Johnson & Johnson (JNJ) is a reliable dividend king with 63 consecutive dividend increases, a 46% payout ratio, and a 24% year-to-date stock performance, but its P/E ratio of 22x means it can no longer be considered a value stock.
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5 Dividend Stocks With PERFECT Payout Ratios
Aug 4, 2026
The Dividend Diplomats discuss five dividend stocks with "perfect" payout ratios, defined as 40-60% of earnings paid out as dividends. They highlight McDonald's (MCD) with a 58% payout ratio and AEP (AEP) with a 59.65% payout ratio, noting that both companies are owned by the creators and fall within their preferred range for sustainable dividend payments.
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Illinois Tool Works (ITW) is a dividend king with 50 consecutive dividend increases, a 56% payout ratio, a 7.15% growth rate, a 2.24% yield, and a 25 PE ratio, and both creators own the stock.
Lowe's (LOW) is highlighted as a dividend king with a perfect payout ratio of 40%, a 17 PE, a 2.4% yield, and 62 years of dividend increases, though one creator does not currently own it.
AEP (AEP) is presented with a 59.65% dividend payout ratio, considered perfect for the utility sector, and is a long-term holding for one of the creators.
McDonald's (MCD) is highlighted for its perfect dividend payout ratio of 58%, falling within the preferred 40-60% range, and is considered a foundation stock for dividend portfolios.
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ITWbuy opened Aug 4, 2026
-6.48%