In this article, we will take a look at some of the best dividend stocks with sustainable payout ratios.
Dividend-paying stocks have remained popular among investors due to their strong historical performance. This sustained interest has led many companies to maintain their dividend payouts, raise them, or introduce new dividend policies altogether.
According to data from S&P Dow Jones Indices, US domestic common stocks saw a net dividend increase of $15.3 billion in the first quarter of 2025, which is an improvement over the $11.7 billion increase seen in the previous quarter. Over the 12 months ending in March 2025, dividend hikes amounted to $68.2 billion, just above the $68.1 billion reported the year before. Meanwhile, dividend cuts dropped significantly, totaling $15.6 billion, compared to $25.2 billion in the prior 12-month period.
The same report noted that overall dividend payments climbed by roughly 6% to 7%, though this was slightly below the pre-2025 expectation of 8%. In comparison, dividend payouts rose by 6.4% in 2024 and 5.1% in 2023.
Additional data from S&P Dow Jones Indices showed that 758 companies raised or initiated dividend payments in Q1 2025, which is a slight decline from 796 in the same period last year, reflecting a 4.8% year-over-year drop. Despite this, the total value of these increases amounted to $19.5 billion for the quarter. Over the 12-month period ending in March 2025, a total of 2,412 companies raised their dividend payments, marking a slight uptick from the 2,411 companies that did so in the same period the previous year. The total value of these dividend increases reached $68.2 billion, just edging past the $68.1 billion recorded during the prior 12-month stretch.
Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices, expressed continued optimism about the overall outlook for dividends. However, he also acknowledged some uncertainty ahead, given the current market conditions. He made the following comment about the situation.
“Dividend growth typically is strongest in Q1, as most companies finish their fiscal year and prepare for their shareholder meeting. For Q1 2025, growth, while noticeably slower, did continue and was in line with expectations given the current economic uncertainties. This uncertainty however did not appear to stop increases, though it did limit them, as forward commitment levels appeared shy.”
Despite some caution, analysts remain positive on dividend stocks, pointing out that US companies are well-positioned to sustain their payouts thanks to strong cash reserves. Nuveen, a financial planning firm based in Illinois, noted that an increasing number of companies are likely to roll out dividend policies, supported by the current cash-rich environment, which could drive stronger-than-expected dividend growth in 2025.
The report mentioned that as of September 30, 2024, corporate cash holdings stood at $1.8 trillion, which was close to their highest levels in the past 20 years. With equity valuations running above historical norms, Nuveen believes that companies may lean more toward boosting dividend payments as a way to return value to shareholders, rather than relying on stock buybacks, which may be less attractive in a higher-valuation landscape.
Analysts generally consider a payout ratio in the range of 30% to 50% to be optimal because it indicates that a company is returning a healthy portion of its earnings to shareholders while still retaining enough profits to reinvest in its business and support future growth. Given this, we will take a look at some of the best dividend stocks with sustainable payout ratios.
Our Methodology
For this article, we screened for companies that consistently distribute dividends to their shareholders. From this initial selection, we narrowed down the list to include only those companies with a 5-year average payout ratio below 50%, indicating a robust cash position. Subsequently, we identified the top 10 companies meeting these criteria and arranged them in ascending order of the number of hedge funds that held stakes in each of them, as per Insider Monkey’s database of Q4 2024.
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. Walmart Inc. (NYSE:WMT)
5-Year Average Payout Ratio: 45.8%
Walmart Inc. (NYSE:WMT) is an American retail corporation, headquartered in Arkansas. The company operates a chain of hypermarkets, discount stores, and grocery stores across the country. The company was built on a foundation of keeping both costs and prices extremely low, and that strategy is still very much in place. Leadership continues to pour resources into technology that blends its brick-and-mortar presence with online shopping to enhance convenience and speed up delivery. For example, nearly all Walmart locations in the US now provide same-day pickup and delivery services. A few years ago, the company also introduced Walmart+, a subscription program offering perks like free shipping, fuel discounts, and a faster checkout experience. The stock has outperformed the market significantly in the past 12 months, generating returns of over 56%.
In the fourth quarter of 2024, Walmart Inc. (NYSE:WMT) posted a 4.1% increase in revenue compared to the same period the previous year, reaching $180.6 billion. On a constant currency basis, revenue growth was even stronger at 5.3%. Operating income rose by 8.3%, driven by improved gross margins, increased membership income, and solid gains in its e-commerce segment.
Over the full year, Walmart Inc. (NYSE:WMT) generated $36.4 billion in operating cash flow and finished with $9 billion in cash and cash equivalents. The company also returned $4.5 billion to shareholders through share buybacks and announced a 13% hike in its quarterly dividend to $0.235 per share—the largest dividend increase it has announced in over ten years. It currently offers a quarterly dividend of $0.235 per share and has a dividend yield of 1.01%, as of April 17. The company has raised its dividends for 52 consecutive years, which makes it one of the best dividend stocks.
9. Comcast Corporation (NASDAQ:CMCSA)
5-Year Average Payout Ratio: 43.5%
Comcast Corporation (NASDAQ:CMCSA) is a Pennsylvania-based multinational mass media company that offers a wide range of mobile phone and cable TV services. The company is expanding into the wireless phone market as a way to counter declining revenue from its cable business. The strategy has gained momentum, especially through bundling offers, and the company has now surpassed 7 million wireless subscribers.
In the fourth quarter of 2024, Comcast Corporation (NASDAQ:CMCSA) reported nearly $32 billion in revenue, marking a 2.1% year-over-year increase. This growth was supported by solid performance across all six of its main business divisions. Connectivity revenue climbed 5%, and the mobile segment expanded with 1.2 million new lines added. Despite facing intense competition, Business Services also delivered a 5% revenue gain.
Comcast Corporation (NASDAQ:CMCSA) pays a quarterly dividend of $0.33 per share, offering a yield of 3.88%, as of April 17. The company maintained a strong financial position, generating over $8 billion in operating cash flow, up from $6 billion the previous year. Free cash flow more than doubled to $3.26 billion, compared to $1.7 billion a year earlier. Comcast also returned $1.2 billion to shareholders through dividend payments. In the past five years, its average payout ratio came in at 43.5%, which makes it one of the best dividend stocks with sustainable payout ratios. The company has raised its payouts for 21 consecutive years.
