In this article, we will analyze the list of the best dividend stocks under $5.
Dividends have consistently been a strong source of returns over time. These stocks hold both theoretical and practical significance in assessing stock values. Although dividend stocks have underperformed the broader market in recent years, their long-term performance remains steady.
Since the beginning of 2024, the Dividend Aristocrats Index—which monitors companies that have consistently raised their dividends for at least 25 consecutive years—has yielded returns of over 8% for investors. However, this performance has fallen short compared to the broader market, which has surged by nearly 19% during the same period. Despite this shortfall, 2024 has been a favorable year for dividends overall. This improvement is largely attributable to several major technology firms, previously known for not paying dividends, announcing the start of their dividend programs. Moreover, these companies have collectively distributed billions in their inaugural dividend payments.
Also read: 12 Best Dividend Stocks For Steady Growth
The long-term performance of dividend stocks also takes into account periods of high interest rates, during which other asset classes typically experience declines. This doesn’t imply that dividend stocks only perform well during episodes of high interest rates. While there isn’t a clear connection between their performance and interest rates, historical data shows that they tend to remain relatively stable regardless of the rate environment. For instance, in certain periods of rising US interest rates, such as the mid-1970s, dividend-paying stocks outperformed the broader market. Conversely, as rates decreased from the mid-1980s to the mid-1990s, the performance of high-yield stocks relative to the market remained relatively stable. Even if we set aside historical data and concentrate on more recent performance, we find that elevated interest rates did not have any serious impact on the performance of dividend equities. For example, in 2022, when the Federal Reserve raised its federal funds rate seven times to tackle persistent inflation—four of which were consecutive hikes of 75 basis points—dividend stocks outperformed the broader market. This could be due to the fact that dividend-paying companies tend to be well-established and more stable, with enough confidence in their cash flows to commit to returning cash to shareholders. Moreover, committing to a dividend imposes financial discipline. Instead of using excess cash for acquisitions that may or may not create value, repurchasing shares at uncertain prices, or funding speculative growth initiatives, executives are compelled to manage payouts responsibly.
Given investors’ growing interest in dividend stocks, more companies are initiating and increasing their dividend payments. A key driver behind this trend is that many companies, particularly large tech firms, have substantial cash reserves and are rapidly boosting their free cash flows. This strong financial footing allows them to reward investors with higher dividends. According to the latest report from S&P Dow Jones Indices, companies in the index paid $153.4 billion in dividends during the second quarter of 2024, up from $151.6 billion in the previous quarter and $143.2 billion in the same period last year. The report also highlighted that there were 539 dividend increases reported, compared to 460 in the same period last year, marking a 17.2% year-over-year growth. The total amount of these increases reached $20.4 billion for the quarter, up significantly from $9.8 billion in Q2 2023. With that, we will take a look at some of the best dividend stocks under $5.
Photo by Annie Spratt on Unsplash
Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $5 as of the close of August 23. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q2 2024 database of 912 hedge funds and their holdings. As the stocks mentioned below are penny stocks, their dividend policies aren’t very consistent because they typically have limited resources and are associated with higher volatility and risk.
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. Oxford Square Capital Corp. (NASDAQ:OXSQ)
Number of Hedge Fund Holders: 2
Share Price as of the close of August 23: $2.95
Oxford Square Capital Corp. (NASDAQ:OXSQ) is an American non-diversified investment management company that invests in corporate debt securities and collateralized loan obligations (CLOs). This exposure to CLO equities sets the company apart from other business development companies. These types of equities represent a form of credit investment created by pooling various loans, typically from companies with below-investment-grade ratings, which increases the risk level of CLOs. According to the company’s recent earnings presentation, CLO equity makes up 32.7% of its investment portfolio, making OXSQ particularly sensitive to interest rate changes. While CLOs introduce significant risks to the company’s portfolio, they are also generating the highest returns.
In the second quarter of 2024, Oxford Square Capital Corp. (NASDAQ:OXSQ) reported a total investment income (TII) of $11.4 million, up from $10.4 million in the previous quarter. CLOs contributed $3.9 million to its TII during the quarter. The stock has surged by over 2.4% since the start of 2024, and analysts hold a positive view of the stock. This optimism is further supported by its recent quarterly earnings. The company’s investment activities included acquiring around $28.8 million in assets, with sales totaling approximately $3.4 million and repayments of about $15.8 million. Additionally, the primary market issuance for US leveraged loans saw a significant increase compared to the previous year.
