In this article, we will take a look at some of the best dividend stocks with low P/E and high dividend yields.
A low price-to-earnings (P/E) ratio indicates that a stock may be undervalued relative to its earnings, presenting a potential buying opportunity for investors looking to acquire shares at a reasonable price. Stocks that combine low P/E ratios with high dividend yields tend to attract those seeking both value and steady income.
One of the reasons these investment strategies remain effective is their long history of delivering strong returns. Approaches centered on identifying undervalued stocks or prioritizing dividend-paying companies have consistently produced favorable results over time. Heartland Advisors referenced a study analyzing US stock returns from 1802 to 2002, which found that dividends and their growth contributed 5.8% to the total annualized return of 7.9% over the 200-year period. Similarly, research from the London Business School examined global returns from 1900 to 2005. The study found that across 17 countries, the average real return was approximately 5%, with an average dividend yield of 4.5% during that timeframe. These findings reinforce the appeal of long-term investment strategies focused on value and income generation.
The Russell Index’s gains this year have been largely driven by a small group of mega-cap stocks, particularly the tech-heavy “Magnificent Seven.” These companies account for over 25% of the index and were responsible for nearly 40% of its 21% total return in the first three quarters of 2024. However, in recent months, market leadership has shifted, with value-oriented stocks gaining momentum. In the third quarter, the Russell Value Index climbed 9.4%, significantly outpacing the 3.2% gain of the Russell Growth Index, as reported by BlackRock.
The report further mentioned that several factors may have influenced this shift toward value stocks. Strong job growth, declining inflation, and the Federal Reserve’s decision to begin cutting interest rates have boosted investor confidence, allowing the rally to extend beyond the largest mega-cap stocks. In addition, value-driven sectors that are sensitive to interest rates—such as financials, utilities, and real estate investment trusts (REITs)—tend to benefit from a lower rate environment.
Though value outperformed growth in the third quarter of 2024, recent market trends have overwhelmingly favored growth and technology stocks, leading to a decline in the representation of value stocks within US large-cap indexes. As of September 30, 2024, growth stocks comprised 32% of the Russell index, whereas value stocks accounted for only 8%, resulting in a notable 24% gap. This stands in contrast to the past 25 years, during which the average difference in market weight between growth and value stocks within the index was 7.4%.
This shift has inadvertently left many portfolios lacking diversification and underexposed to value stocks, potentially causing investors to miss out on gains as value stocks recover. To address this imbalance, investors may benefit from deliberately increasing their allocation to value stocks by complementing core US equity index funds with a dedicated value-focused investment strategy.
Dividend stocks have underperformed recently, largely due to the market’s strong focus on AI-related stocks. As a result, their valuations have declined in recent months. When it comes to dividend investing, high yields often create uncertainty among investors, making it challenging to determine whether these stocks are worthwhile investments. Investors often gravitate toward stocks with high dividend yields, assuming that a higher yield automatically translates to better returns. However, a study by Wellington Management challenged this assumption, revealing that while stocks with the highest dividend payouts and yields performed well over time, they did not necessarily outperform those with moderately high, yet not extreme, dividend yields. This finding suggests that excessively high yields do not always lead to the best results, emphasizing the need for a more balanced approach rather than focusing solely on yield size. Analysts generally consider dividend yields in the range of 3% to 6% to be healthy.
That being said, certain stocks with above-average dividend yields not only provide attractive income but also have a strong track record of consistently increasing their payouts over time.
Photo by Artem Beliaikin on Unsplash
Our Methodology
To compile this list, we filtered for dividend stocks with a forward P/E ratio below 15 and dividend yields exceeding 5% as of February 16. From that group, we chose companies with a proven track record of consistently paying dividends to their shareholders. The ranking of these stocks is based on their forward P/E ratios, arranged from the highest to the lowest.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. United Parcel Service, Inc. (NYSE:UPS)
Forward P/E Ratio: 14.71
Dividend Yield as of February 16: 5.64%
United Parcel Service, Inc. (NYSE:UPS) is a Georgia-based shipping and supply chain management company that offers various related services to its consumers. In the fourth quarter of 2024, the company reported $25.3 billion in revenue, which saw a 1.54% growth from the same period last year. It has also reached a preliminary agreement with its largest customer to reduce volume by over 50% by the second half of 2026. In addition, starting January 1, 2025, it will take full control of its UPS SurePost product. To adapt to these changes, the company is restructuring its U.S. network and launching multi-year “efficiency reimagined” initiatives, with the goal of saving approximately $1.0 billion through a comprehensive process overhaul.
United Parcel Service, Inc. (NYSE:UPS) is prioritizing the expansion of its healthcare logistics services as part of its strategy to establish itself as a global leader in the sector. In January 2025, the company strengthened its capabilities by acquiring Frigo-Trans and its subsidiary BPL, further enhancing its ability to offer comprehensive temperature-controlled logistics solutions, especially in Europe.
