In this article, we will take a look at some of the best cheap dividend stocks.
Value investing has remained a favored approach among investors for years, largely popularized by Warren Buffett, who continues to focus on stocks he believes are undervalued relative to their true worth. While growth investing has dominated market sentiment in recent times, the long-term performance of value stocks remains solid.
Former professor-turned-investment manager Josef Lakonishok and value investing specialist David Dreman strongly advocated for a patient, long-term approach to investing, believing that steady, disciplined strategies often outperform rapid, high-growth ones. Their research indicated that value investing tends to outperform growth strategies approximately 70% of the time, regardless of a company’s size. After analyzing companies across different market capitalizations, they found that, over long periods, value stocks consistently generated average annual returns slightly above 7%, surpassing the performance of growth stocks.
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Much of the Russell Index’s gains this year have been concentrated in a handful of mega-cap stocks, particularly the tech-heavy “Magnificent Seven.” These companies now make up over 25% of the index and were responsible for nearly 40% of its 21% total return in the first three quarters of 2024. However, market dynamics have started to shift in recent months, with value stocks gaining traction. In the third quarter, the Russell Value Index surged 9.4%, significantly outpacing the 3.2% rise in the Russell Growth Index, according to a report from BlackRock.
The report highlighted several key drivers behind this trend. Strong employment numbers, easing inflation, and the Federal Reserve’s move to start cutting interest rates have bolstered investor confidence, prompting a broader market rally beyond the dominant mega-cap stocks. Additionally, sectors that are more sensitive to interest rates—such as financials, utilities, and real estate investment trusts (REITs)—have benefited from a lower-rate environment.
Analysts advise investors against favoring a single investment strategy. JP Morgan noted that large technology companies are widely held both individually and within major indices. As a result, significant market fluctuations can occur when developments—such as the recent introduction of a Chinese large language model in late January—impact the sector. However, the firm does not recommend actively betting against the dominant tech giants that hold the largest weightings in the broader market.
Drawing comparisons to the dot-com bubble of 2000, JP Morgan highlighted that the leading companies of that era traded at forward price-to-earnings ratios between 50x and 75x. In contrast, most of today’s mega-cap stocks are valued at roughly half of those peak multiples. The firm further advised investors to diversify beyond growth equities, particularly by considering financial stocks. Alongside industrials, a balanced approach between growth and value stocks remains its preferred strategy.
Stocks that pay dividends are often associated with value investing, as they generally provide higher yields and demonstrate stronger financial stability compared to growth stocks. According to a report by S&P Dow Jones Indices, investment strategies centered on generating income tend to share traits commonly found in value stocks. Companies with attractive dividend yields and lower valuations often capture investor attention.
However, the report also pointed out that the Dividend Aristocrats Index does not adhere strictly to a value-focused approach. Instead, it maintains a mix of both growth and value stocks. A long-term review of the index, covering the period from 1999 to 2022, indicated that, on average, 59.04% of its holdings were classified as value stocks, while 40.94% fell into the growth category. Given this, we will take a look at some of the best cheap dividend stocks to consider.
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Our Methodology
For this list, we used a Finviz screener and identified dividend companies with forward P/E ratios below 15, as of March 6. The low price-to-earnings ratio shows that they are traded below their intrinsic value. From the resultant dataset, we selected 13 companies that have the highest number of hedge fund investors at the end of Q4 2023. The stocks are ranked in ascending order of hedge funds having stakes in them.
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).
13. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 43
Forward P/E Ratio: 10.59
The Kraft Heinz Company (NASDAQ:KHC) is an American multinational food company. It is well known for its diverse lineup of iconic food and beverage brands, such as Kraft, Heinz, Philadelphia, Ore-Ida, Maxwell House, and Jell-O, among many others. Its strong reputation for quality has earned it a loyal global customer base, with its products serving as both household staples and key ingredients in the food service industry.
The Kraft Heinz Company (NASDAQ:KHC) has been struggling for quite some time now, with the share price declining by over 11% in the past 12 months. The company posted mixed results for the fourth quarter of 2024, as weaker sales were balanced by initiatives to improve profitability. Adjusted earnings per share came in at $0.84, surpassing market expectations by $0.06, primarily due to unexpected tax benefits and a reduced share count. However, quarterly revenue fell 5% year-over-year to $6.58 billion, falling short of the projected $6.66 billion as organic sales continued to decline. In its core US market, net sales dropped 3.9% from the prior year, with price increases only partially offsetting lower sales volumes.
