In this article, we discuss 10 best cheap dividend stocks to buy now. You can skip our detailed analysis of the best dividend stocks and their returns over the years, and go directly to read 5 Best Cheap Dividend Stocks to Buy Now.
Inflation and continuous interest rate hikes have brought dividend investing to the forefront this year. Dividend stocks are gaining attention now more than ever as companies that pay regular dividends are known to help investors create long-term wealth. The historical returns of the stock market show that quality companies with strong dividend growth track records have produced better returns than their peers. According to a report by Cohen & Steers, dividend growers delivered an annual average return of 4.5% from 2000 to 2010, compared with a 2.5% drop in the non-payers. The report also mentioned that during this decade, dividend growers have outperformed with significantly less volatility of 15.3% versus 26.1% for non-dividend payers.
Morgan Stanley in its September investors’ note recommended investors to focus on companies with stable dividend growth track records as they remain resilient against a choppy market. It also mentioned that in the current market environment, these quality companies can help investors generate regular income. A report by Mackenzie Investments sheds light on the compounding returns through reinvestment of dividends. The report mentioned that in some of the world’s major markets, 29% of the returns came from reinvested dividends from September 1979 to August 2019. In addition to this, from 1998 to 2018, the dividend payout ratio of the MSCI World Index remained above 30%, even when the market return was negative. This shows that dividends are a stable component of returns even when the overall markets are down.
Dividend stocks like AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ) are on investors’ radars this year as they have proven track records of dividend growth. Moreover, these companies have strong fundamentals to prop up their shareholder return. In this article, we will discuss the best cheap dividend stocks to buy now.
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Our Methodology:
For this list, we selected dividend stocks with share prices below $35, as of September 29. In addition to this, we took into account the stocks’ dividend yields, hedge fund sentiments, long-term growth potential, and fundamentals while choosing these stocks. The stocks are ranked according to their share prices.
Best Cheap Dividend Stocks to Buy Now
10. Hennessy Advisors, Inc. (NASDAQ:HNNA)
Share Price as of September 29: $8.55
Hennessy Advisors, Inc. (NASDAQ:HNNA) is a California-based investment management company that offers a wide range of mutual funds services. In fiscal Q3 2022, the company reported an operating income of over $2.7 million, up from $2.3 million in the previous quarter. The company’s free cash flow came in at $2.65 million, growing from $2.2 million in the preceding quarter. It ended the quarter with $17.2 million available in cash and cash equivalents, up 23% from the same period last year.
On August 3, Hennessy Advisors, Inc. (NASDAQ:HNNA) announced a quarterly dividend of $0.1375 per share, in line with its previous dividend. The stock’s dividend yield came in at 6.50%, as of September 29. The company has not raised its dividends since 2019, unlike some of the best dividend stocks like AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ), which continued raising their dividends during the pandemic of 2020.
At the end of Q2 2022, Jim Simons’ Renaissance Technologies was the only stakeholder of Hennessy Advisors, Inc. (NASDAQ:HNNA), owning stakes worth over $1.12 million.
9. Algonquin Power & Utilities Corp. (NYSE:AQN)
Share Price as of September 29: $11.60
Algonquin Power & Utilities Corp. (NYSE:AQN) is a Canadian utility company that generates and distributes electricity, natural gas, and water utility services. The company has been raising its dividends consistently for the past ten years. It currently pays a quarterly dividend of $0.1808 per share and has a dividend yield of 6.06%, as recorded on September 29.
In Q2 2022, Algonquin Power & Utilities Corp. (NYSE:AQN) reported revenue of $624.3 million, up 18.4% from the same period last year. The company’s operating cash flow stood at $268.6 million, compared with $166.2 million in the previous quarter. Its net earnings also jumped to roughly $110 million, from $91.7 million in the prior-year quarter.
At the end of Q2 2022, 16 hedge funds in Insider Monkey’s database owned stakes in Algonquin Power & Utilities Corp. (NYSE:AQN), growing from 13 in the previous quarter. The stakes owned by these hedge funds have a total value of nearly $170 million. Ken Griffin and Jim Simons were some of the company’s major stakeholders in Q2.
