In this article, we will be looking at the 10 best dividend stocks to buy under $20. To skip our detailed analysis of dividend investing, you can click to see the 5 Best Dividend Stocks to Buy Under $20.
Dividend investing has existed in the finance world for as long as one can remember. Perhaps the reason this practice has been able to stick around while remaining so popular can be attributed to the promise of financial growth and higher returns that come with it. According to the S&P 500’s index performance, dividend stocks do have the edge over others like growth stocks and the stock market in general since they bring in higher returns for shareholders. Even though a large amount of risk exists in dividend investing, the practice remains popular for investors preferring the establishment of a passive income stream for themselves.
A report by Greenrock Research and cited by the Wall Street Journal testifies to the above. From 1958 to 2018, a portfolio consisting of the top 20% of the S&P 500’s companies ranked based on dividend yield and market cap outperformed the overall S&P 500 by about 2.13% annually. This can be attributed to the fact that dividend payments end up making up a significant part of the stock market’s total return, resulting in dividend stocks being able to outperform the market in general. Morningstar Inc. also reported in 2019 that dividend stocks made up 19% of the S&P 500’s total return in the preceding 5 years.
This trend has continued for decades, if not centuries, and still holds today, as a study by Hartford Funds offering 2021 outlook for dividend investing explains. From about the 1960s to last year, the S&P 500 Index’s total returns without dividends were only $627,161. When this is compared to the $3,845,730 figure of the total returns after reinvestment of dividends during the same time frame, it becomes clear what investment strategy is more promising.
Unsurprisingly then, stocks that are known for continued dividend growth and reasonably high yields are favorites in the investor circle. Such stocks include The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), among a range of others. All these stocks have seen over 50 years of consecutive dividend growth and are fairly dubbed as the “Dividend Kings” today. However, such stocks are far more expensive and harder to invest in for beginner investors, and hence, we have compiled a list of cheaper dividend stocks you can buy under $20.
It has become extremely difficult to find valuable dividend stocks amid the financial volatility, which is also shaking the hedge fund industry. 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.
The stocks mentioned on our list have been selected based on hedge fund popularity, long-term growth prospects, fundamentals, and consistent dividend growth for more than 5 years.
Photo by Joshua Hoehne on Unsplash
Without further ado, let’s look at the 10 best dividend stocks to buy under $20.
10. First Horizon Corporation (NYSE: FHN)
Number of Hedge Fund Holders: 27
Dividend Yield: 3.36%
First Horizon Corporation (NYSE: FHN) is a bank holding company operating for First Horizon Bank, which provides financial services. The company has four segments: Regional Banking, Fixed Income, Corporate, and Non-Strategic. It ranks 10th on our list of the best dividend stocks to buy under $20.
In the first quarter of 2021, First Horizon Corporation (NYSE: FHN) had EPS of $0.51, beating estimates by $0.14. The company’s $808 million revenue for the quarter represented a 69.19% growth year over year and beat estimates by $48.5 million. It has a forward PE ratio of 10, and the stock has gained 40.96% in the past 6 months and 39.1% year to date.
By the end of the first quarter of 2021, 27 hedge funds out of the 866 tracked by Insider Monkey held stakes in First Horizon Corporation (NYSE: FHN). The total value of their stakes was roughly $312 million. This is compared to 30 hedge funds in the previous quarter with a total stake value of about $403 million. Like The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), this is a good dividend stock to buy.
9. Investors Bancorp, Inc. (NASDAQ: ISBC)
Number of Hedge Fund Holders: 12
Dividend Yield: 3.79%
Investors Bancorp, Inc. (NASDAQ: ISBC) is a bank holding company for the Investors Bank in the US. Its deposit products include savings, checking, and money market accounts, and the company ranks 9th on our list of the best dividend stocks to buy under $20.
This February, Investors Bancorp, Inc. (NASDAQ: ISBC) began rising as it was reported to move into the S&P SmallCap 600 Index to replace Biotelemetry (NASDAQ: BEAT). The company is also planning on closing the acquisition of eight Berkshire Bank branches, holding $308 million in consumer and commercial loans and $639 million in deposits at the time of the announcement, before June 30th, as mentioned in their first-quarter conference call. In the first quarter of 2021, Investors Bancorp, Inc. (NASDAQ: ISBC) had an EPS of $0.31, beating estimates by $0.02, and revenue of $200.74 million, representing a 6.81% growth year over year but missing estimates by $5.08 million. The stock has a forward PE ratio of 11.82 and has gained 41.26% in the past 6 months and 40.06% year to date.