Despite these headwinds, The Kraft Heinz Company (NASDAQ:KHC) maintained a strong financial position in fiscal 2024, generating $3.2 billion in free cash flow—an increase of 6% from the previous year. Operating cash flow also rose 5.2% year-over-year, reaching $4.2 billion. In addition, the company returned $2.7 billion to shareholders through dividends and share repurchases, which makes it one of the best dividend stocks on our list. The company currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.09%, as of March 6.
12. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Forward P/E Ratio: 10.54
Altria Group, Inc. (NYSE:MO) is an American tobacco company, headquartered in Virginia. The company manufactures a wide range of related products including cigarettes and other nicotine products. In the fourth quarter of 2024, the company reported $5.11 billion in revenue, reflecting a 1.63% increase from the previous year and exceeding analyst estimates by $59.6 million. Strong brand performance contributed to higher earnings and improved margins in its core tobacco segment, while the company continued making strategic investments to support future growth. Looking ahead to 2025, Altria projects adjusted diluted EPS between $5.22 and $5.37, representing an expected increase of 2% to 5% compared to its 2024 EPS of $5.12.
The tobacco industry has undergone significant changes in recent years. While smoking rates have declined globally, demand for smoke-free alternatives, such as e-cigarettes and oral tobacco, has risen due to perceptions of reduced harm. Altria Group, Inc. (NYSE:MO), known for brands like Marlboro and Parliament, has been adapting to these evolving consumer preferences by expanding its portfolio of smoke-free products. The stock has surged by nearly 37% in the past 12 months.
Altria Group, Inc. (NYSE:MO) company has a long history of prioritizing shareholder returns through consistent dividend payments. In fiscal 2024, it distributed $6.8 billion in dividends. With 55 consecutive years of dividend growth, MO is one of the best dividend stocks on our list. It currently pays a quarterly dividend of $1.02 per share and has a dividend yield of 7.19%, as of March 6.
11. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 49
Forward P/E Ratio: 13.83
General Mills, Inc. (NYSE:GIS) ranks eleventh on our list of the best cheap dividend stocks to invest in. The company is a well-established player in the food industry, recognized for its wide range of brands, including Cheerios, Haagen-Dazs, and Betty Crocker. With operations spanning more than 100 countries, the company maintains a strong presence in the market through its extensive brand portfolio and continuous innovation. Recently, it has prioritized boosting sales volume and expanding its market share, both of which are crucial to its growth strategy.
General Mills, Inc. (NYSE:GIS) delivered solid results for the second quarter of fiscal 2025, generating $5.24 billion in revenue—a 2% increase from the previous year—exceeding analyst expectations by $97 million. Operating profit surged 33% to $1.1 billion, driven by stronger gross profit and the absence of a goodwill impairment charge that had weighed on the prior year’s results.
General Mills, Inc. (NYSE:GIS) offers a quarterly dividend of $0.60 per share for a dividend yield of 3.85%, as recorded on March 6. With a consistent cash flow, the company has a long-standing commitment to dividend payments. In the first half of fiscal 2025, operating cash flow rose 19% year-over-year to $1.8 billion. During this period, it returned $676 million to shareholders through dividends. Notably, the company has maintained an unbroken record of dividend payments for 125 years, solidifying its position as a reliable dividend payer.
10. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 53
Forward P/E Ratio: 13.42
Chubb Limited (NYSE:CB) is a multinational insurance company that offers a wide range of insurance products, including property and casualty, life insurance, and reinsurance. The company distinguishes itself by effectively managing risk and setting policy prices in a way that consistently generates underwriting profits. Another advantage of investing in Chubb is its ability to benefit from the current high-interest rate environment. The company holds a substantial investment portfolio worth $150 billion, allowing it to take advantage of higher yields on fixed-income assets compared to the previous decade. In 2024, the company reported $5.9 billion in net investment income, reflecting a 20% increase from the prior year.
However, Chubb Limited (NYSE:CB) is facing a challenge due to recent wildfire-related losses, which are projected to lower free cash flow by $1.5 billion. Despite this setback, the company has a proven history of navigating substantial losses, including those from Hurricane Ian and Hurricane Milton, showcasing its resilience in managing such financial impacts.
Chubb Limited (NYSE:CB) maintains a strong financial position, with operating cash flow reaching $4.57 billion. The company also rewarded shareholders by returning approximately $1.1 billion through dividends and share buybacks. It has upheld a 31-year streak of consecutive dividend increases, which makes it one of the best dividend stocks on our list. The company pays a quarterly dividend of $0.91 per share and has a dividend yield of 1.27%, as of March 6.
9. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 74
Forward P/E Ratio: 9.17
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company that offers a wide range of related services and products to its consumers. The company is leveraging its solid financial position to speed up the expansion of its fiber network through the $20 billion all-cash acquisition of Frontier Communications. This deal will extend Verizon’s fiber coverage to 25 million locations. While the transaction is expected to close next year, the company anticipates an immediate boost to its earnings and aims to achieve at least $500 million in annual cost savings.
Verizon Communications Inc. (NYSE:VZ) posted strong fourth-quarter results for 2024, generating $35.7 billion in revenue—a 1.6% increase from the previous year. This growth was driven by a rise in customer additions across both mobile wireless and internet services. In the mobile wireless segment, net postpaid phone subscriber additions reached 568,000, up from 449,000 in the same quarter last year. Revenue from this division climbed 3.1% year-over-year to $20 billion, marking its 18th consecutive quarter of growth.
Verizon Communications Inc. (NYSE:VZ) has drawn investor interest due to its robust cash flow and commitment to innovation. In fiscal 2024, the company reported $37 billion in operating cash flow, while free cash flow increased to $19.8 billion from $18.7 billion the previous year. The company offers a quarterly dividend of $0.6775 per share and has a dividend yield of 6.13%, as of March 6.
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 79
Forward P/E Ratio: 13.51
QUALCOMM Incorporated (NASDAQ:QCOM) ranks eighth on our list of the best cheap dividend stocks. The American semiconductor company has a strong financial position and advanced research and development capabilities, and is well-equipped to expand into high-growth sectors such as robotics chips. As automation transforms industries like manufacturing, logistics, and services, the demand for sophisticated robotics technology is expected to grow, creating new opportunities for the company. Its cutting-edge semiconductor designs, including custom “Oryon” cores featured in the Snapdragon X Elite and Snapdragon 8 Elite, deliver high performance and energy efficiency—critical for real-time decision-making in robotics applications.
In fiscal Q1 2025, QUALCOMM Incorporated (NASDAQ:QCOM) reported $11.7 billion in revenue, marking a 17.6% year-over-year increase. This was the third consecutive quarter of double-digit revenue growth, setting a new quarterly sales record. The chip division (QCT) contributed $10.1 billion in revenue, up 20% from the previous year. Smartphone-related sales rose 13% to $7.6 billion, while automotive revenue saw a 61% surge, reaching $961 million. Meanwhile, the Internet of Things (IoT) segment grew 36% to $1.5 billion.
QUALCOMM Incorporated (NASDAQ:QCOM) maintained a strong financial position in the latest quarter, with over $3.1 billion in cash and cash equivalents. Operating cash flow reached nearly $4.6 billion, and the company returned $942 million to shareholders through dividend payments. The company’s quarterly dividend comes in at $0.85 per share for a dividend yield of 2.18%, as of March 6. QCOM is a reliable dividend payer with 20 years of dividend growth under its belt.
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 80
Forward P/E Ratio: 12.94
An American multinational telecommunications company, AT&T Inc. (NYSE:T) has regained momentum, after facing significant challenges in recent years. The company has refocused its strategy by spinning off its pay-TV business, DirecTV, to concentrate on wireless and fiber connectivity. This strategic shift, along with last year’s transaction, generated billions in cash, enabling AT&T to make progress in reducing its substantial debt. Currently, the company holds over $122 billion in net financial debt, marking a nearly 10% decline from the $136 billion recorded less than two years ago.
AT&T Inc. (NYSE:T) has consistently prioritized shareholder returns, supported by its strong cash position. In the most recent quarter, the company generated $11.9 billion in operating cash flow, while free cash flow totaled $4.8 billion. Currently, it pays a quarterly dividend of $0.2775 per share and has a dividend yield of 2.15%, as of March 6.
For Q4 2024, AT&T Inc. (NYSE:T) delivered steady growth, with revenue increasing 0.6% year-over-year to $32.3 billion. Operating income reached $5.3 billion, and net income came in at $4.4 billion. The company saw 482,000 net additions in its postpaid phone segment and maintained an industry-leading postpaid phone churn rate of 0.85%. Mobility service revenues grew 3.3% from the prior year to $16.6 billion. In addition, its AT&T Fiber segment added 307,000 net customers, marking the 20th consecutive quarter with at least 200,000 net additions.
6. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 86
Forward P/E Ratio: 10.01
ConocoPhillips (NYSE:COP) is an American multinational energy company, headquartered in Texas. The company is engaged in hydrocarbon exploration and production. In the fourth quarter of 2024, it saw a significant rise in production, with output increasing by 14.8% year-over-year to 2,183 thousand barrels of oil equivalent per day (MBOED). This growth was largely fueled by strategic acquisitions, including the completion of its Marathon Oil acquisition in November 2024. Financially, the company remained strong, generating $20.1 billion in operating cash flow for the year, with total cash from operations reaching $20.3 billion.
Recently, ConocoPhillips (NYSE:COP) has prioritized enhancing operational efficiency and expanding its LNG business. Its strong performance has been supported by disciplined cost management, seamless integration of acquisitions, and advancements in low-carbon technologies. As part of its sustainability efforts, the company earned the Oil and Gas Methane Partnership 2.0 Gold Standard in 2024, highlighting its commitment to reducing emissions.
ConocoPhillips returned $3.6 billion to shareholders through dividends. Following a 34% increase in October, its quarterly dividend now stands at $0.78 per share. With 10 consecutive years of dividend growth, it is one of the best dividend stocks on our list. The stock has a dividend yield of 3.52%, as of March 6.
5. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 88
Forward P/E Ratio: 8.83
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based pharmaceutical industry company. In the fourth quarter of 2024, the company reported revenue of $12.34 billion, reflecting a 7.5% increase from the previous year. Its Growth Portfolio performed exceptionally well, with revenue climbing 21% to $6.4 billion. This strong performance was driven by rising demand for key treatments such as Reblozyl, Breyanzi, and Camzyos, which saw annual sales growth of 71%, 125%, and 101%, respectively.
By the end of the year, Bristol-Myers Squibb Company (NYSE:BMY) maintained a solid financial position with over $10.3 billion in cash and cash equivalents. As one of the best dividend stocks, BMY has consistently paid dividends for 93 years and has raised its payouts for 16 consecutive years. The company’s quarterly dividend comes in at $0.62 per share and has a dividend yield of 4.12%, as of March 6.
Bristol-Myers Squibb Company (NYSE:BMY) remains focused on developing new molecular entities while strategically acquiring businesses to enhance its research and development capabilities. This approach strengthens its competitive position, fosters innovation, and reinforces its leadership in the pharmaceutical industry. The company was a part of 88 hedge funds at the end of Q4 2024, up from 70 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds are worth over $3.2 billion.
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 91
Forward P/E Ratio: 10.34
Merck & Co., Inc. (NYSE:MRK) is an American multinational pharmaceutical company, based in New Jersey. The company is widely known for its broad range of treatments spanning oncology, diabetes, cardiovascular diseases, vaccines, and infectious diseases. In addition to its pharmaceutical business, the company has a significant animal health division and is actively involved in biotechnology beyond traditional drug development. This diversified portfolio, along with its strong track record of innovation, makes Merck an appealing investment option.
Since the beginning of 2025, Merck & Co., Inc. (NYSE:MRK) has declined by over 5%, primarily due to the company’s revenue forecast for the year falling short of market expectations. The company projected revenue between $64.1 billion and $65.6 billion, below analysts’ estimates of $67.31 billion. In addition, its outlook has been impacted by the temporary suspension of Gardasil shipments to China, though deliveries are expected to resume by mid-2025.
Though the company’s guidance did not meet investors’ expectations, Merck & Co., Inc. (NYSE:MRK) delivered solid results in the fourth quarter of 2024. The company posted $15.6 billion in revenue, reflecting a 7% rise compared to the same period last year. Merck has strengthened its foothold in specialty pharmaceuticals and oncology, with Keytruda, its flagship cancer treatment, making a substantial impact on cancer care while contributing to significant revenue gains. Its strong market position has helped the company generate healthy cash flow, reinforcing its commitment to shareholder returns. In fiscal 2024, Keytruda sales climbed 18% year-over-year, totaling $29.5 billion.
Merck & Co., Inc. (NYSE:MRK) currently offers a quarterly dividend of $0.81 per share and has a dividend yield of 3.45%, as of March 6. It is one of the best dividend stocks on our list as the company has raised its payouts for 14 years in a row.
