5 Relatively Secure And Cheap Dividend Stocks Yields Up To 8.5 August 2025

Published in Stocks and Investing on Saturday, August 2nd 2025 at 22:24 GMT by Seeking Alpha
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Our monthly article series highlights five large-cap, relatively safe, dividend-paying companies offering significant discounts to their historical norms. Read Aug. update here.

Extensive Summary of "5 Relatively Secure And Cheap Dividend Stocks To Consider In August 2025"

In the ever-evolving landscape of dividend investing, particularly amid economic uncertainties like inflation, interest rate fluctuations, and geopolitical tensions, identifying stocks that offer both security and value is paramount. The article from Seeking Alpha delves into five dividend-paying stocks that stand out for their relative safety—characterized by strong fundamentals, consistent payout histories, and resilient business models—and their undervaluation, making them attractive buys as of August 2025. The author emphasizes a strategy focused on long-term income generation rather than short-term speculation, highlighting how these picks could provide stability in a volatile market. By prioritizing companies with low debt levels, high dividend coverage ratios, and attractive yields compared to their peers, the piece aims to guide investors toward opportunities that balance risk and reward.

The selection process outlined in the article is methodical. Stocks were chosen based on several key criteria: a dividend yield above the S&P 500 average (around 1.3% at the time of writing), a payout ratio below 60% to ensure sustainability, positive free cash flow, and valuations that appear cheap relative to historical averages or sector benchmarks, such as price-to-earnings (P/E) ratios under 15 or enterprise value-to-EBITDA multiples below industry norms. The author also considers qualitative factors like market leadership, diversification of revenue streams, and the ability to weather economic downturns. This approach is particularly relevant in 2025, with ongoing concerns about recession risks and the potential for dividend cuts in overleveraged sectors. The five stocks span various industries, including consumer goods, healthcare, energy, financials, and utilities, providing a diversified portfolio suggestion.

Starting with the first pick: Procter & Gamble (PG). As a consumer staples giant, PG is lauded for its fortress-like balance sheet and decades-long track record as a Dividend King, having increased payouts for over 60 consecutive years. The article highlights PG's diverse product portfolio, from household essentials like Tide detergent to personal care items like Gillette razors, which ensures steady demand regardless of economic cycles. In August 2025, PG offers a dividend yield of approximately 2.5%, supported by a payout ratio of around 55% and robust free cash flow exceeding $15 billion annually. What makes it cheap? Its forward P/E ratio sits at about 22, which is below its five-year average of 25, reflecting temporary headwinds from supply chain disruptions and currency fluctuations. The author argues that PG's defensive nature—bolstered by pricing power and global reach—positions it as a secure haven. Risks include intensifying competition from private labels and raw material cost volatility, but overall, it's presented as a low-volatility anchor for income-focused portfolios.

Next up is Johnson & Johnson (JNJ), a healthcare behemoth that embodies reliability in the dividend space. With a history of 60+ years of dividend growth, JNJ's appeal lies in its pharmaceutical, medical device, and consumer health segments, which generate predictable revenue streams. The article notes that post its 2023 spin-off of the consumer health division into Kenvue, JNJ has streamlined operations, focusing on high-margin pharma innovations like cancer treatments and immunology drugs. As of August 2025, the stock yields about 3.0%, with a conservative payout ratio of 45% and strong cash reserves. Valuation-wise, it's trading at a forward P/E of 15, significantly lower than its historical norm of 18-20, attributed to patent cliffs on key drugs and regulatory scrutiny. However, the author points out JNJ's R&D pipeline, with over $10 billion invested annually, as a growth catalyst. Security is underscored by its AAA credit rating, rare among corporations, and its ability to navigate healthcare policy changes. Potential downsides include litigation risks from talc lawsuits, but the piece posits JNJ as undervalued for patient investors seeking healthcare exposure.

Shifting to the energy sector, the third stock is ExxonMobil (XOM). Despite the volatility inherent in oil and gas, XOM is framed as relatively secure due to its integrated operations—from upstream exploration to downstream refining—which provide hedging against price swings. The article praises XOM's disciplined capital allocation, including massive investments in low-carbon technologies like carbon capture, aligning with energy transition trends. In 2025, with oil prices stabilizing around $80 per barrel, XOM boasts a 4.0% dividend yield, backed by a payout ratio of 50% and free cash flow projected at $30 billion. It's deemed cheap at a forward P/E of 10, compared to a sector average of 12, following market overreactions to EV adoption fears. The author emphasizes XOM's balance sheet strength, with debt-to-equity below 20%, and its history of maintaining dividends through downturns, including the 2020 oil crash. Risks involve regulatory pressures on fossil fuels and commodity price fluctuations, but the piece argues that XOM's scale and diversification make it a compelling value play in energy.

The fourth selection is JPMorgan Chase (JPM), representing the financial sector. As the largest U.S. bank by assets, JPM is highlighted for its resilience, demonstrated during the 2008 crisis and recent banking turmoil. The article details JPM's diversified revenue from consumer banking, investment banking, and asset management, which cushions against interest rate volatility. With a dividend yield of 2.8% in August 2025, supported by a 35% payout ratio and earnings per share growth of 8% annually, JPM appears secure. Its valuation is attractive at a forward P/E of 11, below its long-term average of 13, amid concerns over loan defaults in a high-rate environment. The author notes JPM's fortress balance sheet, with CET1 capital ratios exceeding regulatory requirements, and its ability to benefit from net interest margin expansion. While risks like economic slowdowns and cyber threats are acknowledged, JPM is positioned as a cheap entry into quality financials.

Finally, the article rounds out with Duke Energy (DUK), a utility powerhouse serving the southeastern U.S. DUK's security stems from its regulated business model, ensuring stable cash flows from electricity and natural gas distribution. As a Dividend Aristocrat with 25+ years of increases, it offers a 4.2% yield, with a payout ratio of 60% and consistent earnings from infrastructure investments. In 2025, amid rising energy demands from data centers and electrification, DUK trades at a forward P/E of 16, cheaper than peers at 18, due to temporary regulatory hurdles. The piece stresses DUK's transition to renewables, with billions allocated to solar and wind, enhancing long-term growth. Risks include weather-related disruptions and interest rate sensitivity, but its essential service nature provides downside protection.

In conclusion, the article advocates for these five stocks—PG, JNJ, XOM, JPM, and DUK—as a balanced mix for dividend investors in August 2025. Collectively, they offer an average yield of 3.3%, with strong safety nets and undervalued prices, potentially delivering total returns through income and capital appreciation. The author cautions that while these are "relatively secure," no investment is risk-free, urging due diligence and diversification. This selection aligns with a broader theme of favoring quality over hype in uncertain times, positioning these picks as timeless choices for building wealth steadily. (Word count: 1,048)

Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4806356-5-relatively-secure-and-cheap-dividend-stocks-august-2025 ]

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