Oxford Square Capital Corp. (NASDAQ:OXSQ) is one of the best dividend stocks on our list as the company offers monthly dividend payments to shareholders. In addition, the company has never missed a dividend since 2006. Currently, its monthly dividend comes in at $0.035 per share for a dividend yield of 14.24%, as of August 23.
At the end of Q2 2024, 2 hedge funds tracked by Insider Monkey held stakes in Oxford Square Capital Corp. (NASDAQ:OXSQ), down from 4 in the previous quarter. The consolidated value of these stakes is nearly $3 million.
9. Crown Crafts, Inc. (NASDAQ:CRWS)
Number of Hedge Fund Holders: 4
Share Price as of the close of August 23: $4.76
Crown Crafts, Inc. (NASDAQ:CRWS) is an American company that specializes in infant, toddler, and juvenile consumer products. The company manufactures developmental toys, bedding, and bibs. The stock is down by over 4% this year so far as the company tried to overcome ongoing inflationary pressures. Its fiscal Q1 2025 earnings were also affected by these macroeconomic conditions, which limited consumers’ discretionary income, along with certain non-routine costs that led to a slight loss for the quarter. However, it is encouraged by the performance of its bedding segment. In FY24, the company’s bedding, blankets, and accessories group generated over $32 million in revenue.
Crown Crafts, Inc. (NASDAQ:CRWS) is actively growing its portfolio by acquiring new companies. Its acquisition of Manhattan Toy broadened its distribution channels, and it continues to receive positive feedback on Manhattan Toy’s new product development. The company is also enthusiastic about its recent acquisition of Baby Boom, which strengthens its position in the toddler bedding market and diversifies its product lineup with diaper bags. Baby Boom currently licenses some of the most popular brands, and they anticipate that this acquisition will immediately boost earnings.
Crown Crafts, Inc. (NASDAQ:CRWS), one of the best dividend stocks under $5, has been paying regular dividends to shareholders since 1989, with only a brief pause for one quarter during the pandemic. Over the course of its dividend history, the company has also distributed special dividends to shareholders. In FY24, it returned $3.3 million in dividends to shareholders, up from $3.2 million in FY23. The company pays a quarterly dividend of $0.08 per share and has a dividend yield of 6.72%, as of August 23.
As of the close of Q2 2024, 4 hedge funds in Insider Monkey’s database owned stakes in Crown Crafts, Inc. (NASDAQ:CRWS), up from 3 in the previous quarter. These stakes have a consolidated value of roughly $3 million. Among these hedge funds, Renaissance Technologies was the company’s leading stakeholder in Q2.
8. Nordic American Tankers Limited (NYSE:NAT)
Number of Hedge Fund Holders: 8
Share Price as of the close of August 23: $3.63
Nordic American Tankers Limited (NYSE:NAT) is an international tanker company that owns, operates, and charters Suezmax tankers. The company’s business model is strong but is currently challenged by ongoing geopolitical tensions around the Red Sea. The stock is down by over 11% in the past 12 months That said, it still has many positive aspects to focus on.
The supply and demand for Nordic American Tankers Limited (NYSE:NAT) fleet is currently favorable, contributing to a positive outlook. In addition to this, the company has one of the lowest debt levels among publicly traded tanker companies. As of March 31, 2024, the company’s net debt—calculated by subtracting current assets from total liabilities—was $228 million. With a fleet of 20 vessels, this translates to $11.4 million of debt per ship. The company also maintains a low debt-to-equity ratio of 0.5.
Nordic American Tankers Limited (NYSE:NAT) places a strong emphasis on maintaining its financial health. The company prioritizes strategic timing and careful financing of expansions to ensure financial stability and sustain its commitment to paying dividends. The company has paid dividends for 107 consecutive quarters, positioning it as one of the best dividend stocks on our list. It offers a quarterly dividend of $0.12 per share, yielding 11.85%, as of August 23. The company expects to increase its payouts when market conditions improve. Moreover, its financial position is strong, with over $37.5 million in operating cash flow generated in the first quarter of 2024.
Insider Monkey’s database for Q2 2024 indicated that 8 hedge funds held stakes in Nordic American Tankers Limited (NYSE:NAT), down from 18 in the previous quarter. These stakes have a total value of nearly $23 million. With over 2.2 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q2.
