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When you consider a dividend stock, company debt levels should always be part of the process. Because debtholders will always be paid before shareholder dividends, large debt payments can put a wedge between the value to shareholders and debtholders, and this can ultimately threaten the dividend.

We ran a screen of dividend stocks taking this idea into account. We searched for dividend stocks with sustainable dividend yields (below 7%) and payout ratios (below 35%) from companies carrying low debt relative to assets (with total debt to assets below 20%). From this list, we then found those that have seen significant buying from institutional investors over the current quarter.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



Do you think these stocks pay reliable dividends? Use this list as a starting-off point for your own analysis.

List sorted by net institutional buying as a percent of share float.

1. Cato Corp. (CATO): Apparel Stores Industry. Market cap of $854.03M. Net institutional shares purchased over the current quarter at 1.8M, which is 6.6% of the company's 27.27M share float. MRQ dividend yield at 2.56%, MRQ payout ratio at 17.06%. MRQ total debt-to-assets at 0.00%. The stock is a short squeeze candidate, with a short float at 7.52% (equivalent to 13.46 days of average volume. The stock has had a couple of great days, gaining 6.75% over the last week.

2. Cal-Maine Foods, Inc. (CALM): Farm Products Industry. Market cap of $718.96M. Net institutional shares purchased over the current quarter at 909.4K, which is 6.5% of the company's 14.00M share float. MRQ dividend yield at 6.26%, MRQ payout ratio at 33.32%. MRQ total debt-to-assets at 16.34%. The stock is a short squeeze candidate, with a short float at 35.98% (equivalent to 35.36 days of average volume).

3. Briggs & Stratton Corp. (BGG): Diversified Machinery Industry. Market cap of $985.91M. Net institutional shares purchased over the current quarter at 2.8M, which is 5.79% of the company's 48.35M share float. MRQ dividend yield at 2.26%, MRQ payout ratio at 10.77%. MRQ total debt-to-assets at 15.54%. The stock is a short squeeze candidate, with a short float at 15.9% (equivalent to 21.54 days of average volume). The stock has lost 1.31% over the last year.

4. Microsoft Corporation (MSFT): Application Software Industry. Market cap of $206.35B. Net institutional shares purchased over the current quarter at 312.1M, which is 4.18% of the company's 7.46B share float. MRQ dividend yield at 2.62%, MRQ payout ratio at 25.78%. MRQ total debt-to-assets at 11.95%. The stock might be undervalued at current levels, with a PEG ratio at 0.9, and P/FCF ratio at 10.73. The stock has lost 3.43% over the last year.

5. Exxon Mobil Corporation (XOM): Major Integrated Oil & Gas Industry. Market cap of $392.66B. Net institutional shares purchased over the current quarter at 173.8M, which is 3.53% of the company's 4.92B share float. MRQ dividend yield at 2.21%, MRQ payout ratio at 20.54%. MRQ total debt-to-assets at 4.97%. The stock has gained 29.38% over the last year.

6. Kohlberg Kravis Roberts & Co. (KKR): Asset Management Industry. Market cap of $3.18B. Net institutional shares purchased over the current quarter at 6.5M, which is 3.31% of the company's 196.61M share float. MRQ dividend yield at 5.53%, MRQ payout ratio at 28.47%. MRQ total debt-to-assets at 3.87%. The stock has performed poorly over the last month, losing 11.92%.

7. Meredith Corp. (MDP): Publishing Industry. Market cap of $1.43B. Net institutional shares purchased over the current quarter at 1.0M, which is 2.56% of the company's 39.07M share float. MRQ dividend yield at 3.27%, MRQ payout ratio at 30.39%. MRQ total debt-to-assets at 13.20%. The stock is a short squeeze candidate, with a short float at 27.15% (equivalent to 15.56 days of average volume). The stock has had a couple of great days, gaining 6.03% over the last week.

8. Quaker Chemical Corporation (KWR):
Specialty Chemicals Industry. Market cap of $509.39M. Net institutional shares purchased over the current quarter at 298.3K, which is 2.48% of the company's 12.05M share float. MRQ dividend yield at 2.34%, MRQ payout ratio at 26.07%. MRQ total debt-to-assets at 17.77%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.5). The stock has gained 44.76% over the last year.

9. Selective Insurance Group Inc. (SIGI): Property & Casualty Insurance Industry. Market cap of $855.14M. Net institutional shares purchased over the current quarter at 1.3M, which is 2.47% of the company's 52.66M share float. MRQ dividend yield at 3.29%, MRQ payout ratio at 33.30%. MRQ total debt-to-assets at 4.97%. The stock has gained 4.9% over the last year.

10. Bob Evans Farms Inc. (BOBE): Restaurants Industry. Market cap of $1.02B. Net institutional shares purchased over the current quarter at 683.0K, which is 2.31% of the company's 29.54M share float. MRQ dividend yield at 2.37%, MRQ payout ratio at 32.93%. MRQ total debt-to-assets at 13.64%. The stock is a short squeeze candidate, with a short float at 6.66% (equivalent to 11.93 days of average volume). The stock has gained 28.69% over the last year.

*Institutional data sourced from Fidelity, dividend and debt data sourced from Screener.co, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 10 Low Debt Dividend Stocks Seeing Significant Institutional Buying