Here’s a little bit about each cheap dividend stock, along with some key Morningstar metrics. All data is through June 13, 2025.
ExxonMobil
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: High
- Trailing Dividend Yield: 3.50%
- Industry: Oil and Gas Integrated
ExxonMobil tops our list of the best dividend stocks to buy. Unlike peers that are diverting investment to renewables to achieve long-term carbon intensity reduction targets, ExxonMobil remains committed to oil and gas, explains Morningstar director
Allen Good. “While this strategy is unlikely to win praise from environmentally oriented investors, we think it’s more likely to be more successful and probably holds less risk,” he adds. ExxonMobil qualifies as a
dividend aristocrat; dividend aristocrats are those companies that have raised their dividends for 25 consecutive years or more. We think
ExxonMobil stock is worth $135 per share, and shares trade 17% below that.
Review Exxon Mobil’s dividend history.
Johnson & Johnson
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Low
- Trailing Dividend Yield: 3.20%
- Industry: Drug Manufacturers—General
Johnson & Johnson is another dividend aristocrat on our list of undervalued dividend stocks to invest in. The stock is trading about 4% below our fair value estimate of $164 per share. With a diverse revenue base, solid pipeline, and exceptional cash flow, the company earns a wide economic moat rating, says Morningstar Director
Karen Andersen. Andersen notes that the market is underestimating the company’s solid pipeline. She calls Johnson & Johnson’s dividends (and share repurchases) “about right.”
Review Johnson & Johnson’s dividend history.
Merck
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Medium
- Trailing Dividend Yield: 3.87%
- Industry: Drug Manufacturers—General
Merck is the second healthcare stock on our list of good dividend stocks to invest in, with its stock trading 26% below our fair value estimate of $111 per share. Shares sagged after Merck announced a decline in Gardasil sales, and Morningstar trimmed its fair value on the stock by 7.5% as a result. Even after the fair value trim, Merck stock looks undervalued. The company’s balance sheet is sound and carries low risk. We expect steady future dividends, supported by a payout ratio of close to 50% relative to adjusted earnings per share, notes Morningstar’s Andersen.
Review Merck’s dividend history.
3 Dividend Stocks for June 2025
One technology firm, one REIT, and a utility that’s a dividend aristocrat.
2m 57s May 30, 2025
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PepsiCo
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Low
- Trailing Dividend Yield: 4.19%
- Industry: Beverages—Nonalcoholic
Pepsi is the third dividend aristocrat on this month’s list of top dividend stocks to buy. We think
Pepsi stock is worth $162, and shares trade 19% below that. Despite near-term headwinds from consumer belt-tightening in the US and higher supply-chain costs, we think Pepsi remains poised to bolster its competitive standing in beverages and snacks by leveraging marketing and product initiatives, reports Morningstar Equity Analyst
Dan Su. Over the next decade, we expect Pepsi’s payout ratio to remain in the low 70s on average and the dividend payment to grow at a mid-single-digit pace annually, says Su.
Review PepsiCo’s dividend history.
ConocoPhillips
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: High
- Trailing Dividend Yield: 3.22%
- Industry: Oil and Gas E&P
The second energy stock on our list of best dividend stocks to buy, ConocoPhillips stock, trades 13% below our $111 fair value estimate. Morningstar’s Allen Good calls the firm “a compelling option in the energy sector, given its commitment to capital restraint and clear policy on the return of cash to shareholders.” ConocoPhillips ties cash returns to cash flow and is committed to returning 30% of operating cash flow to shareholders, which keeps dividend growth modest but ties excess cash toward repurchases and a variable dividend each year.
Review ConocoPhillips’ dividend history.
Medtronic
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
- Trailing Dividend Yield: 3.21%
- Industry: Medical Devices
A top dividend stock to buy, Medtronic shares trade 22% below our $112 fair value estimate. The largest pure-play medical device-maker is a key partner for its hospital customers, thanks to its diversified product portfolio aimed at a wide range of chronic diseases, Morningstar Senior Equity Analyst
Debbie Wang explains. The company aims to return a minimum of 50% of its annual free cash flow to shareholders but has been in the 60% to 70% range in recent years, says Wang. Medtronic has raised its dividend for 46 consecutive years, earning it dividend aristocrat status.
Review Medtronic’s dividend history.