By the end of the first quarter of 2021, 12 hedge funds out of the 866 tracked by Insider Monkey held stakes in Investors Bancorp, Inc. (NASDAQ: ISBC). The total value of their stakes was roughly $78.6 million. This is compared to 24 hedge funds in the previous quarter with a total stake value of about $211 million. Like The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), this is a good dividend stock to buy.
8. People’s United Financial, Inc. (NASDAQ: PBCT)
Number of Hedge Fund Holders: 20
Dividend Yield: 4.09%
People’s United Financial, Inc. (NASDAQ: PBCT) is another bank holding company operating for People’s United Bank, National Association providing commercial banking, retail banking, and wealth management services to consumers in an individual, corporate, and municipal capacity. The company ranks 8th on our list of the best dividend stocks to buy under $20.
This February, People’s United Financial, Inc. (NASDAQ: PBCT) agreed with M&T Bank (NYSE: MTB) to merge the two, after which People’s United Financial, Inc. (NASDAQ: PBCT) would be valued at over $7 billion, according to the Wall Street Journal. In the first quarter of 2021, People’s United Financial, Inc. (NASDAQ: PBCT) had EPS of $0.37, beating estimates by $0.03. The company’s revenue was $480.5 million, missing estimates by $13.38 million. The stock has a forward PE ratio of 13.71 and has gained 37.38% in the past 6 months and 38.77% year to date.
By the end of the first quarter of 2021, 20 hedge funds out of the 866 tracked by Insider Monkey held stakes in People’s United Financial, Inc. (NASDAQ: PBCT). The total value of their stakes was roughly $208 million. This is compared to 29 hedge funds in the previous quarter with a total stake value of about $1.23 billion. Like The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), this is a good dividend stock to buy.
7. Huntington Bancshares Incorporated (NASDAQ: HBAN)
Number of Hedge Fund Holders: 27
Dividend Yield: 4.11%
Huntington Bancshares Incorporated (NASDAQ: HBAN) is a regional bank holding company with headquarters in Columbus, Ohio. The company has $123 billion in assets and 839 branches in its network, alongside 1,322 ATMs across about seven Midwestern states. The company ranks 7th on our list of the best dividend stocks to buy under $20.
This April, Huntington Bancshares Incorporated (NASDAQ: HBAN) said that it expects greater demand for loans later this year, and its lending pipelines are already widespread. The company’s first-quarter report showed strong net interest income and loan rises. In the first quarter of 2021, Huntington Bancshares Incorporated (NASDAQ: HBAN) had an EPS of $0.48, beating estimates by $0.16. Its revenue for the quarter was $1.37 billion, representing an 18.77% growth year over year and beating estimates by $142.5 million. The stock has a forward PE ratio of 10.16 and has gained 17.26% in the past 6 months and 16.32% year to date.
By the end of the first quarter of 2021, 27 hedge funds out of the 866 tracked by Insider Monkey held stakes in Huntington Bancshares Incorporated (NASDAQ: HBAN). The total value of their stakes was $154 million. This is compared to 29 hedge funds in the previous quarter, with a total stake value of roughly $88.6 million. Like The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), this is a good dividend stock to buy.
6. Algonquin Power & Utilities Corp. (NYSE: AQN)
Number of Hedge Fund Holders: 10
Dividend Yield: 4.46%
Algonquin Power & Utilities Corp. (NYSE: AQN) owns and operates regulated and non-regulated generation, distribution, and transmission utility assets in the US, Canada, Chile, and Bermuda. The company generates electrical energy through non-regulated renewable power generation facilities. It ranks 6th on our list of the best dividend stocks to buy under $20.
On June 18th, Algonquin Power & Utilities Corp. (NYSE: AQN) priced its upsized equity units offering at $1 billion. Credit Suisse’s Andrew Kuske also said this April that the stock was a good opportunity for dividend growth investors to “ride the green wave.” In the first quarter of 2021, the EPS of Algonquin Power & Utilities Corp. (NYSE: AQN) was $0.20, missing estimates by $0.01. The company’s revenue was $634.5 million, representing 36.48% growth year over year and beating estimates by $73.74 million. Algonquin Power & Utilities Corp. (NYSE: AQN) has a gross profit margin of 40.31% as well.
By the end of the first quarter of 2021, 10 hedge funds out of the 866 tracked by Insider Monkey held stakes in Algonquin Power & Utilities Corp. (NYSE: AQN). The total value of their stakes was roughly $172 million. This is compared to 15 hedge funds in the previous quarter with a total stake value of $298 million approximately. Like The Coca-Cola Company (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG), this is a good dividend stock to buy.
Click to continue reading and see the 5 Best Dividend Stocks to Buy Under $20.
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Disclosure: None. 10 Best Dividend Stocks to Buy Under $20 is originally published on Insider Monkey.
