In this article, we will take a look at the 10 best affordable dividend stocks to buy. You can skip our comprehensive analysis of these cheap dividend stocks and go directly to the 5 Best Affordable Dividend Stocks To Buy.
With the current economic turmoil brought on by the COVID-19 pandemic, it’s a wise move to begin investing in low-cost dividend stocks that pay decent, steady yields. Globally, dividend stocks were not exempted from the financial distress, with dividends dropping 12.2% in 2020 to $1.26 trillion. Several companies posted suspension in payouts such as theme park and cruise line operator The Walt Disney Company (NYSE: DIS) while some had to cut dividends to make ends meet such as powerboat manufacturer Marine Products Corporation (NYSE: MPX) and resort operator Vail Resorts, Inc. (NYSE: MTN). Between April and December 2020, cuts and cancellations totaled $220 billion, whereas dividends paid were $965 billion, considerably outnumbering the cuts.
According to the Q1 2021 Janus Henderson Global Dividend Index report, U.S. dividend stocks were remarkably resilient, rising 2.6% year over year to a new high of $503.1 billion in 2020. The report mentioned that North America performed well primarily because companies were able to save cash and preserve dividends by suspending or reducing share buybacks. According to Janus Henderson’s best-case scenario, dividends will increase by 5% to $1.32 trillion in 2021.
Why Invest in Cheap Dividend Stocks?
Investors are drawn to cheap dividend stocks because they allow them to purchase a large number of shares. Not everyone can buy expensive stocks like NVIDIA Corporation (NASDAQ: NVDA), Equinix, Inc. (REIT) (NASDAQ: EQIX), and BlackRock, Inc. (NYSE: BLK), all trading for over $500 a share. Newbie income investors can hold more shares by investing in affordable dividend stocks that return decent pay regularly. Investing in low-cost dividend-paying stocks provides investors with a consistent and dependable recurring source of income.
Dallas-based express trust Cross Timbers Royalty Trust (NYSE: CRT) is one of the cheap dividend-paying stocks. The company has a market cap of $57.9 million and currently trades at $9.65 per share as of May 25. The company offers an annualized dividend of close to a dollar payout per share. Since 1995, Cross Timbers Royalty Trust (NYSE: CRT) has been paying monthly dividends to shareholders and has never faced a suspension. The trust’s primary asset is its net profit interests, which are generated from producing royalty and overriding royalty interest gas assets in Texas, Oklahoma, and New Mexico. The trust also receives net profits interests from 7 oil-producing properties in Texas and Oklahoma. The net income of CRT in 2020 was $5.3 million, with $4.7 million distributable income. The stock has gained 29% in the last twelve months.
Another cheap dividend stock is Minnesota-based residential real estate investment trust (REIT) Two Harbors Investment Corp. (NYSE: TWO). The REIT offers a high yield of 9.52% and currently pays an annualized dividend of $0.68 per share. Since 2010, the REIT has paid out dividends quarterly with no disruptions. Two Harbors Investment Corp. (NYSE: TWO) is one of the largest REITs by total assets in the US with $16 billion reported assets in the first quarter of 2021. The REIT has a market cap of $1.9 billion. For the first quarter of the fiscal year 2021, Two Harbors Investment Corp. announced a dividend of $0.17 per share of common stock, which was paid on April 29. The REIT has a payout ratio of 49.64% and a quarterly return on book value per common share of 2.2%.
General Electric Company (NYSE: GE)
One of the affordable dividend-paying stocks you should include in your portfolio is the American industrial firm General Electric Company (NYSE: GE). The Boston-based firm is engaged in producing industrial machines and equipment in the areas of healthcare, aviation, power, and renewable energy. General Electric Company (NYSE: GE) was named a Dividend Aristocrat in 2009 after increasing its dividend every year for the past 32 years. Despite this, the company cut its quarterly dividend in February 2009, amid the financial crisis. For the second time since the Great Depression, General Electric Company (NYSE: GE) reduced its dividend by 50% in 2017. As cash flow fell further, the industrial firm reduced its dividend by 92% in late 2018. GE has been a poor dividend stock for the past five years, but the future is looking bright. General Electric Company has made significant progress in restoring its balance sheet, driven by dividend cuts that save the company $8 billion per year. Revenue in the first quarter of 2021 came in at $16.3 billion. According to the company’s Q1 2021 report, debt has been reduced by approximately $4 billion in the first quarter. The company welcomed the fiscal year 2021 with $32 billion of cash on hand. The company currently pays an annual dividend of $.04 per share with a 0.3% dividend yield. The shares of GE jumped 105% over the past twelve months.
