Seven Dividend Stocks With Great Balance Sheets

by: Dividend Monk

One of the things I really focus on when looking for a suitable investment is a great balance sheet. I want to own a company with plenty of cash and little debt. Sometimes I’m willing to make exceptions for unusually durable businesses, but overall, I try to keep my portfolio filled with companies that boast better-than-average financial strength. These are not necessarily recommendations, and a closer look is of course required, but here are seven companies that might be appealing to investors looking for a high-quality financial situation:

Automatic Data Processing (NASDAQ:ADP)

Automatic Data Processing is one of the world’s largest outsourcing companies. ADP deals with human resource needs, benefits, payroll, and computing processes for many companies around the world. They prepare employee payroll checks, direct deposits, and tax reports. They capture, calculate, and record employee time and attendance. They perform hiring services. They provide record-keeping and administrative services for retirement plans. Basically, if it’s an uninteresting part of a business, ADP can help with it.

Total Debt/Equity: 0.01
Dividend Yield: 3.12%
Full ADP Analysis

Exxon Mobil (NYSE:XOM)

Exxon Mobil is one of the largest oil and gas companies in the world, and has one of the best balance sheets in the business. With a market capitalization of approximately $350 billion, the company is absolutely massive. XOM has investments in both oil and natural gas, and has both upstream and downstream projects. The company has a great long-term return on equity, and they spend considerable amounts on share buybacks in addition to paying the dividend.

Total Debt/Equity: 0.13
Dividend Yield: 2.47%

Costco Wholesale (NASDAQ:COST)

Costco is a very high quality, growing company with a developing economic moat and a very, very strong balance sheet. The company has a better balance sheet than Walmart (NYSE:WMT), and most of the equity is real rather than consisting of a lot of intangibles or goodwill. Costco is approaching a count of 600 stores and is expanding internationally in Canada, Mexico, UK, Japan, South Korea, Taiwan, and Australia. Due to the fairly high valuation, the dividend yield is a bit on the low side.

Total Debt/Equity: 0.20
Dividend Yield: 1.20%
Full COST Analysis

Microsoft (NASDAQ:MSFT)

Microsoft, the software juggernaut, has a fairly low valuation and still has a very strong balance sheet. Microsoft is the maker of Windows, Office, Xbox, and other products, but is having its economic moat threatened by its less-than-desirable performance in the mobile operating system and mobile electronics devices markets.

Total Debt/Equity: 0.22
Dividend Yield: 2.46%

Analog Devices (NASDAQ:ADI)

This company produces a variety of high performance analog and signal processing systems. Analog systems convert signals in the real world, like temperature or pressure, into electrical signals that can then be interpreted by the rest of an electrical system. The company has a current ratio of over 5, which means they have a ton of cash on hand in addition to their low debt levels.

Total Debt/Equity: 0.13
Dividend Yield: 2.40%

National Presto Industries (NYSE:NPK)

National Presto is a small, diversified company. The company makes cooking appliances, diapers, and ammunition. NPK pays an annual special dividend and regular dividend, and for the past several years, the total dividend yield has been considerable. The company has zero debt and a current ratio of over 5, which is spectacular. There is considerable inside ownership, and the stock valuation is fairly low.

Total Debt/Equity: 0.00
Dividend Yield: 6.50% (including special dividend)
Full NPK Analysis

The Buckle (NYSE:BKE)

The Buckle is a retailer with zero debt that sells medium and higher priced casual apparel to young men and women. The dividend can be unpredictable due to special dividends. Much like NPK, there is considerable inside ownership. This year, regular dividends plus the announced special dividend total $3.30 which translates into a yield of over 8%.

Total Debt/Equity: 0.00
Dividend Yield: Varies

Full Disclosure: At the time of this writing, I own shares of XOM and NPK.