United Parcel Service, Inc. (NYSE:UPS) currently offers a quarterly dividend of $1.64 per share, having raised it by 0.6% in February. This marked the company’s 23rd consecutive year of dividend growth, which makes UPS one of the best dividend stocks on our list. The stock supports a dividend yield of 5.64%, as of February 16. In addition to its dividend growth, the company is a preferred choice for income investors because of its strong cash position. In fiscal year 2024, the company reported $10.1 billion in operating cash flow, while free cash flow amounted to $6.3 billion. It also returned $5.9 billion to shareholders through dividends and share repurchases.
9. VICI Properties Inc. (NYSE:VICI)
Forward P/E Ratio: 11.76
Dividend Yield as of February 16: 5.70%
VICI Properties Inc. (NYSE:VICI) is an American real estate investment trust company that owns casinos and entertainment properties across the US and Canada. The company maintains a solid financial foundation, closing the third quarter of 2024 with $355.7 million in cash and cash equivalents. This strong liquidity has supported the company in consistently increasing its dividend payouts for seven straight years, achieving a compound annual growth rate (CAGR) of 7% since going public. In the latest quarter, VICI distributed around $453 million in dividends. The company pays a quarterly dividend of $0.4325 per share and has a dividend yield of 5.7%, as of February 16.
VICI Properties Inc. (NYSE:VICI) has attracted investor interest with its distinctive business model. While its heavy exposure to the gaming industry might appear risky, casinos have historically shown resilience during economic downturns. The company secures tenants through long-term leases, and stringent gaming regulations make it challenging for operators to relocate, adding stability to its revenue stream. This approach has enabled VICI to maintain full occupancy since its IPO in 2018, even during periods of disruption such as the COVID-19 pandemic, which impacted travel, hospitality, and casino operations. Furthermore, many of its long-term lease agreements are linked to the consumer price index (CPI), allowing rental adjustments to keep pace with inflation.
Insider Monkey’s database of Q3 2024 showed that 35 hedge funds held stakes in VICI Properties Inc. (NYSE:VICI), up from 33 in the previous quarter. These stakes have a consolidated value of more than $787.6 million.
8. Enterprise Products Partners L.P. (NYSE:EPD)
Forward P/E Ratio: 11.53
Dividend Yield as of February 16: 6.40%
Enterprise Products Partners L.P. (NYSE:EPD) is a Texas-based midstream natural gas and crude oil pipeline company, headquartered in Texas. The company’s Q4 2024 earnings came in strong, grabbing investors’ attention. It posted revenue of $14.2 billion, which surpassed analysts’ consensus by $74.5 million. The company’s operating income came in at $1.9 billion and its net income amounted to $1.63 billion.
Enterprise Products Partners L.P. (NYSE:EPD) continued to demonstrate strong cash generation alongside its other financial metrics. During the quarter, the company reported operating cash flow exceeding $2.3 billion, while its adjusted free cash flow totaled $336 million. This solid financial footing allowed EPD to announce its 27th consecutive annual dividend increase in January 2025.
In the past 12 months, Enterprise Products Partners L.P. (NYSE:EPD) has surged by nearly 23%. The company is entering a growth phase, supported by rising demand for NGL exports and increasing power consumption driven by AI. It has $6.9 billion in expansion projects currently under development. Additionally, the company sees AI-driven power needs as a major factor contributing to higher natural gas consumption. With a well-established pipeline and storage network, Enterprise is among the few companies positioned to benefit from this trend. It has also emphasized its strong presence in the Dallas-Fort Worth and San Antonio areas, which are becoming significant data center hubs.
7. Energy Transfer LP (NYSE:ET)
Forward P/E Ratio: 10.78
Dividend Yield as of February 16: 6.50%
Energy Transfer LP (NYSE:ET) is an American energy company that is engaged in pipeline transportation and storage for natural gas, crude oil, and other refined products. The company has gained from acquisitions, recently completed organic growth projects, and favorable market conditions. Over the past several quarters, it finalized three key acquisitions: Lotus Midstream in May 2023, Crestwood Equity Partners in November 2023, and WTG Midstream in July 2024. In addition, it established a joint venture with its affiliated MLP, Sunoco LP, to merge their crude oil and produced water-gathering assets in the Permian Basin.
In the fourth quarter of 2024, Energy Transfer LP (NYSE:ET) reported revenue of $5.27 billion, down 6.6% from the same period last year. The company’s adjusted EBITDA reached $3.88 billion, reflecting an 8% increase from $3.60 billion in the prior-year period. It anticipates its adjusted EBITDA for 2025 to fall between $16.1 billion and $16.5 billion. In addition, the Partnership projects approximately $5.0 billion in growth capital expenditures for 2025, while maintenance capital expenditures are expected to total around $1.1 billion.