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 92
Forward P/E Ratio: 8.76
Pfizer Inc. (NYSE:PFE) is a pharmaceutical company that mainly manufactures, markets, and sells related products worldwide. In recent years, the company has focused on expanding its presence in oncology, including a major $43 billion acquisition of Seagen to strengthen its cancer treatment portfolio. It projects significant growth in this sector over the next five years, aiming to double its patient base by 2030 and introduce at least three new blockbuster drugs—each generating over $1 billion in annual sales. With oncology revenue rising 25% in 2024, the company’s growth momentum in this area is already gaining traction.
Pfizer Inc. (NYSE:PFE) reported a 12% operational revenue increase from its non-COVID products over the past year, underscoring its focus on strategic execution. The company successfully met its $4 billion net cost savings target through an ongoing cost realignment initiative and has now raised its goal to approximately $4.5 billion by the end of 2025. As part of its Manufacturing Optimization Program, Pfizer aims to achieve $1.5 billion in net cost savings by 2027, with the first benefits expected in the latter half of 2025. The company remains optimistic about restoring its pre-pandemic operating margins in the coming years.
Pfizer Inc. (NYSE:PFE), one of the best dividend stocks, currently pays a quarterly dividend of $0.43 per share, following a 2.4% increase in December 2024, extending its streak of annual dividend growth to 15 consecutive years. The stock supports a dividend yield of 6.5%, as of March 6.
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 101
Forward P/E Ratio: 9.67
Citigroup Inc. (NYSE:C) is a multinational investment banking company that offers a diverse range of financial products and services. The company operates through three primary business segments: Global Consumer Banking, Institutional Clients Group, and Treasury and Trade Solutions. By leveraging its extensive customer base and international presence, Citigroup aims to strengthen its competitive position in the market.
Citigroup Inc. (NYSE:C) has declined sharply between February 28 and March 6 following reports of manual errors in bank transfers, highlighting an ongoing regulatory challenge the bank has been working to address in recent years. According to a report by The Financial Times, the bank mistakenly deposited $81 trillion into a client’s account instead of the intended $280, adding to a series of errors the bank has been working to correct as it seeks to rebuild its reputation. In another news, Bloomberg reported that Citigroup’s wealth management division came close to mistakenly transferring $6 billion to a client’s account.
The reports raise concerns as regulators issued a consent order against Citigroup Inc. (NYSE:C) in 2020, along with a $400 million fine, due to the bank’s failure to address persistent internal and risk control issues. This order was partly influenced by the bank’s accidental transfer of $900 million to Revlon creditors that same year. In July 2023, regulators imposed another fine of $136 million on the bank for delays in resolving the issues outlined in the 2020 consent order.
Analysts believe that while these mistakes may have long-term implications, they are still viewed as short-term setbacks in light of the bank’s overall performance. Citigroup Inc. (NYSE:C) is a strong dividend payer, distributing $6.7 billion to shareholders through dividends and stock buybacks in FY24, reinforcing its commitment to delivering shareholder value. With a 34-year track record of uninterrupted dividend payments, it is one of the best dividend stocks to consider. The company pays a quarterly dividend of $0.56 per share and has a dividend yield of 3.17%, as of March 6.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 104
Forward P/E Ratio: 13.46
Exxon Mobil Corporation (NYSE:XOM) is one of the largest integrated oil and gas companies in the US. The company’s operations are appealing because they span the entire oil and gas supply chain, covering exploration and production, transportation, and the refining of crude oil into products such as gasoline, diesel, and petrochemicals. This diversified structure provides stability in the often unpredictable energy market. When oil prices are high, the exploration and production segments thrive, while during periods of lower prices, the transportation and refining divisions help offset the impact of market fluctuations.
In the fourth quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) reported revenue of $83.4 billion, representing a slight 1.1% decline compared to the previous year. Since 2019, the company has achieved $12.1 billion in structural cost savings, outperforming its industry peers while helping to mitigate inflationary pressures and expansion costs. For the full year, the company posted the highest return on capital employed in its sector at 12.7%, with a five-year average of 10.8%.
Exxon Mobil Corporation (NYSE:XOM) pays a quarterly dividend of $0.99 per share, offering a yield of 3.68%, as of March 6. The company delivered strong financial results in 2024, generating $55 billion in free cash flow—the third-highest figure in the past decade. Total free cash flow for the year stood at $36.2 billion, with $16.7 billion returned to shareholders through dividends. Exxon remains committed to its $20 billion annual share repurchase program, which is set to continue through 2026, while maintaining a 42-year streak of consecutive dividend increases.
Overall, Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of cheap dividend stocks to buy now. While we acknowledge the potential for XOM 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 XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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