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11 Best Dividend Paying Debt Free Stocks to Buy

In this article, we highlight 11 of the best dividend-paying debt-free stocks that investors may consider buying. Debt financing can have both positive and negative impacts on companies depending on how it is utilized. While debt can help businesses generate cash flows and enhance shareholder returns when used wisely, excessive debt can lead to financial challenges, especially with rising interest rates. Last year, there was a notable increase in corporate debt defaults, a trend that may continue in 2024. Companies with high levels of debt on their balance sheets could face difficulties as interest rates are expected to remain elevated.

The Federal Reserve has reported that corporate America is carrying a significant debt load of $13.7 trillion. Despite the challenges posed by debt, some companies are managing their finances well and are able to pay out dividends to shareholders. Examples of such debt-free stocks that pay dividends include The New York Times Company (NYSE:NYT), Cincinnati Financial Corporation (NASDAQ:CINF), and A. O. Smith Corporation (NYSE:AOS).

To identify the best debt-free stocks that pay dividends, we used a Finviz stock screener to select companies with a debt-to-equity ratio below 1, indicating a reliance on equity financing. We then focused on companies with the highest number of hedge fund investors. Hedge funds’ top consensus stock picks have outperformed the S&P 500 Index by a significant margin over the last decade.

Some of the top dividend-paying debt-free stocks include Piper Sandler Companies (NYSE:PIPR), The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), RLI Corp. (NYSE:RLI), Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC), Mueller Industries, Inc. (NYSE:MLI), and Janus Henderson Group plc (NYSE:JHG). These companies have a track record of paying dividends to shareholders and have strong financial positions.

Overall, investing in debt-free stocks that pay dividends can provide a stable source of income for investors, especially in uncertain economic times. It is essential for investors to conduct thorough research and consider factors such as dividend yields, financial health, and market trends before making investment decisions.

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