7. ARC Document Solutions, Inc. (NYSE:ARC)
Number of Hedge Fund Holders: 9
Share Price as of the close of August 23: $2.97
ARC Document Solutions, Inc. (NYSE:ARC) is a California-based company that offers specialized document solutions to businesses of all kinds. In the past three months, the shares have surged by over 9%. The gain is mainly attributed to the recent binding offer of $3.25 per share to take the company private, proposed by the company’s CEO. However, it is still uncertain whether this deal will ultimately go through.
In the second quarter of 2024, ARC Document Solutions, Inc. (NYSE:ARC) reported strong sales, and the company managed to reverse the year-over-year decline in gross margin experienced in the first quarter. Several large projects were completed in the last month of the second quarter, shifting collections into the third quarter, which temporarily subdued operating cash flow performance. However, the company remains confident that cash flows will improve in the third and fourth quarters, as they did last year. Its revenue for the quarter came in at over $75 million, which showed a 3.8% growth from the same period last year.
Digital printing was one of the best-performing segments of ARC Document Solutions, Inc. (NYSE:ARC) in Q2 2024. The sales in the segment rose by 5.8% compared to the previous year. Year-over-year sales experienced solid growth in digital color graphic printing, driven by both new and existing customers. In addition to these strong results, the company is also a solid pick for dividend seekers, especially since it has cash in its back pocket. It ended the quarter with nearly $50 million available in cash and cash equivalents. The company’s operating cash flow was $6.4 million.
On August 1, ARC Document Solutions, Inc. (NYSE:ARC) declared a quarterly dividend of $0.05 per share, which was in line with its previous dividend. The company initiated its dividend policy in 2019 but had to temporarily halt payouts in 2020 due to challenges related to the pandemic. The stock’s dividend yield sits at 6.73%, as of August 23.
According to Insider Monkey’s database of Q2 2024, 9 hedge funds held stakes in ARC Document Solutions, Inc. (NYSE:ARC), up from 8 in the preceding quarter. These stakes have a collective value of more than $8.7 million.
6. Silvercorp Metals Inc. (NYSE:SVM)
Number of Hedge Fund Holders: 13
Share Price as of the close of August 23: $3.86
Silvercorp Metals Inc. (NYSE:SVM) is a Canadian precious metals company that is mainly involved in the exploration and development of silver-containing properties. The stock has gained over 53% since the start of 2024 because of rising silver prices. The company consistently captures investors’ attention because metals like gold and silver are commonly viewed as a hedge against inflation. In addition, escalating tensions in the Middle East are pushing investors towards “safer” options, such as precious metals.
Silvercorp Metals Inc. (NYSE:SVM) operates low-cost mines that consistently generate cash flow. The company’s strong balance sheet supports growth opportunities, ensuring the delivery of sustainable value to shareholders. Another reason for the company’s strong balance sheet is that silver has a promising future, with global decarbonization and electrification expected to drive continuous demand growth, while forecasts suggest limited supply growth ahead. In fiscal Q1 2025, the company produced around 1,146 ounces of gold and 1.7 million ounces of silver, equivalent to approximately 1.8 million ounces when including other metals. The company also sold 1.7 million ounces of silver during the quarter.
Silvercorp Metals Inc. (NYSE:SVM) generated over $40 million in operating cash flow in fiscal Q1 2025. The company ended the quarter with over $215 million available in cash and cash equivalents. It currently pays a semi-annual dividend of $0.0125 per share and has a dividend yield of 0.64%, as of August 23. Over the course of its dividend history, the company has returned over $200 million to shareholders through dividends and share repurchases, which makes SVM one of the best dividend stocks under $5.
At the end of June 2024, 13 hedge funds owned stakes in Silvercorp Metals Inc. (NYSE:SVM), which remained unchanged from the previous quarter, as per Insider Monkey’s database. These stakes have a total value of over $31 million.
5. The Cato Corporation (NYSE:CATO)
Number of Hedge Fund Holders: 14
Share Price as of the close of August 23: $4.9
An American retailer of women’s fashion and accessories, The Cato Corporation (NYSE:CATO) ranks fifth on our list of the best dividend stocks under $5. The company is encountering challenges, as reflected in its Q1 2024 earnings. High interest rates and inflation are putting pressure on customers’ discretionary spending, which continues to negatively impact sales. Given this financial strain on its customers, the company remains cautious about the outlook for the rest of the year. In the first quarter, which ended on May 4, 2024, the company did not open any new stores and permanently closed seven.