Energy Transfer LP (NYSE:ET)’s cash position also came in strong. The company posted a distributable cash flow of $1.98 billion. The company currently offers a quarterly dividend of $0.325 per share, having raised it by 0.8% in January. Through this increase, it stretched its dividend growth streak to 13 years, which makes ET one of the best dividend stocks on our list. The stock has a dividend yield of 6.5%, as of February 16.
6. Altria Group, Inc. (NYSE:MO)
Forward P/E Ratio: 10.04
Dividend Yield as of February 16: 7.66%
Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that manufactures a wide range of related products including cigarettes and other nicotine products. The tobacco industry has undergone notable transformations in recent years. Although smoking rates have decreased worldwide, there has been a growing shift toward smoke-free alternatives such as e-cigarettes and oral tobacco, which are viewed as less harmful and are gaining popularity. Altria Group, the company behind brands like Marlboro and Parliament, appears to be navigating these changes effectively by expanding its portfolio of smoke-free products. In the past 12 months, the stock has surged by nearly 33%.
In the fourth quarter of 2024, Altria Group, Inc. (NYSE:MO) reported revenue of $5.11 billion, marking a 1.63% increase from the same period a year earlier. This figure also surpassed analysts’ expectations by $59.6 million. The company’s strong brand performance contributed to income growth and margin improvements in its core tobacco segment, while it continued making strategic investments to support future expansion. Looking ahead to 2025, Altria anticipates adjusted diluted earnings per share (EPS) to range between $5.22 and $5.37, representing a projected increase of 2% to 5% from the 2024 EPS of $5.12.
Altria Group, Inc. (NYSE:MO) has a strong dividend history as the company has remained committed to its shareholder return. In FY24, the company paid $6.8 billion worth of dividends to investors. Moreover, it has raised its payouts for 55 consecutive years, which makes MO one of the best dividend stocks on our list. The stock’s dividend yield on February 16 came in at 7.66%.
5. Franklin Resources, Inc. (NYSE:BEN)
Forward P/E Ratio: 9.93
Dividend Yield as of February 16: 6.23%
Franklin Resources, Inc. (NYSE:BEN) is an American multinational asset management company that offers a wide range of related services and products to its consumers. In its fiscal Q1 2025, the company disclosed a 34% year-over-year increase in long-term inflows, excluding reinvested distributions. The company also reported positive net flows in equity, multi-asset, and alternative investments, amounting to $17 billion for the quarter. Although long-term net outflows totaled $50 billion, excluding Western Asset Management, the company achieved $18 billion in long-term net inflows, with growth observed across all asset classes.
Over the past year, Franklin Resources, Inc. (NYSE:BEN)’s stock has declined by nearly 25%, reflecting its history of fluctuating performance. However, it has made significant strategic moves to strengthen its operations. Through acquisitions like last year’s purchase of options-trading technology firm volScout, the asset management firm has expanded its capabilities, enabling it to better serve both individual and institutional investors.
Franklin Resources, Inc. (NYSE:BEN), one of the best dividend stocks, currently offers a quarterly dividend of $0.32 per share, having raised it by 3% in December 2024. This marked the company’s 49th consecutive year of dividend growth. The stock has a dividend yield of 6.23%, as of February 16.
4. Edison International (NYSE:EIX)
Forward P/E Ratio: 8.83
Dividend Yield as of February 16: 6.61%
Edison International (NYSE:EIX) is a California-based public utility company that produces electricity from various sources, including natural gas, nuclear energy, and renewables. The company is encountering difficulties this year as lawsuits have been filed against Edison, holding it responsible for wildfire damage. Until these legal disputes are resolved, investors may face significant uncertainty and risk. Since the start of 2025, the stock has declined by over 37%.
That said, Edison International (NYSE:EIX) has continued to grow its dividend, backed by a strong cash position. By the end of the most recent quarter, the company had approximately $200 million in cash and cash equivalents. In addition, its operating cash flow rose to $3.8 billion over the first nine months of the year, compared to $2.5 billion during the same period last year.
In December 2024, Edison International (NYSE:EIX) announced a 6.1% hike in its quarterly dividend to $0.8275 per share. Through this increase, the company took its dividend growth streak to 21 years, which makes it one of the best dividend stocks on our list. As of February 16, the stock supports a dividend yield of 6.61%.
3. Verizon Communications Inc. (NYSE:VZ)
Forward P/E Ratio: 8.77
Dividend Yield as of February 16: 6.61%
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company that provides a wide range of communication services to its consumers. The company’s Q4 2024 earnings came in strong, with revenues amounting to $35.7 billion, up 1.6% from the same period last year. This growth was driven by a rise in customer additions across both mobile wireless and internet services. In the mobile wireless segment, the company added 568,000 net postpaid phone subscribers, an increase from 449,000 in the same quarter the previous year. Revenue from this segment grew 3.1% year-over-year to $20 billion, marking its 18th consecutive quarter of growth.