8. Kinder Morgan, Inc. (NYSE:KMI)
Share Price as of September 29: $16.84
Kinder Morgan, Inc. (NYSE:KMI) is one of the largest energy infrastructure companies, headquartered in Texas, US. The company owns and controls oil and gas pipelines and terminals in the country. In August, Barclays raised its price target on the stock to $21 with an Equal Weight rating on the shares and appreciated the company’s solid fundamentals in the current market.
In the second quarter of 2022, Kinder Morgan, Inc. (NYSE:KMI) reported that its cash position has grown significantly. The company’s operating cash flow came in at $1.56 billion, up from $1.08 billion in the previous quarter. Its free cash flow was recorded at $1.2 billion, compared with $677 million a quarter earlier. Also, the company generated $545 million of excess distributable cash flow above its declared dividend.
Kinder Morgan, Inc. (NYSE:KMI) currently pays a quarterly dividend of $0.2775 per share. The company maintains a five-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list. As of September 29, the stock’s dividend yield came in at 6.70%.
At the end of Q2 2022, 41 hedge funds tracked by Insider Monkey owned investments in Kinder Morgan, Inc. (NYSE:KMI), up from 40 in the previous quarter. The total value of these investments is over $1.24 billion.
7. TELUS Corporation (NYSE:TU)
Share Price as of September 29: $20.81
TELUS Corporation (NYSE:TU) is a Canada-based national telecommunications company that provides a wide range of related products and services including internet access, video streaming, and voice entertainment. The company was a part of 15 hedge fund portfolios in Q2 2022, the same as in the previous quarter, according to Insider Monkey’s data. The stakes owned by these hedge funds hold a combined value of over $256.5 million.
In Q2 2022, TELUS Corporation (NYSE:TU) generated over $1.2 billion in operating cash flow, up from $1.13 billion in the previous quarter. The company’s free cash flow stood at $234 million, compared with $122 million a quarter earlier. In the first seven months of the year, the company returned nearly $1.4 billion in dividends to shareholders.
TELUS Corporation (NYSE:TU) has been making uninterrupted dividend payments since 2004, coming through as one of the best dividend stocks on our list. Since then, the company has cumulatively paid $16.6 billion in dividends. Its current quarterly dividend stands at C$0.3386 per share, with a dividend yield of 5.09%, as of September 29.
In September, Scotiabank lifted its price target on TELUS Corporation (NYSE:TU) to C$34.50 and maintained an Outperform rating on the shares.
6. Matthews International Corporation (NASDAQ:MATW)
Share Price as of September 29: $22.84
Matthews International Corporation (NASDAQ:MATW) is a provider of brand solutions, memorialization products, and industrial technologies. The company helps other corporations to simplify their marketing strategies.
Matthews International Corporation (NASDAQ:MATW) holds a strong dividend history, having raised its dividends consistently for the past 23 years. Moreover, the company’s five-year dividend CAGR stands at 5.29%. It currently pays $0.22 per share in quarterly dividends, with a dividend yield of 3.95%, as recorded on September 29. The company can be a good addition to dividend portfolios alongside some of the best dividend stocks like AbbVie Inc. (NYSE:ABBV), Exxon Mobil Corporation (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ).
In July, B. Riley maintained its Buy rating on Matthews International Corporation (NASDAQ:MATW) with a $22 price target, highlighting the company’s fiscal Q3 results. The firm acknowledged the company’s balance sheet and its improving fundamentals.
In its fiscal Q3 2022 earnings report, Matthews International Corporation (NASDAQ:MATW) posted consolidated sales of over $1.3 billion year-to-date, showing a 5.9% growth from the same period last year. The company’s operating cash flow came in at over $11.6 million and had over $45.8 million available in cash and cash equivalents. Its total assets at the end of June amounted to nearly $2 billion.
The number of hedge funds tracked by Insider Monkey owning stakes in Matthews International Corporation (NASDAQ:MATW) grew to 17 in Q2 2022, from 15 a quarter earlier. The collective value of these stakes is over $52.1 million. Among these hedge funds, GAMCO Investors owned the largest position in the company in Q2.
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Disclosure. None. 10 Best Cheap Dividend Stocks to Buy Now is originally published on Insider Monkey.
