 per share. This was the company’s fourth consecutive year of dividend growth, which makes M one of the best value dividend stocks. The stock has a dividend yield of 6.78%, as of April 21.
Overall, Macy’s, Inc. (NYSE:M) ranks first on our list of the best value stocks that pay dividends. While we acknowledge the potential of M 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 M 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.
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