There is no such thing as a flawless dividend stock, as the pandemic of 2020 demonstrated. However, it makes sense to seek out long-term earnings in areas that are expected to grow in the coming years such as technology, finance, oil and gas, and real estate industries. To provide you the most accurate list of the top affordable dividend stocks to buy, we analyzed dividend stocks under $15 that pay a good dividend and haven’t suspended distributions in the recent 5 to 10 years.
Just like dividend investing, the hedge fund industry is also seeing the winds of change. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th, 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Sharon McCutcheon on Unsplash
With this context in mind, here is our list of the 10 best affordable dividend stocks to buy.
Best Affordable Dividend Stocks To Buy
10. Cross Timbers Royalty Trust (NYSE: CRT)
Dividend Yield: 7.08%
Price as of May 26, 2021: $9.74
We start our list of the 10 best affordable dividend stocks to buy with Dallas-based express trust Cross Timbers Royalty Trust (NYSE: CRT). The company offers an annualized dividend of $0.68 per share. Since 1995, Cross Timbers Royalty Trust (NYSE: CRT) has been paying monthly dividends to shareholders and has never faced a suspension. The trust’s major assets are its net profit interests, which are generated from producing royalty and overriding royalty interest gas assets in Texas, Oklahoma, and New Mexico. The trust also receives net profits interests from seven oil-producing properties in Texas and Oklahoma.
The company has a market cap of $57.9 million and currently trades at $9.74 per share as of May 26.
The net income of CRT in 2020 was $5.3 million, with $4.7 million distributable income. The stock has gained 29% in the last twelve months. Shares of CRT climbed 27% over the past twelve months.
9. Gladstone Investment Corporation (NASDAQ: GAIN)
Dividend Yield: 6.21%
Price as of May 26, 2021: $13.88
No. of Hedge Fund Holders: 4
Gladstone Investment Corporation (NASDAQ: GAIN) ranks 9th on the list of 10 best affordable dividend stocks to buy. The fund invests in small and mid-sized businesses with $3 million to $20 million EBITDA that provide commercial services and manufacture consumer goods. Since 2005, Gladstone Investment Corporation has paid monthly dividends without suspension. The company currently pays an annual dividend of $0.84 per share with a high yield of 6.21%. In the quarter that ended in March 2021, Gladstone Investment Corporation’s payout ratio was 72.69%.
Gladstone Investment Corporation (NASDAQ: GAIN) has a market cap of $453 million. The company’s total investment income in the first quarter of 2021 came in at $16.7 million. Shares of GAIN jumped 24% over the past twelve months. On April 21, started coverage of Gladstone Investment Corporation with a “Perform” rating.
Unlike expensive names like NVIDIA Corporation (NASDAQ: NVDA), Equinix, Inc. (REIT) (NASDAQ: EQIX), and BlackRock, Inc. (NYSE: BLK), GAIN is an affordable dividend stock for income investors.
At the end of the first quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $1.93 million in Gladstone Investment Corporation (NASDAQ: GAIN), down from 5 in the preceding quarter worth $2.5 million.
8. Star Group, L.P. (NYSE: SGU)
Dividend Yield: 5.47%
Price as of May 26, 2021: $10.24
No. of Hedge Fund Holders: 6
Ranking 8th on the list of 10 best affordable dividend stocks to buy is service energy provider Star Group, L.P. (NYSE: SGU). The Connecticut-based energy firm offers heating and air conditioning products and services to residential and commercial properties. In addition, the company provides solely delivery service or gasoline and diesel fuel. Star Group, L.P. (NYSE: SGU) has paid shareholders dividends quarterly since 1996 without any suspension. Star Group, L.P. currently pays an annualized dividend of $0.57 per share with a 5.47% yield. The company has increased its dividend for 8 consecutive years and has increased annualized dividends in the last 10 years.
Star Group, L.P. (NYSE: SGU) has a market cap of $418.9 million. The company’s revenue in the second quarter of 2021 increased 11.2% to $604.1 million, up from $543.1 million in the previous year due to bigger volumes sold. Shares of SGU climbed 30% over the past twelve months.
