In this article, we will be looking at the 10 best high yield dividend stocks under $50. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Best High Yield Dividend Stocks Under $50.
Dividend investing may be the perfect strategy for those who want multiple income streams. Dividend stocks offer not just the typical value appreciation of the relevant stock, but also a steady stream of passive income from dividend payments. As long as you’re smart with where you put your money, dividend investing can pay off big time. For instance, a Bloomberg report just this May revealed how Asian high-yield dividend stocks managed to be worth investing in this year, despite the increasing financial volatility in the world. MSCI Asia Pacific Index’s returns for the year were over 9%, almost 5% more than the overall regional returns. The index consists mainly of financials, IT, and materials companies and has surpassed even value stocks this year.
Jeffrey Roskell, the portfolio manager for JPMorgan’s Asia Equity Dividend Fund, has commented that profitability and dividends can be expected to grow more and that economic growth in this sector may reach its highest rate in decades.
With the coronavirus pandemic, more investors have begun steering towards dividend investment in a bid to go on the defense in times of financial volatility. A Wall Street Journal report cited David Carter, the chief investment officer at Lenox Wealth Advisors, as saying that they would be investing more in dividend stocks in light of the stagnant growth of the economy after the outbreak of the pandemic. Such a strategy would be necessary to be able to generate more returns, Carter commented, and quality dividend stocks would be able to help them do just that.
Despite the above, knowing where to invest is still exceptionally important. Jefferies analysts have notably mentioned that the healthcare, technology, and consumer products industries would be the best bets for dividend investing in a time of financial and political volatility, while financials, REITs, and consumer discretionary stocks would be riskier investment options. In the US, the firm pinpointed The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), and Medtronic plc (NYSE: MDT) among others as top dividend stock picks. Apart from these, stocks like the Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ) are also good dividend bets, having consistently increased their dividend yields for the past 50 years or above.
We have also compiled a list of the best high yield dividend stocks under $50, which you can see below. The stocks on our list have been selected on the basis of hedge fund sentiment, fundamentals, growth potential based on core business strengths, analysts’ ratings, and consistent dividend yield growth for at least five years.
Because of the pandemic, 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 May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 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.
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Without further ado, let’s look at the 10 best high yield dividend stocks under $50.
Best High Yield Dividend Stocks Under $50
10. TFS Financial Corporation (NASDAQ: TFSL)
Number of Hedge Fund Holders: 6
Dividend Yield: 5.52%
TFS Financial Corporation (NASDAQ: TFSL) is a provider of retail consumer banking services in the US. The company’s deposit products include savings, money market, checking, individual retirement, and other plan accounts. It ranks 10th on our list of the best high yield dividend stocks under $50.
The May, TFS Financial Corporation (NASDAQ: TFSL) declared its quarterly dividend of $0.28 per share. In the fiscal second quarter of 2021, TFS Financial Corporation (NASDAQ: TFSL) had an EPS of $0.08, beating estimates by $0.01. The company’s revenue was $58.41 million, beating estimates by $0.61 million. The stock has gained 14.75% in the past 6 months and year to date.
By the end of the first quarter of 2021, 6 hedge funds out of the 866 tracked by Insider Monkey held stakes in TFS Financial Corporation (NASDAQ: TFSL), worth about $145 million. This is compared to 10 hedge fund holders in the previous quarter, holding stakes worth roughly $136 million. Like The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), Medtronic plc (NYSE: MDT), The Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ), TFS Financial Corporation (NASDAQ: TFSL) is a dividend stock worth investing in.
9. PPL Corporation (NYSE: PPL)
Number of Hedge Fund Holders: 25
Dividend Yield: 5.93%
PPL Corporation (NYSE: PPL) is a utility holding company working to deliver electricity and natural gas in the US and the UK. It has three segments: UK Regulated, Kentucky Regulated, and Pennsylvania Regulated. The company ranks 9th on our list of the best high yield dividend stocks under $50.
