In this article, we will analyze the list of the best dividend stocks under $50.
The bullish market trend that had been ongoing since October 2022 faced a disruption in early August. Investor sentiment shifted as concerns about the U.S. economy’s strength grew. This change was triggered by a jobs report, which revealed modest job growth in July and a rise in the national unemployment rate. These figures sparked worries about potential economic challenges and doubts about whether the Federal Reserve had acted too slowly in implementing anticipated interest rate cuts that were expected to support the economy. As a result, stock markets saw sharp declines over several consecutive trading days. The broader market fell by 3% between August 2 and August 5.
According to analysts, despite the recent downturn in the market, there is no reason for equity investors to become overly cautious. The outlook remains positive, and it is still considered a favorable time to invest. For those holding cash, this period presents an opportunity to allocate capital to longer-term assets. Positive investment trends, particularly in AI but extending beyond it, offer ample opportunities for stock growth. Additionally, rising dividends provide another attractive element for investors to consider. Although dividend stocks have been underperforming relative to the broader market recently, they remain a popular choice due to their long-term returns. The Dividend Aristocrats Index has risen slightly over 6% this year, but the growth in dividends among US companies is promising. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, forecasts a 6% increase in dividend payments for 2024, up from a 5.1% rise in 2023.
Also read: 10 Highest Paying Monthly Dividend Stocks
Dividend growth has been a trend this year, compared to the previous year. In the first and second quarters of 2024, dividends paid by US companies have grown significantly. According to Silverblatt, the significant takeaway from both quarters was the performance of large-cap companies. In April, Alphabet began paying a $9.3 billion dividend, joining other major dividend initiations in the first quarter, such as Bookings with $1.2 billion, Meta Platforms with $4.4 billion, and Salesforce with $1.5 billion. These initiatives contributed to 53% of the S&P 500’s year-to-date indicated dividend increase. Although gains without these new initiations were already setting a record for the broader market dividend payments in 2024, the additional forward cash commitments to dividends are expected to significantly boost payouts and prompt both investors and non-paying boards to reconsider their strategies.
Dividend stocks have historically made a substantial contribution to overall market returns. According to a Hartford Funds report, from 1940 to 2023, dividend income accounted for an average of 34% of the total market return. Analysts have long explored various dividend strategies to maximize investor returns. While high dividend yields have attracted considerable attention, dividend growth has proven to be a more reliable approach. However, recent research indicates that combining both yield and growth strategies can offer the greatest benefits. The High Dividend Growth Index, which tracks companies with the highest projected dividend yield growth in the broader market and a history of maintaining or increasing dividends for at least five years, has surged nearly 20% over the past year. This performance surpasses that of the Dividend Aristocrats Index, which focuses solely on dividend growth without considering yields.
Investors should thoroughly evaluate what suits their portfolio, as strategies that are effective at one time may not perform well in another. It’s crucial to consider the underlying fundamentals of a company when making investment decisions. In this article, we will take a look at some of the best dividend stocks under $50 according to analysts.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology:
For this list, we screened for dividend stocks with share prices below $50, as of the close of August 16. From this group, we picked stocks with a projected upside potential of over 10% based on analyst price targets. We further narrowed down the list by including stocks that have dividend yields of at least 2%, as of August 16. The stocks are ranked in ascending order of their upside potential, as of August 16.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10 Best Dividend-Paying Stocks Under $50
10. VICI Properties Inc. (NYSE:VICI)
Upside Potential as of August 16: 11.2%
Share Price as of the close of August 16: $31.5
VICI Properties Inc. (NYSE:VICI) is an American real estate investment trust company that mainly invests in casino and entertainment properties. The company has significant exposure to the casino industry, with Caesars Entertainment and MGM Resorts as two of its major tenants. However, it is actively working to diversify its portfolio. Recognizing the economic sensitivity of the casino industry, the company extended a $250 million loan to Great Wolf Lodge. This move strengthens its existing partnership with the operator of a chain of indoor water parks and hotels. In addition, the company is expanding its real estate and financing partnerships with prominent operators across various experiential sectors, including Bowlero, Cabot, Canyon Ranch, Chelsea Piers, Homefield, and Kalahari Resorts. VICI Properties Inc. (NYSE:VICI) also owns four championship golf courses and holds 33 acres of undeveloped and underdeveloped land near the Las Vegas Strip.
VICI Properties Inc. (NYSE:VICI) reported strong earnings in the second quarter of 2024. Its revenue for the quarter came in at $957 million, which showed a 6.5% growth from the same period last year. It also beat Street estimates by $3.32 million. Net income attributable to common shareholders also showed a 7.3% YoY growth at $741.3 million. The company ended the quarter with $347.2 million available in cash and cash equivalents.
VICI Properties Inc. (NYSE:VICI), one of the best dividend stocks, started paying dividends in 2018 and has raised its payouts every year since then. Currently, it pays a quarterly dividend of $0.415 per share and has an impressive dividend yield of 5.25%, as of August 16. In the most recent quarter, the company returned approximately $430 million to shareholders through dividends.
