10 Dividend Stocks with Sustainable Payout Ratios

1. McKesson Corporation (NYSE:MCK)

5-Year Average Payout Ratio: 15.34%

McKesson Corporation (NYSE:MCK) is a Texas-based healthcare company that focuses on pharmaceutical distribution, medical supplies, health information technology, and healthcare management solutions. In recent years, the company has sharpened its focus on the U.S. and Canadian markets, scaling back its presence in parts of Europe to better concentrate its resources. Its operational strength is underpinned by an expansive distribution network and solid ties with suppliers and customers, enabling efficient service delivery across its core business areas.

During fiscal Q3 2025, McKesson Corporation (NYSE:MCK) reported revenue of $95.3 billion—an 18% increase compared to the same quarter last year. Adjusted operating profit also climbed 16% to $1.5 billion. However, revenue fell slightly short of analyst projections of $96.08 billion, partly due to weaker performance in the U.S. pharmaceutical segment. With a forward P/E ratio of 18.80, the company is considered one of the more attractive value plays in the market.

Following its strong quarterly performance, McKesson Corporation (NYSE:MCK) raised its full-year adjusted EPS guidance to a range of $32.55 to $32.95, reflecting a projected annual growth of 19% to 20%. The company also reaffirmed its focus on rewarding shareholders, distributing $3.1 billion in the first nine months of 2024, including $254 million in dividend payments. Its quarterly dividend comes in at $0.71 per share for a dividend yield of 0.41%, as of April 17. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past eight years.

Overall, McKesson Corporation (NYSE:MCK) ranks first on our list of the best dividend stocks with sustainable payout ratios. While we acknowledge the potential of MCK 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 MCK 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.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.