Updated on April 16th, 2024 by Bob Ciura
At Sure Dividend, we recommend investors focus on the best dividend stocks that can generate the highest returns over time.
When it comes to dividends, investors should also be focused on dividend safety. There have been many stocks with high dividend yields that eventually cut or eliminate their dividends when business conditions deteriorate.
Dividend cuts should be avoided whenever possible.
We have created a unique metric called Dividend Risk Score, which measures a stock’s ability to maintain its dividend during recessions, and increase the dividend over time.
With this in mind, we’ve compiled a free list of the 50 safest dividend stocks based on their payout ratios and Dividend Risk Score, which you can download below:
The safest dividend growth stocks are high-quality businesses that can maintain their dividends, even during recessions. But investing in poor businesses that cut their dividends is a recipe for under-performance over time.
That’s why, in this article, we have analyzed the 10 safest dividend stocks from our Sure Analysis Research Database with the safest dividends based on our Dividend Risk Score rating system.
The safest dividend stocks below all have Dividend Risk Scores of ‘A’ (our top rating), and have the lowest payout ratios. The 10 safest dividend stocks also have dividend yields of at least 1%, to make them appealing for income investors.
Table of Contents
- Why The Payout Ratio Matters
- Safest Dividend Stock #10: Primerica Inc. (PRI)
- Safest Dividend Stock #9: Owens Corning (OC)
- Safest Dividend Stock #8: Fox Corporation (FOXA)
- Safest Dividend Stock #7: Ameriprise Financial (AMP)
- Safest Dividend Stock #6: Nucor Corp. (NUE)
- Safest Dividend Stock #5: Chubb Ltd. (CB)
- Safest Dividend Stock #4: Mueller Industries (MLI)
- Safest Dividend Stock #3: Farmers & Merchants Bancorp (FMCB)
- Safest Dividend Stock #2: Everest Group Ltd. (EG)
- Safest Dividend Stock #1: Globe Life Inc. (GL)
Why The Payout Ratio Matters
The dividend payout ratio is simply a company’s annual per-share dividend, divided by the company’s annual earnings-per-share. It is a measure of the level of earnings a company distributes to its shareholders via dividends.
The payout ratio is a valuable investing metric because it differentiates the safest dividend stocks that have low payout ratios that room for dividend growth, from companies with high payout ratios whose dividends may not be sustainable.
Indeed, research has shown that companies with higher dividend growth have outperformed companies with lower dividend growth or no dividend growth.
In research performed by Ned Davis and Hartford Funds, it was found that dividend growers and initiators delivered total returns of 10.19% per year from 1973 through 2023, better than the equal-weighted S&P 500’s performance of 7.72% per year.
Interestingly, the dividend growers and initiators analyzed in this study generated outperformance with less volatility – a rarity and a contradiction to what modern academic financial theory tells us.
A summary of this research can be found below.
Source: Hartford Funds – The Power Of Dividends
Outperformance of 2.47% annually might not seem like a game-changer, but it certainly is thanks to the wonder that is compound interest.
Using data from the same piece of research, investors who chose to invest exclusively in dividend growers and initiators turned $100 into $14.118 from 1973-2023. During the same time period, the S&P 500 index turned $100 into $4,439.
Source: Hartford Funds – The Power Of Dividends
Stocks that did not pay dividends could not match the performance of all types of dividend payers, turning $100 into $843 from 1973-2023. Dividend cutters and eliminators fared even worse, turning $100 into just $73–meaning these stocks actually lost money.
As a result, investors looking for stocks with better dividend growth (and long-term return potential) could consider these 10 safest dividend stocks with low payout ratios and Dividend Risk Scores of ‘A’.
Safest Dividend Stock #10: Primerica Inc. (PRI)
- Payout Ratio: 16.9%
Primerica, Inc. provides term life insurance to middle-income households in the United States and Canada. On behalf of third parties, it also offers mutual funds, annuities, managed investments, and other financial products. Primerica insured over 5.7 million lives and had over 2.9 million client investment accounts on December 31, 2023. The company was the second-largest issuer of Term Life insurance coverage in the United States and Canada in 2023.
On February 13th, 2024, Primerica released its fourth quarter and full year 2023 results for the period ending December 31st, 2023. For the quarter, the company reported revenue of $726.3 million, which represents an increase of 6% compared with a revenue of $686.9 million in the same quarter of 2022. Reported adjusted operating net earnings-per-diluted share for the same periods was $4.30 and $3.95, an increase of 8.8% year-over-year.