At the end of Q2 2024, 33 hedge funds tracked by Insider Monkey reported having stakes in VICI Properties Inc. (NYSE:VICI), down from 38 in the previous quarter. These stakes have a collective value of nearly $936 million. With over 10.4 million shares, Citadel Investment Group was the company’s leading stakeholder in Q2.
9. Cisco Systems, Inc. (NASDAQ:CSCO)
Upside Potential as of August 16: 11.50%
Share Price as of the close of August 16: $49.46
Cisco Systems, Inc. (NASDAQ:CSCO) is an American digital communications technology company that offers a wide range of related services. Earlier this year, the company improved its cyber threat protection by purchasing the data analytics and cybersecurity company, Splunk. This acquisition turned out to be advantageous for the company, as Splunk added $960 million to the company’s revenue in fiscal Q4 2024. The company’s $28 billion purchase of Splunk also marks a significant change, putting the company into a net debt position to support growth and increase returns for shareholders. In an interview, Chief Financial Officer Scott Herren stated that the company will have the flexibility to decide whether to reduce its debt or maintain it, depending on future interest rates. He emphasized that Cisco will prioritize disciplined capital allocation and investments in growth rather than specifically aiming to reduce debt. Herren also declined to provide a target ratio for the company’s debt.
That said, analysts are positive about Cisco Systems, Inc. (NASDAQ:CSCO)’s cash position because of its strong cash generation. In the most recent quarter, the company reported an operating cash flow of approximately $3.7 billion. The company had nearly $17.9 billion available in cash and cash equivalents. During the quarter, the company returned $1.6 billion to shareholders through dividends. At the beginning of the year, the company committed to spending $5 billion annually on share buybacks and $6.5 billion each year on dividend payments. These expenditures will take up a significant part of the $14 billion to $15 billion in free cash flow that the company generates yearly.
Though Cisco Systems, Inc. (NASDAQ:CSCO)’s earnings remained strong in the most recent quarter, it has announced in a filing that it is undertaking a restructuring plan, including layoffs, which will lead to $1 billion in pretax charges. This move is intended to enable the company to invest in key growth opportunities and enhance operational efficiencies.
Cisco Systems, Inc. (NASDAQ:CSCO) currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 3.23%, as of August 16. It is one of the best dividend stocks on our list as the company maintains a 17-year streak of consistent dividend growth.
As of the close of Q2 2024, 61 hedge funds in Insider Monkey’s database held stakes in Cisco Systems, Inc. (NASDAQ:CSCO), up from 58 in the previous quarter. These stakes have a total value of nearly $1.6 million. Among these hedge funds, Harris Associates owned the largest stake in the company in Q2.
8. UGI Corporation (NYSE:UGI)
Upside Potential as of August 16: 11.79%
Share Price as of the close of August 16: $24.37
UGI Corporation (NYSE:UGI) ranks eighth on our list of the best dividend stocks under $50. The American natural gas distribution company specializes in delivering safe, reliable, and affordable energy to its consumers. On August 7, the company declared a quarterly dividend of $0.375 per share, which fell in line with its previous dividend. Overall, it has been growing its payouts for 37 consecutive years. The stock supports a dividend yield of 6.16%, as of August 16.
The European propane market has experienced volatility, resulting in an oversupply and reduced demand from the heating sector. UGI Corporation (NYSE:UGI), which operates an LPG distribution business across 16 European countries under six well-known brands, has encountered challenges in this market. Consequently, propane prices have dropped by nearly 20% and are now lower than they were two years ago, a development that could benefit the company in FY24. AmeriGas Propane, the company’s LPG division, reported a revenue of $445 million in fiscal Q3 2024, down from $514 million in the same period last year.
That said, UGI Corporation (NYSE:UGI) remains proactive in addressing the current challenges by utilizing all available resources. The board has decided to concentrate on restructuring and enhancing operations for AmeriGas. This strategy involves prioritizing customer retention, increasing free cash flow, managing costs efficiently, and maintaining disciplined capital allocation. The company has outlined a plan to distribute $1.3 billion in shareholder returns from fiscal 2024 through 2027.
First Pacific Advisors also highlighted reasons to invest in UGI Corporation (NYSE:UGI) in its Q1 2024 investor letter. Here is what the firm has to say:
“UGI Corporation (NYSE:UGI) owns gas utilities and pipelines in Pennsylvania and West Virginia and the largest propane distribution businesses in the United States and Europe. Despite its disparate parts, UGI has increased consolidated earnings at a relatively steady high- single-digit rate while distributing excess cash through dividends. UGI’s share price has declined because of a combination of poor execution and too much debt at AmeriGas, UGI’s U.S. propane business. On August 30, 2023 UGI announced a review of strategic alternatives. We believe the company’s stock price is attractive at less than 10x earnings, and we have been incrementally adding to the Fund’s position.”
The number of hedge funds tracked by Insider Monkey owning stakes in UGI Corporation (NYSE:UGI) grew to 32 in Q2 2024, from 29 in the previous quarter. These stakes are collectively worth over $310.6 million.