Verizon Communications Inc. (NYSE:VZ) has grabbed investors’ attention due to its strong cash flow and commitment to innovation. In fiscal year 2024, it reported $37 billion in operating cash flow, while free cash flow rose to $19.8 billion from $18.7 billion the previous year. Analysts remain optimistic about its prospects, especially after partnering with NVIDIA to develop an AI-powered enterprise solution that enhances AI applications on its secure 5G private networks using private Mobile Edge Computing. Moreover, the company is pursuing other AI-driven initiatives, including network slicing and satellite connectivity, to expand revenue streams and strengthen its market position.
Due to its strong cash generation, Verizon Communications Inc. (NYSE:VZ) was able to raise its payouts for 18 consecutive years, which places it on our list of the best dividend stocks. The company’s quarterly dividend comes in at $0.6775 per share and has a dividend yield of 6.61%, as of February 16.
2. British American Tobacco p.l.c. (NYSE:BTI)
Forward P/E Ratio: 8.30
Dividend Yield as of February 16: 7.72%
British American Tobacco p.l.c. (NYSE:BTI) is a London-based manufacturing company that specializes in cigarettes, tobacco, and various other nicotine products. The company viewed 2024 as a year of investment, with performance aligning with its projections. Throughout the year, it continued its transformation, adding 3.6 million adult consumers to its smokeless product segment, bringing the total to 29.1 million. These products now contribute 17.5% of the company’s total revenue, reflecting a 1.0 percentage point increase compared to fiscal year 2023. The company reported revenue of £25.8 billion in FY24, representing a 5.2% decline from the previous year. This decrease was primarily attributed to the sale of its businesses in Russia and Belarus in September 2023, along with unfavorable currency translation effects.
British American Tobacco p.l.c. (NYSE:BTI) has surged by over 27% in the past 12 months. The company experienced accelerated performance in the second half of the year, driven by the rollout of innovations in its New Categories segment, the impact of strategic investments in US commercial initiatives, and the reversal of related wholesaler inventory movements. Looking ahead to 2025, regulatory and fiscal challenges in Bangladesh and Australia are expected to weigh on the performance of its combustibles segment. However, the company remains confident in its ability to build on its progress as it transitions from an investment phase to full-scale deployment. It remains committed to returning to its mid-term targets of 3-5% revenue growth and 4-6% adjusted profit from operations growth, on a constant currency basis, by 2026.
British American Tobacco p.l.c. (NYSE:BTI) has demonstrated strong cash generation, achieving 100% operating cash conversion over the past five years, with a conversion rate of 101% in 2024—surpassing its 90% target. During the year, it generated £7.9 billion in free cash flow before dividends, while operating cash flow exceeded £10 billion. Over the past five years, the company has returned £28 billion to shareholders through a combination of progressive dividends and a sustainable share buyback program. In 2024, it initiated £0.7 billion in share repurchases, with an additional £0.9 billion committed for 2025. The company’s quarterly dividend sits at $0.7431 per share for a dividend yield of 7.72%, as of February 16.
1. Ford Motor Company (NYSE:F)
Forward P/E Ratio: 7.52
Dividend Yield as of February 16: 6.33%
Ford Motor Company (NYSE:F) is an American company that is engaged in the manufacturing, distribution, and sale of automobiles. The company’s stock has been under pressure for some time, largely due to its projected downturn in sales for 2025. It anticipates a revenue decline ranging between 15% and 25%. The stock has fallen by nearly 24% in the past 12 months.
That said, Ford Motor Company (NYSE:F) has been working to enhance operational efficiency by making strategic adjustments. It has significantly reduced underperforming international operations, exiting markets such as Brazil and India while scaling back its European presence. This restructuring has enabled the company to concentrate more on its electrification strategy. In the fourth quarter of 2024, it posted revenue of $48.2 billion, reflecting a 5% increase from the same period the previous year.
Ford Motor Company (NYSE:F) also demonstrated strong cash generation throughout the year. In fiscal 2024, operating cash flow totaled $15.4 billion, while free cash flow reached $6.7 billion. For the full year 2025, the company projects an adjusted EBIT between $7.0 billion and $8.5 billion, with adjusted free cash flow expected to range from $3.5 billion to $4.5 billion. Capital expenditures are estimated to fall between $8 billion and $9 billion. The company offers a quarterly dividend of $0.15 per share for a dividend yield of 6.33%, as of February 16.
Overall Ford Motor Company (NYSE:F) ranks first on our list of the best dividend stocks. While we acknowledge the potential for F 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 F but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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