Having no debt can provide a company with the flexibility to navigate changing business conditions and reduce the anxiety felt by its CEO. This also allows the CEO’s brain to function better without the burden of debt. While some may argue that owing money can spark innovation, the benefits of being debt-free are undeniable, especially as interest rates rise. Artificial intelligence is not needed to see the advantages of being debt-free and to identify stocks that are benefiting from this condition. A simple screen for “dividend-paying” and “less than .10 debt to equity” reveals four such stocks with no or very little debt.
One of the companies identified in this screen is Cal-Maine Foods, the largest producer of fresh shell eggs in the United States. With no debt and a market capitalization of $2.88 billion, Cal-Maine pays a 5.23% dividend and has seen earnings grow at a 42% pace over the past 5 years. Epsilon Energy, an oil and gas exploration company with no long-term debt, also offers investors a 4.63% dividend. Similarly, RPC, an oil and gas equipment and services company, has a debt-to-equity ratio of .02 and pays a 2.06% dividend. Vipshop Holdings, an e-commerce retail business based in China, with a debt-to-equity ratio of .06, rounds out the list with a 2.59% dividend.
Earning growth, price-earnings ratios, book value multiples, and other key financial metrics are highlighted for each company, showcasing their financial health and performance. These companies represent a range of industries, from agriculture to oil and gas, demonstrating that a no or low-debt strategy can be effective across various sectors. By focusing on dividends and debt levels, investors can identify stocks that may provide stable returns even in uncertain economic times. The ability to pay dividends and maintain financial stability without relying on debt can be a key factor in weathering market volatility.
As market conditions fluctuate and interest rates rise, companies with no debt may be better positioned to thrive. The reduced financial burden allows these companies to invest in growth opportunities, provide consistent returns to shareholders, and withstand economic downturns. Investors seeking stability and long-term growth potential may find these debt-free stocks appealing, as they offer the dual benefits of financial security and dividend income. By choosing companies with strong balance sheets and low debt levels, investors can build a resilient and diversified portfolio that can withstand market challenges. Overall, these debt-free stocks present a promising opportunity for investors looking for stability and growth in their investment portfolios.