The Cato Corporation (NYSE:CATO) generated $175.3 million in revenues in the first quarter, which reported an 8% decline from the same period last year. The company’s same-store sales also fell by 6% on a YoY basis. One positive aspect of the company’s operations is its strong balance sheet. The cash reserves are currently covering the dividends, which the company is struggling to pay due to negative cash flows. Cato still holds a significant amount of cash, with $39.1 million in cash and equivalents and $66.3 million in short-term investments, totaling $105.4 million in unrestricted capital. This is particularly notable given the company’s market cap of $100.7 million.
The Cato Corporation (NYSE:CATO) is not entirely in bad shape overall, even if it might appear that way right now. A shift in consumer sentiment could positively impact its operations. Additionally, it’s drawing investor interest due to its long history of consistent dividend payments. The company has been paying regular dividends to shareholders since 1987 and currently offers a quarterly dividend of $0.17 per share. The stock offers an impressive dividend yield of 13.88%, as of August 23.
The number of hedge funds tracked by Insider Monkey owning stakes in The Cato Corporation (NYSE:CATO) grew to 14 in Q2 2024, from 9 in the previous quarter. The consolidated value of these stakes is over $9.5 million. Among these hedge funds, Jim Simons’ Renaissance Technologies was the company’s leading stakeholder in Q2.
4. Braemar Hotels & Resorts Inc. (NYSE:BHR)
Number of Hedge Fund Holders: 15
Share Price as of the close of August 23: $3.04
Braemar Hotels & Resorts Inc. (NYSE:BHR) is an American real estate investment trust company, based in Texas. The company owns and operates luxury hotels and resorts. The company’s business is gradually recovering after facing significant challenges during the 2020 pandemic. The stock has climbed over 23.2% since the beginning of 2024, with a 12-month return of nearly 9%. Additionally, its second-quarter 2024 earnings were promising and have reassured investors.
In the second quarter of 2024, Braemar Hotels & Resorts Inc. (NYSE:BHR) is mainly pleased with the performance of its urban hotels, which saw a 6.3% increase in revenue per available room (RevPAR) compared to the same quarter last year. Looking ahead, the company believes that its portfolio is well-positioned for outperformance in both the near and long term. Moreover, it is making significant progress in executing its recently announced shareholder value creation plan. This includes the recent sale of the Hilton La Jolla Torrey Pines at a very attractive cap rate, ongoing evaluations of additional potential asset sales, a $50 million preferred share redemption program, and a $50 million share buyback authorization, all demonstrating their commitment to maximizing value for investors.
Braemar Hotels & Resorts Inc. (NYSE:BHR)’s balance sheet also remained strong. It ended the quarter with over $120.3 million in cash and cash equivalents and has restricted cash of $60.7 million. The company offers a quarterly dividend of $0.05 per share and has a dividend yield of 6.51%, as of August 23.
Braemar Hotels & Resorts Inc. (NYSE:BHR) was included in 15 hedge fund portfolios at the end of Q2 2024, the same as in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a collective value of nearly $25 million.
3. Uniti Group Inc. (NASDAQ:UNIT)
Number of Hedge Fund Holders: 22
Share Price as of the close of August 23: $4.49
Uniti Group Inc. (NASDAQ:UNIT) is an American real estate investment trust company that specializes in the acquisition, ownership, and leasing of communications infrastructure. The company was spun off from Windstream to take ownership of the telecommunications company’s fiber optic assets. It continues to make substantial progress on this merger and is on track to complete the transaction by the second half of 2025. As a combined company, they plan to maintain a disciplined growth trajectory, expand their fiber network into Tier II and III markets, and significantly enhance their overall financial profile. With demand for both commercial and residential fiber at an all-time high, Uniti Group Inc. (NASDAQ:UNIT) is well-positioned to capitalize on this growth potential moving forward.
As of June 30, 2024, Uniti Group Inc. (NASDAQ:UNIT) owns around 142,000 miles of fiber routes, 8.6 million fiber strand miles, and various other communication properties across the US. The company reported strong earnings in the second quarter of 2024, driven by high demand for its essential fiber infrastructure. Around 40% of its consolidated bookings during the quarter—the highest since 2022—were fueled by Hyperscalers and Generative AI demand, with expectations for continued growth. The core recurring strategic fiber business saw a 3% increase in the second quarter of 2024 compared to the same period in 2023, while net success-based capital intensity at Uniti Fiber decreased to 27% from 44% in the second quarter of 2023.
