As companies close the books on their fiscal years and prepare for upcoming shareholder meetings, the first quarter (Q1) of 2025 has shown that dividend growth is continuing, albeit at a slower pace. According to Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices, while the growth in dividends has noticeably decelerated, it remains aligned with market expectations despite ongoing economic uncertainties. Silverblatt optimistically stated that the prevailing uncertainties in the market did not prevent companies from increasing dividends, although it has tempered the extent of these increases.

Data collected by S&P Dow Jones Indices reveals that 758 companies either raised or initiated dividend payments in Q1 2025. This figure marks a slight decline from the 796 companies that did so during the same period in the previous year, resulting in a year-over-year decline of 4.8%. Nevertheless, the total value of these dividend increases reached an impressive $19.5 billion for the quarter. Over the twelve-month period concluding in March 2025, a total of 2,412 companies raised their dividend payments, a marginal increase from the 2,411 companies that did so the year prior, with the total value of these dividend increases amounting to $68.2 billion, just surpassing the $68.1 billion reported during the previous twelve-month stretch.

The report further noted that overall dividend payments experienced an increase of approximately 6% to 7%. However, this growth fell slightly short of the pre-2025 expectation of 8%. In comparison, dividend payouts witnessed a growth of 6.4% in 2024 and 5.1% in 2023, illustrating a more restrained upward trend.

In the landscape of U.S. domestic common stocks, a net dividend increase of $15.3 billion was noted for Q1 2025, representing an improvement over the $11.7 billion increase recorded in the preceding quarter. For the twelve months ending in March 2025, total dividend hikes reached $68.2 billion, just above the previous year's total of $68.1 billion. Significantly, instances of dividend cuts have also seen a substantial decrease, totaling $15.6 billion compared to $25.2 billion in the prior twelve-month period.

Dividend-paying stocks have maintained their allure for investors, largely due to their strong historical performance. This sustained interest has prompted many companies to either maintain their dividend payouts, increase them, or even implement new dividend policies, reflective of the prevailing market environment.

In light of these trends, we previously published a list of the 10 Dividend Stocks with Sustainable Payout Ratios. In this article, we will delve into how Walmart Inc. (NYSE:WMT) ranks against other leading dividend stocks known for their sustainable payout ratios.

Despite the cautious sentiment surrounding the market, analysts retain a positive outlook on dividend stocks. They emphasize that U.S. companies are well-positioned to uphold their dividends due to robust cash reserves. According to Nuveen, a financial planning firm based in Illinois, an increasing number of companies are likely to announce dividend policies supported by this cash-rich environment, potentially driving stronger-than-expected dividend growth throughout 2025.

The report noted that as of September 30, 2024, corporate cash holdings have reached a staggering $1.8 trillion, approaching the highest levels seen in the last two decades. With equity valuations standing above historical averages, Nuveen posits that companies might favor enhancing dividend payments as a means to deliver value to shareholders, rather than relying on stock buybacks, which may be less appealing in a high-valuation environment.

Financial analysts often perceive an optimal payout ratio to be in the range of 30% to 50%. This range is considered healthy as it indicates that a company is returning a significant portion of its earnings to shareholders while still retaining sufficient profits to reinvest in its operations and promote future growth.

Now, turning our attention to Walmart Inc. (WMT), it stands out among dividend stocks with sustainable payout ratios. Headquartered in Arkansas, Walmart Inc. operates an extensive chain of hypermarkets, discount stores, and grocery stores across the United States. The companys business model is built on the fundamental principle of maintaining low costs and prices, a strategy that continues to drive its operations. Walmart's leadership has been proactive in investing in technology that integrates its physical stores with online shopping, thereby enhancing customer convenience and expediting delivery services. For instance, nearly all Walmart locations in the U.S. now offer same-day pickup and delivery. A few years back, the company also launched Walmart+, a subscription service providing perks like free shipping, fuel discounts, and expedited checkout.

In the fourth quarter of 2024, Walmart Inc. witnessed a 4.1% increase in revenue compared to the same time last year, reaching a significant $180.6 billion. On a constant currency basis, this growth was even more robust, coming in at 5.3%. The operating income for the company jumped by 8.3%, driven largely by improved gross margins, increased income from memberships, and strong performance in its e-commerce segment.

Throughout the entire year, Walmart generated an impressive $36.4 billion in operating cash flow, finishing with $9 billion in cash and cash equivalents. The company has been generous in returning value to shareholders, distributing $4.5 billion through share buybacks while also announcing a substantial 13% hike in its quarterly dividend to $0.235 per sharethe largest increase in over a decade. Currently, Walmarts quarterly dividend stands at $0.235 per share, reflecting a dividend yield of 1.01%, as of April 17. Notably, Walmart has consistently raised its dividends for 52 consecutive years, cementing its status as one of the premier dividend stocks.

Walmart ranks 10th on our list of the best dividend stocks with sustainable payout ratios. While we recognize Walmart's potential as a solid investment, we also believe that some undervalued dividend stocks may offer greater promise for delivering higher returns in a shorter time frame. For those seeking a more promising and undervalued dividend stock, we encourage you to check out our report on a particularly cheap dividend stock that trades at just 10 times its earnings and is projected to grow its earnings at double-digit rates annually.

For further insights, be sure to read our previous articles, including the 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article was originally published at Insider Monkey.