On June 14th, PPL Corporation (NYSE: PPL) closed the sale of its utility business in the UK, Western Power Distribution to National Gride. The company brought in about $10.7 billion through the deal, of which it is planning to use $6.6 billion to strengthen its balance sheet and bring about more growth opportunities for itself by reducing its debt and investing in renewables. In the first quarter of 2021, PPL Corporation (NYSE: PPL) had an EPS of $0.28, missing estimates by -$0.36, while its $1.5 billion revenue also missed estimates by $710.3 million. The stock has a forward PE ratio of 11.21 and has gained 1.41% in the past 6 months and year to date. PPL Corporation (NYSE: PPL) has a gross profit margin of 57.9%.
By the end of the first quarter of 2021, 25 hedge funds out of the 866 tracked by Insider Monkey held stakes in PPL Corporation (NYSE: PPL), worth about $152 million. This is compared to 21 hedge fund holders in the previous quarter, holding stakes worth roughly $152 million. Like The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), Medtronic plc (NYSE: MDT), The Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ), PPL Corporation (NYSE: PPL) is a dividend stock worth investing in.
Miller/Howard Investments, an investment management firm, mentioned PPL Corporation (NYSE: PPL) in their first-quarter 2021 investor letter. Here’s what they said:
“PPL Corp. (PPL) announced the sale of its UK utility business to National Grid (NGG). In a separate transaction, PPL acquired NGG’s Rhode Island utility business. Once the dust settles, we expect PPL to rerate toward US peers.”
8. Holly Energy Partners, L.P. (NYSE: HEP)
Number of Hedge Fund Holders: 2
Dividend Yield: 6.19%
Holly Energy Partners, L.P. (NYSE: HEP) is an energy company operating petroleum products and crude pipelines, storage tanks, distribution terminals, and other facilities. The company operates in the US and ranks 8th on our list of the best high yield dividend stocks under $50.
Last November, Holly Energy Partners, L.P. (NYSE: HEP) mentioned plans to increase its spending on renewables by a maximum of $530 million this year, making its capital spending almost double from what it was in 2020. Holly Energy Partners, L.P. (NYSE: HEP) has also been upgraded to Outperform by Credit Suisse with a $16 price target, in light of Holly Energy Partners, L.P.’s (NYSE: HEP) 12% distribution yield and 25% free cash flow yield estimated through 2024. In the first quarter of 2021, Holly Energy Partners, L.P. (NYSE: HEP) had an EPS of $0.61, beating estimates by $0.14. The company’s revenue was $127.18 million, also beating estimates by $3.8 million, and it has a gross profit margin of 69.69%. The stock has a forward PE ratio of 10.76 and has gained 64.82% in the past 6 months and year to date.
By the end of the first quarter of 2021, 2 hedge funds out of the 866 tracked by Insider Monkey held stakes in Holly Energy Partners, L.P. (NYSE: HEP), worth about $3.61 million. This is compared to 3 hedge fund holders in the previous quarter, holding stakes worth roughly $1.36 million. Like The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), Medtronic plc (NYSE: MDT), The Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ), Holly Energy Partners, L.P. (NYSE: HEP) is a dividend stock worth investing in.
7. Enbridge Inc. (NYSE: ENB)
Number of Hedge Fund Holders: 22
Dividend Yield: 6.94%
Enbridge Inc. (NYSE: ENB) is an energy infrastructure company, operating through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storages, Renewable Power Generation, and Energy Services. The company ranks 7th on our list of the best high yield dividend stocks under $50.