For the first six months of the year, Uniti Group Inc. (NASDAQ:UNIT) reported an operating cash flow of $174.3 million, down from approximately $200 million in the same period last year. The company ended the quarter with nearly $619 available in cash and cash equivalents. It is one of the best dividend stocks on our list as the company has paid uninterrupted dividends to shareholders since 2015. Its quarterly dividend currently comes in at $0.15 per share for an impressive dividend yield of 13.51%, as of August 23.
The number of hedge funds tracked by Insider Monkey owning stakes in Uniti Group Inc. (NASDAQ:UNIT) grew to 22 in Q2 2024, from 19 in the previous quarter. These stakes are worth over $75.3 million in total. With over 10 million shares, Elliott Management was the company’s leading stakeholder in Q2.
2. Diversified Healthcare Trust (NASDAQ:DHC)
Number of Hedge Fund Holders: 24
Share Price as of the close of August 23: $3.5
An American real estate investment trust company, Diversified Healthcare Trust (NASDAQ:DHC) ranks second on our list of the best dividend stocks under $5. The company owns around $7.2 billion worth of premium healthcare properties across 36 states and Washington, D.C. It aims for diversification throughout the healthcare services sector, including various care delivery methods, research disciplines, and types of properties and locations. In the past 12 months, the stock has surged by over 30%.
In the second quarter of 2024, Diversified Healthcare Trust (NASDAQ:DHC) reported revenue of roughly $372 million, which showed a 7.5% growth from the same period last year. The company also surpassed expectations for normalized FFO due to revenue growth and effective expense management. This performance was bolstered by a 27% year-over-year increase in same-property NOI for SHOP, along with gains in occupancy and rent. In the Medical Office and Life Science Portfolio, the company achieved a 12% rise in weighted average rental rates on over 100,000 square feet of leased space, marking its fourth consecutive quarter of double-digit rent growth. With ongoing favorable trends in the SHOP industry, Diversified Healthcare Trust (NASDAQ:DHC) is well-positioned to meet its goals for the rest of the year, focusing on achieving its SHOP NOI growth target for 2024 and enhancing its capital and liquidity profile.
Though Diversified Healthcare Trust (NASDAQ:DHC) does not hold any dividend growth streak, the company has been paying regular dividends to shareholders for over two decades. It currently pays a quarterly dividend of $0.01 per share and has a dividend yield of 1.12%, as of August 23.
According to Insider Monkey’s database of Q2 2024, 24 hedge funds held stakes in Diversified Healthcare Trust (NASDAQ:DHC), compared with 27 in the previous quarter. These stakes have a total value of nearly $140 million.
1. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Holders: 33
Share Price as of the close of August 23: $3.2
After a rough start to 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI) saw a boost in mid-August when Warren Buffett revealed that his company had more than tripled its stake in the broadcasting firm during the second quarter. As a result, the stock jumped nearly 4% between August 14 and August 15. Despite this recent uptick, it remains down over 43% for the year so far.
Sirius XM Holdings Inc. (NASDAQ:SIRI) is facing challenges due to increased competition. Spotify, a leading global player in digital music, recently reported an 18% rise in monthly active users in North America. Meanwhile, Sirius XM is struggling with its streaming service, Pandora, which it acquired over five years ago. Pandora has seen a drop in subscribers, losing 41,000 self-pay subscribers for Pandora Plus and Pandora Premium in the second quarter of 2024, bringing the total down to six million. Additionally, Sirius XM Holdings Inc. (NASDAQ:SIRI)’s Q2 revenue fell by 3% year-over-year to $3.18 billion. The company’s own subscriber base has also declined, dropping from 35 million in 2020 to 33 million in the most recent quarter.
That said, Sirius XM Holdings Inc. (NASDAQ:SIRI) is attractive for income investors because of its solid dividend history. The company has been growing its dividends for seven consecutive years, which makes it one of the best dividend stocks under $5. It currently offers a quarterly dividend of $0.0266 per share and has a dividend yield of 3.42%, as of August 23.
Sirius XM Holdings Inc. (NASDAQ:SIRI) remained popular among elite money managers during the second quarter of 2024, as hedge fund positions in the company grew to 33, from 17 in the previous quarter, according to Insider Monkey’s database. These stakes have a total worth of nearly $530 million.
Overall, Sirius XM Holdings Inc. (NASDAQ:SIRI) ranks first on our list. While we acknowledge the potential for SIRI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
