5 Dividend Stocks with Sustainable Payout Ratios

In this article, we discuss 5 dividend stocks with sustainable payout ratios. If you want to read our detailed analysis of dividend stocks and the importance of payout ratios, go directly to read 10 Dividend Stocks with Sustainable Payout Ratios. 

5. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 88
5-Year Average Payout Ratio: 26.5%

An American financial services company, Bank of America Corporation (NYSE:BAC) ranks fifth on our list of the best dividend stocks with sustainable payout ratios. The company has a 24-year run of paying regular dividends to shareholders and it currently offers a quarterly dividend of $0.24 per share. The stock has a dividend yield of 2.93%, as of January 23. In the past five years, its average payout ratio came in at 26.5%.

As per Insider Monkey’s database of Q3 2023, 88 hedge funds owned stakes in Bank of America Corporation (NYSE:BAC), compared with 90 in the previous quarter. These stakes have a total value of more than $31.3 billion, and the majority of this stake, amounting to $28.2 billion, is attributed to Berkshire Hathaway, the company owned by Warren Buffett.

4. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 104
5-Year Average Payout Ratio: 29.8%

UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates across various segments of the healthcare industry. The company pays a quarterly dividend of $1.88 per share for a dividend yield of 1.46%, as recorded on January 23. It maintains a 13-year streak of consistent dividend growth and its 5-year average payout ratio came in at 29.8%. UNH is among the best stocks with sustainable payout ratios.

UnitedHealth Group Incorporated (NYSE:UNH) was included in 104 hedge fund portfolios at the end of Q3 2023, according to Insider Monkey’s database. The stakes owned by these funds have a total value of roughly $11 billion.

3. Thermo Fisher Scientific Inc. (NYSE:TMO)

Number of Hedge Fund Holders: 109
5-Year Average Payout Ratio: 7.10%

With a 5-year average payout ratio of just 7.10%, Thermo Fisher Scientific Inc. (NYSE:TMO) is next on our list of the best dividend stocks with sustainable payout ratios. The global scientific and biotech company has been growing its dividends for six consecutive years and currently offers a per-share dividend of $0.35 every quarter. As of January 23, the stock has a dividend yield of 0.25%.

As of the end of the September quarter of 2023, 109 hedge funds in Insider Monkey’s database owned stakes in Thermo Fisher Scientific Inc. (NYSE:TMO), up from 103 a quarter earlier. The total value of these stakes is nearly $9 billion. With 3.2 million shares, TCI Fund Management was the company’s leading stakeholder in Q3.

2. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 134
5-Year Average Payout Ratio: 19.40%

Apple Inc. (NASDAQ:AAPL), despite being a technology company, boasts a robust track record in terms of dividends. The company has been raising its payouts for 11 consecutive years and its 5-year average payout ratio came in at just 19.40%. It currently pays a quarterly dividend of $0.24 per share and has a dividend yield of 0.49%, as recorded on January 23.

Of the 910 hedge funds tracked by Insider Monkey at the end of Q3 2023, 134 hedge funds owned stakes in Apple Inc. (NASDAQ:AAPL), compared with 135 in the previous quarter. The collective value of these stakes is roughly $180 billion.

1. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 140
5-Year Average Payout Ratio: 20.03%

Mastercard Incorporated (NYSE:MA) tops our list of the best dividend stocks with sustainable payout ratios. The global financial tech company has raised its dividends for 11 years straight and offers a quarterly dividend of $0.66 per share. The company’s 5-year average payout ratio came in at 20.03%. The stock’s dividend yield on January 23 came in at 0.60%.

According to Insider Monkey’s database of Q3 2023, 140 hedge funds owned investments in Mastercard Incorporated (NYSE:MA), up from 139 in the preceding quarter. These stakes are worth more than $15.2 billion. Among these hedge funds, Akre Capital Management was the largest stakeholder of the company in Q3.

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