At the end of the first quarter of 2021, 6 hedge funds in the database of Insider Monkey held stakes worth $60 million in Star Group, L.P. (NYSE: SGU), down from 10 in the previous quarter’s worth $61 million.
Like Cross Timbers Royalty Trust (NYSE: CRT), Two Harbors Investment Corp. (NYSE: TWO) and General Electric Company (NYSE: GE), SGU is one of the best affordable dividend stocks to buy now.
7. Prospect Capital Corporation (NASDAQ: PSEC)
Dividend Yield: 8.72%
Price as of May 26, 2021: $8.32
No. of Hedge Fund Holders: 7
Ranking 7th on the list of 10 best affordable dividend stocks to buy is private equity firm Prospect Capital Corporation (NASDAQ: PSEC). The company provides private debt and equity capital sponsors for acquisitions, refinancings, recapitalization, and later-stage growth investments in the areas of energy, healthcare, manufacturing, food, and industrials. The company has been paying dividends quarterly since 2004 without suspension. Currently, Prospect Capital Corporation (NASDAQ: PSEC) pays an annual dividend of $0.72 per share with a 20% payout ratio.
The company has a market cap of $3.2 billion. Prospect Capital Corporation (NASDAQ: PSEC)’s total investment income increased 3.2% year over year to $159.5 million in the third quarter of 2021. Shares of PSEC jumped 52.4% over the past twelve months. On May 13, Prospect Capital Corporation remains Underweight at Wells Fargo, although the price target has been raised to $6. Prospect Capital Corporation (NASDAQ: PSEC) said on May 20 that it has priced $300 million in 3.364% notes due 2026, which will close on May 27. Prospect plans to use the gross profits of this offering to consolidate existing debt, including the redemption of its 6.25% Senior Notes due 2028 and repayment of borrowed funds under its revolving fund, among other things.
If you want to buy dividend stocks but looking to avoid expensive names like NVIDIA Corporation (NASDAQ: NVDA), Equinix, Inc. (REIT) (NASDAQ: EQIX), and BlackRock, Inc. (NYSE: BLK), PSEC is for you.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $11.6 million in Prospect Capital Corporation (NASDAQ: PSEC), down from 8 in the previous quarter worth $18.4 million.
Like Cross Timbers Royalty Trust (NYSE: CRT), Two Harbors Investment Corp. (NYSE: TWO) and General Electric Company (NYSE: GE), PSEC is one of the best affordable dividend stocks to buy now.
6. Whitestone REIT (NYSE: WSR)
Dividend Yield: 5.14%
Price as of May 26, 2021: $8.37
No. of Hedge Fund Holders: 7
Whitestone REIT (NYSE: WSR) is a shopping center REIT focused on investing in and redeveloping high-quality community centers in the Sunbelt’s densely-populated, fastest-growing, and wealthiest regions. Whitestone REIT ranks 6th on the list of 10 best affordable dividend stocks to buy. The company currently pays an annualized dividend of $0.43 per share. In March, Whitestone REIT declared an increase of quarterly payout to $0.036 per share from $0.35 per share. Whitestone is a cheap dividend-paying stock that has paid dividends monthly for over 15 years.
The company has a market cap of $358 million. First-quarter revenues came in at $29 million, down from $30.6 million in the same period in 2020. In the first quarter of 2021, the company’s net income attributable to common shareholders was $1.6 million, or $0.04 per share. As of March 31, the company manages 94 leased properties with a total lease value of $30,824,000. Shares of WSR jumped 33% over the past twelve months. Like Cross Timbers Royalty Trust (NYSE: CRT), Two Harbors Investment Corp. (NYSE: TWO) and General Electric Company (NYSE: GE), WSR is one of the best affordable dividend stocks to buy now.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $13 million in Whitestone REIT (NYSE: WSR), down from 10 in the previous quarter worth $12.8 million.
Click to continue reading and see the 5 Best Affordable Dividend Stocks to Buy.
Suggested articles:
- 10 Biggest Healthy Food Brands in the World
- Top 10 Real Estate Billionaires in the World
- 15 Largest Coffee Companies in the World in 2021
Disclosure: None. 10 Best Affordable Dividend Stocks to Buy is originally published on Insider Monkey.