Click here to download our most recent Sure Analysis report on PRI (preview of page 1 of 3 shown below):
Safest Dividend Stock #9: Owens Corning (OC)
- Payout ratio: 16.8%
Owens Corning produces and sells insulation, roofing, and fiberglass materials across diverse markets. Operating in Composites, Insulation, and Roofing segments, it manufactures and sells glass reinforcements, fiber products, thermal insulation, foam sheathing, roofing shingles, and components used in construction and various industries. Its wide distribution network directly supplies manufacturers, installers, retailers, and distributors.
On February 14th, 2024, the company announced results for the fourth quarter of 2023. Owens Corning reported Q4 non-GAAP EPS of $2.80, which missed market estimates by $0.06, and revenue of $2.3 billion that was up 0.8% compared to the prior year.
Click here to download our most recent Sure Analysis report on OC (preview of page 1 of 3 shown below):
Safest Dividend Stock #8: Fox Corporation (FOXA)
- Payout Ratio: 16.1%
Fox Corp. is a television broadcasting company. The company, known among insiders as “New Fox,” was spun off from the former 21st Century Fox when The Walt Disney Co. (DIS) acquired most of its assets in 2019, including its cinema entertainment business. Since the spinoff, Fox Corp. has been a much more focused company, with its operations centered on Cable Networks & Television. For Fiscal Year (FY)2023, the company generated $14.9 billion in revenue.
Fox Corp. is a more focused company following the asset sale. Fox News, Fox Business, Fox Sports, Fox Broadcasting, and other TV assets will remain highly relevant. It helps that Fox News has no mainstream competition in the conservative news arena. The assets that Fox retained are not very cyclical or vulnerable to recessions, compared to, for example, the more cyclical filmed entertainment business. The past year saw earnings increase by 26%.
Click here to download our most recent Sure Analysis report on FOXA (preview of page 1 of 3 shown below):
Safest Dividend Stock #7: Ameriprise Financial (AMP)
- Payout ratio: 16.1%
Ameriprise Financial has a market capitalization of $32 billion, with more than 12,000 employees, and more than $1 trillion in assets under management. The company’s operating segments include Advice & Wealth Management, Asset Management, Annuities, and Protection (insurance products).
On January 24th, 2024, Ameriprise Financial announced fourth-quarter and full-year earnings results. For the quarter, revenue increased 8.5% to $3.95 billion, which topped estimates by $40 million. Adjusted earnings-per-share of $7.75 compared very favorably to the prior year’s result of $6.94 and was $0.06 above expectations. For 2023, revenue grew 7.7% to $15.4 billion while adjusted earnings-per-share of $29.58 compared to $24.43 in the prior year.
Total assets under management, or AUMs, increased 15% to $1.4 trillion due to strong client net inflows and market appreciation. Client assets for the Advice & Wealth Management grew 19% to $901 billion. Adjusted operating revenues were up 8% while pretax adjusted operating earnings improved 5% due to growth of client accounts and a higher investment return from cash products. Asset Management AUM grew 9% to $637 billion.
Click here to download our most recent Sure Analysis report on AMP (preview of page 1 of 3 shown below):
Safest Dividend Stock #6: Nucor Corp. (NUE)
- Payout Ratio: 15.9%
Nucor is the largest publicly traded US-based steel corporation. The steel industry is notoriously cyclical, which makes Nucor’s streak of 50 consecutive years of dividend increases even more remarkable.
The company currently operates in three segments: Steel Mills (the largest segment by revenue), Steel Products, and Raw Materials.
Source: Investor presentation
Nucor Corporation disclosed its Q4 2023 earnings on January 30, 2024. The company reported earnings of $3.16 per share for the quarter, a decrease from the previous year’s $4.89 per share but surpassing the consensus estimate of $2.83.
Net sales for the quarter amounted to $7.70 billion, an 11.7% decrease year-over-year. The decline in earnings during the fourth quarter was primarily attributed to lower prices, reflecting the volatile steel market conditions.
For the full year 2023, Nucor reported net earnings of $4.52 billion or $18 per share, a decrease from 2022’s net earnings of $7.61 billion or $28.79 per share.
Click here to download our most recent Sure Analysis report on NUE (preview of page 1 of 3 shown below):
Safest Dividend Stock #5: Chubb Limited (CB)
- Payout Ratio: 15.9%
Chubb is based in Zurich, Switzerland, and provides insurance services, including property & casualty insurance, accident & health insurance, life insurance, and reinsurance.
The company operates in over 50 countries and territories. It is the world’s largest publicly traded P&C insurance company and the largest commercial insurer in the U.S.
Chubb has a large and diversified product portfolio.
