• These six high-yield dividend-paying growth stocks have moderate to high payout ratios. This means that the company’s dividends represent half to two-thirds of its earnings. It implies that the company should have no issues in continuing to pay the dividend and also leaves room for share buybacks.
• HP Inc (HPQ): This low P/E stock has a 2.70% dividend yield with a low 23% payout ratio.
• Intel Corp (INTC): This chipmaker has a low P/E, a 3.30% dividend yield, and a low 41.5% payout ratio.
• Cummins Inc (CMI): This large engine maker has a low P/E, 2.88% yield, and a low 33% payout ratio.
• Target Inc (TGT): This discount retailer has a low P/E, a 1.60% yield, and a low 25% payout ratio.
• CVS Health (CVS): This pharmacy/insurer has a low P/E, a 2.18% yield, and a 26% payout ratio.
• Tyson Foods (TSN): This meat producer has a low P/E, a 2.0% yield, and a 21.5% payout ratio.

These growth stocks seem to have the best of all worlds. They have good growth characteristics, low valuations, low payout ratios (allowing room for other uses of its cash flow), and good dividend yields. Typically, but not always, companies with low payout ratios tend to have medium to average yields, but also good share buyback programs.

I have chosen each of these stocks because they have the ability to withstand a recession and maintain their dividends. Since their dividends do not take up more than 50% of earnings, they are not likely to cut the dividends.

Dividend-Paying Stocks to Buy: HP Inc (HPQ)

Market Cap: $39.0 billion

HP Inc (NYSE:HPQ) is a low-tech company that has a decent 2.70% yield as well as a hefty, consistent buyback program. Its annual dividend is $1.00 per share, which represents just 23% of its forecast $4.26 earnings per share (EPS) for 2022. Moreover, HP has produced 11 consecutive years of dividend increases, as well as 32 years of continuous dividend payments.

Moreover, based on analysts’ estimates, HPQ stock trades for just 8.5 times the average of 16 analysts’ EPS estimate of $4.26 this year. It is slightly lower based on next year’s estimates.

HP has ample cash flow. HP generated cash flow from operating activities of $1.7 billion and FCF of $1.4 billion. From this FCF HP paid $271 million on dividends and $1.5 billion on share repurchases.

Warren Buffett likes HP and recently took a large 11.4% stake in the company. HPQ stock is likely to be one of the top undervalued stocks to own for the long term.

Intel Corp (INTC)

Market Cap: $181 billion

Intel Corporation (NASDAQ:INTC) raised its dividend-per-share (DPS) by 5% to $1.46 annually when it announced fourth-quarter (Q4) and 2021 earnings. As a result the stock now yields 3.30% as of May 6. But its $1.46 dividend per share (DPS) represents just 41.6% of its forecast $3.51 earnings per share (EPS) 2022 estimates. As a result, its price-to-earnings (P/E) multiple is very low at just 12 times forecast EPS.

Moreover, Intel’s powerful free cash flow (FCF) allows it to pay out these dividends. Last quarter ending April 2, Intel reported that its adjusted FCF for its latest quarter was $5.549 billion. This was more than enough to pay its dividends, which cost just $1.487 billion. However, unlike other companies on this list, Intel did not buy back any of its shares in the latest quarter.

Nevertheless, given its high yield and low payout ratio, the stock is one of the best dividend-paying stocks to own in this turbulent market.

Dividend-Paying Stocks to Buy: Cummins Inc (CMI)

Market Cap: $28.5 billion

Cummins (NYSE:CMI) makes, distributes and services large diesel and natural gas engines. The company pays a $5.80 DPS, which represents a low 33% of its forecast $17.53 EPS for 2022. Moreover, at May 6’s price of $201.72, the dividend provides an ample yield of 2.88%.

Moreover, in its latest quarter ending March 31, the company has been repurchasing its shares for $311 million. The company said it plans to return approximately 50 percent of operating cash flow to shareholders in the form of dividends and share repurchases.

Analysts now project that its EPS for 2022 will reach $17.53 in 2022 and $20.16 in 2023. At $201.72 this puts CMI stock on a forward P/E multiple of just 11.5 times for 2022 and 10 times for 2023.

This makes CMI stock one of the better dividend-paying stocks worth buying in May 2022.

Target Inc (TGT)

Market Cap: $104.4 billion

Target Corp (NYSE:TGT) is a fast-growing retailer with good cash flow and a 1.59% dividend yield. The company will likely produce its next financial results for the quarter ending April 30 on June 1 or shortly thereafter. Target pays a $3.60 DPS, which represents just 24.7% of analysts’ forecast EPS of $14.58 for this year (ending Jan. 2023). Moreover, this puts TGT stock on a cheap P/E multiple of just 15.5 times earnings.

People will keep buying groceries, clothes and cheap items at stores like Target during a recession. That is what occurred during the Covid-19 lockdown period. Target had one of its best years in 2020, growing 19.8%. In 2021 its sales rose 13.2%.

Target also produces strong FCF, about $2 billion last quarter. That allows it to cover its $432 million quarterly dividend costs. Moreover, Target spent $2.3 billion on share buybacks. Last year it bought back $7.36 billion worth of its stock, representing 6.88% of its existing market cap.

Dividend-Paying Stocks to Buy: CVS Health (CVS)

Market Cap: $132.2 billion

CVS Health (NYSE:CVS) has over 9,900 retail drug stores and 1,100 walk-in MinuteClinic locations. CVS Health also acquired Aetna in late 2018, a giant health insurance company. This has helped stabilize its earnings. As a result, the company now pays out a solid $2.20 dividend per share (DPS).

Since analysts forecast that its earnings per share (EPS) will reach $8.32 this year, its payout ratio is low at 26%. Moreover, its valuation is low with a P/E multiple of just 12.1 given its price on May 6 of $100.69 per share.

Moreover, CVS has started buying back large amounts of shares. Last quarter ending March 31, it bought back over $2 billion of common stock. On an annualized basis that represents over 6.2% of its $132.2 billion market capitalization. That will help make it one of the most undervalued dividend-paying stocks.

Tyson Foods (TSN)

Market Cap: $32.9 billion

This meat producer has a low forward P/E of just 11 times forecast earnings for 2022, based on EPS of $8.55. In addition, its $1.84 annual dividend provides an ample 2% dividend yield. This also means its payout ratio is low at 21.5% (i.e., $1.84/$8.55).

Moreover, Tyson Foods dramatically increased its share buyback activity during its latest quarter ending Jan. 31. It repurchased $348 million of common stock compared to $16 and $17 million in the prior two quarters. This works out to 4.2% of its $32.9 billion market value on an annualized basis. That makes it one of the best undervalued dividend-paying stocks with low payouts and valuations.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.