Lockheed Martin
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Medium
- Trailing Dividend Yield: 2.68%
- Industry: Aerospace and Defense
The only name from the
industrials sector on our list of good dividend stocks, Lockheed Martin, increased its dividend earlier this year by 5%. As a bet on the defense industry, wide-moat Lockheed is hard to beat, argues Morningstar Analyst
Nicolas Owens. “Biggest isn’t always best, but Lockheed (and investors) benefit from the sheer scale of its tens of billions of dollars of contracts that provide defined decades-long revenue and profit streams,” he explains. Given the company’s conservatively run balance sheet, stable business model, and strong history of returning capital to shareholders, the dividend will likely remain a priority. We think this top dividend stock is worth $539, and shares trade 10% below that.
Review Lockheed Martin’s dividend history.
Mondelez International
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Low
- Trailing Dividend Yield: 2.74%
- Industry: Confectioners
Mondelez International is one of the top performers this year among our list of the best dividend stocks to buy. With a portfolio of brands that includes Oreo, Chips Ahoy, Halls, and Cadbury, we think the firm has carved out a wide economic moat. “Mondelez has proved unrelenting in its commitment to remove further complexity from its operations by rationalizing its supplier base, parting ways with unprofitable brands, and continuing to upgrade its manufacturing facilities,” argues Morningstar Director
Erin Lash. We forecast the company will increase its dividend in the high-single-digit range on average through fiscal 2033. We think this top dividend stock is worth $74, and shares trade 10% below that.
Review Mondelez’s dividend history.
Oneok
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
- Trailing Dividend Yield: 4.82%
- Industry: Oil and Gas Midstream
The third energy name on our list of the best dividend stocks to buy is also the highest-yielding stock on our list. Oneok is trading 16% below our fair value estimate of $100 per share. Several recent acquisitions made at favorable prices have set up Oneok for growth in 2025 and 2026, explains Morningstar Analyst Adam Baker. We expect the company to raise dividends at a consistent 4%-6% rate, he adds.
Review Oneok’s dividend history.
Schlumberger
- Morningstar Rating: 5 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
- Trailing Dividend Yield: 3.09%
- Industry: Oil and Gas Equipment and Services
Schlumberger rounds out this month’s list of the best dividend stocks to buy. This top dividend stock trades 29% below our $51 fair value estimate. The world’s premier oilfield services company, as measured by market share, Schlumberger has carved out a narrow economic moat owing to its cost advantages and intangible assets. Morningstar Director
Josh Aguilar calls the company’s distributions “shareholder-friendly,” and we expect the management to return more than 70% of free cash flow to shareholders in dividends or buybacks.
Review Schlumberger’s dividend history.
What Is the Morningstar Dividend Yield Focus Index?
A subset of the Morningstar US Market Index (which represents 97% of equity market capitalization), the Morningstar Dividend Yield Focus Index tracks the top 75 high-yielding stocks that meet our screening requirements for quality and financial health.
How are the stocks selected for the index? Only securities whose dividends are qualified income are included;
real estate investment trusts are tossed out. Companies are then screened for quality using the
Morningstar Economic Moat Rating and
Morningstar Uncertainty Rating. Specifically, companies must earn a Moat Rating of narrow or wide and an Uncertainty Rating of Low, Medium, or High; companies with Very High or Extreme Uncertainty Ratings are excluded. The index includes a screen for financial health using a distance-to-default measure, which uses market information and accounting data to determine how likely a firm is to default on its liabilities; it is a measure of balance-sheet strength.
The 75 highest-yielding stocks that pass the quality screen are included in the index, and constituents are weighted according to the total dividends paid by the company to investors.
More on Dividend Stocks
We expect these highly rated dividend ETFs with big yields to outperform over the long term.
And what the dividend stock divide means for investors.
These dividend ETFs and mutual funds earn high ratings from Morningstar in 2024.
The Best Dividend Stocks for 2025: More Ideas to Consider
Investors who would like to uncover more cheap dividend stocks to research further can do the following:
- Review the full list of dividend stocks included in the Morningstar Dividend Yield Focus Index. Those dividend stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.
- Use our Morningstar Investor Screener tool to find the best dividend stocks according to your specific criteria. You can search for stocks based on their dividend yields, valuation measures such as price/earnings, and more.
- Use Morningstar Investor to build a watchlist of the best dividend stocks and create a view that allows you to easily follow the valuations, ratings, and dividend yields of the stocks on your list.
- Watch our dividend stock video series, hosted by David Harrell, for ideas to consider.
- Bookmark our dividends topic page to stay up to date on Morningstar’s newest dividend stock content.
Sectors Likely to Benefit (Positive Impact)
Neutral or Mixed Impact