Source: Investor Presentation
For its fiscal fourth quarter, Chubb Ltd reported net written premiums of $11.6 billion, which was 13% more than the net written premiums that Chubb generated during the previous year’s quarter. Net written premiums were up 12.5% year-over-year in the company’s Global P&C business unit, while other business units such as Life saw solid growth as well.
Chubb was able to generate net investment income of $1.37 billion during the quarter, or $1.49 billion after adjustments, which was up by a nice 33% compared to the previous year’s period.
Click here to download our most recent Sure Analysis report on CB (preview of page 1 of 3 shown below):
Safest Dividend Stock #4: Mueller Industries (MLI)
- Payout Ratio: 15.2%
Mueller Industries is a company that manufactures and sells metal and plastic products around the world through its three segments: Piping Systems, Industrial Metals, and Climate. The Piping Systems segment offers copper tubes and plumbing-related fittings, and it also resells steel pipes, brass, and other metal products to wholesalers in various industries.
The Industrial Metals segment manufactures brass, bronze, and copper alloy rods and other metal products for OEMs in the industrial, construction, HVAC, plumbing, and refrigeration markets. Finally, the Climate segment offers valves, protection devices, and brass fittings for various OEMs.
Click here to download our most recent Sure Analysis report on MLI (preview of page 1 of 3 shown below):
Safest Dividend Stock #3: Farmers & Merchants Bancorp (FMCB)
- Payout Ratio: 14.4%
Farmers & Merchants Bancorp is a locally owned and operated community bank with 32 locations in California. Due to its small market cap and its low liquidity, it passes under the radar of most investors. F&M Bank has paid uninterrupted dividends for 88 consecutive years and has raised its dividend for 58 consecutive years.
In late January, F&M Bank reported (1/24/24) financial results for the full fiscal 2023. The bank grew its earnings-per-share 21% over the prior year, from $96.55 to a new all-time high of $116.61. It posted 4% growth of loans and a -2% decrease of deposits.
Net interest income grew 11% thanks to an expansion of net interest margin from 3.81% to 4.30% and growth of loans. Management remains optimistic for the foreseeable future, as the 23-year high interest rates are likely to continue to support a wide net interest margin.
Click here to download our most recent Sure Analysis report on FMCB (preview of page 1 of 3 shown below):
Safest Dividend Stock #2: Everest Group Ltd. (EG)
- Payout Ratio: 11.5%
Everest Group is a holding company that provides insurance as well as reinsurance services. Everest Group provides reinsurance for property & casualty insurers as well as for special lines such as maritime and aviation. Everest Group operates in the US and through branches in Canada, Singapore and Bermuda. The company was founded in 1999, and is headquartered in Hamilton, Bermuda.
Everest Group reported its fourth quarter earnings results on February 8. The company earned revenues of $3.7 billion during the quarter, up 12% year-over-year. The company managed to grow its gross written premiums by 21% year over year, primarily in the reinsurance space (26%, versus a lower growth rate for the insurance business), which bodes well for the company’s future revenue growth in upcoming quarters.
The company’s attritional combined ratio stood at 86.7%, which was slightly lower than the average over the last year, which was a tailwind for profitability.
Click here to download our most recent Sure Analysis report on EG (preview of page 1 of 3 shown below):
Safest Dividend Stock #1: Globe Life Inc. (GL)
- Payout Ratio: 8.5%
Albemarle is the largest producer of lithium and second largest producer of bromine in the world. The two products account for nearly two-thirds of annual sales. Albemarle produces lithium from its salt brine deposits in the U.S. and Chile. The company has two joint ventures in Australia that also produce lithium.
Related: 2023 Lithium Stocks List
Source: Investor Presentation
On November 1st, 2023, Albemarle reported third quarter results for the period ending September 30th, 2023. For the quarter, revenue grew 10.5% to $2.31 billion, but missed estimates by $220 million. Adjusted earnings-per-share of $2.74 compared very unfavorably to $7.50 in the prior year and was $1.00 below estimates.
Results were negatively impacted by lower prices for lithium. For the quarter, revenue for Energy Storage grew 20% to $1.7 billion. A 40% increase in volume was offset by lower prices. Revenues for Specialties fell 20.2% to $352.7 million as volumes were down 7% and realized prices declined 13%. Ketjen sales of $260.7 million were a 10.6% increase from the prior year, again due to higher prices.
Click here to download our most recent Sure Analysis report on Albemarle (preview of page 1 of 3 shown below):
Additional Reading
Investors looking for more of the safest dividend stocks can find additional reading below:
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of rising dividends.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 54 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.