This June, Credit Suisse upgraded Enbridge Inc. (NYSE: ENB) to Outperform with a $44 price target, in light of lower political and regulatory risks. Enbridge Inc. (NYSE: ENB) made its first move to join the South American market by making a non-binding offer for the largest natural gas pipeline in Brazil this May, according to Reuters. The consortium making the bid, led by Enbridge Inc. (NYSE: ENB), will submit a final binding offer by July 5th. In the first quarter of 2021, Enbridge Inc. (NYSE: ENB) had an EPS of $0.67, beating estimates by $0.08. The company’s revenue was $10.04 billion, up 17% year over year and beating estimates by $624.56 million, and it has a gross profit margin of 49.57%. The stock has gained 25.24% in the past 6 months and year to date.
By the end of the first quarter of 2021, 22 hedge funds out of the 866 tracked by Insider Monkey held stakes in Enbridge Inc. (NYSE: ENB), worth about $144 million. This is compared to 28 hedge fund holders in the previous quarter, holding stakes worth roughly $181 million. Like The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), Medtronic plc (NYSE: MDT), The Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ), Enbridge Inc. (NYSE: ENB) is a dividend stock worth investing in.
ClearBridge Investments, an investment management firm, mentioned Enbridge Inc. (NYSE: ENB) in its first-quarter 2021 investor letter. Here’s what they said:
“Enbridge owns and operates one of the largest oil and gas pipeline networks in North America. The company also owns regulated gas distribution utilities in Ontario, Canada. The first quarter saw the market giving the energy sector credit for its leverage to the eventual economic recovery as COVID-19 vaccines get rolled out through 2021.”
6. Altria Group, Inc. (NYSE: MO)
Number of Hedge Fund Holders: 38
Dividend Yield: 7.21%
Altria Group, Inc. (NYSE: MO) is a manufacturer of cigarettes, oral tobacco products, and wine in the US. The company’s brands include Marlboro, Black & Mild, Copenhagen, Skoal, Red Seal, and Husky. It ranks 6th on our list of the best high yield dividend stocks under $50.
According to Morgan Stanley, Altria Group, Inc. (NYSE: MO) is set to have only an upside after the FTC administrative trial. The firm retained its Overweight rating and $52 price target on the company. In the first quarter of 2021, Altria Group, Inc. (NYSE: MO) had an EPS of $1.07, beating estimates by $0.02, while its $4.88 billion revenue missed estimates by $108.51 million. Altria Group, Inc. (NYSE: MO) has a gross profit margin of 65.28%. Additionally, the stock has a forward PE ratio of 10.39 and has gained 16.75% in the past 6 months and year to date.
By the end of the first quarter of 2021, 38 hedge funds out of the 866 tracked by Insider Monkey held stakes in Altria Group, Inc. (NYSE: MO), worth about $1.1 billion. This is compared to 37 hedge fund holders in the previous quarter, holding stakes worth roughly $1.08 billion. Like The Procter & Gamble Company (NYSE: PG), Cisco Systems, Inc. (NASDAQ: CSCO), Medtronic plc (NYSE: MDT), The Coca-Cola Company (NYSE: KO) and Johnson & Johnson (NYSE: JNJ), Altria Group, Inc. (NYSE: MO) is a dividend stock worth investing in.
Oakmark Funds, an investment management firm, mentioned Altria Group, Inc. (NYSE: MO) in their first quarter 2021 investor letter. Here’s what they said:
“We initiated a new position in Altria, which commands roughly 50% of the cigarette and smokeless tobacco market in the U.S. Both of these markets are duopolies that we believe have exhibited strong pricing power over time. While the shares trade at a low multiple of reported earnings, Altria also owns valuable stakes in other non-core businesses, including ~10% of AB InBev, 35% of Juul and 45% of Cronos. Excluding the values of these stakes and their respective earnings contribution, we were able to purchase shares of Altria for less than seven times our estimate of next year’s earnings. This compares to other consumer brands with less favorable earnings growth profiles that trade for three times Altria’s multiple. The company also has several promising reduced-risk products that may appeal to tobacco users, including On! and iQOS. We believe these products position the company well to help consumers slowly transition to a tobacco-free future. We expect management to return the vast majority of future earnings to shareholders given the company’s strong balance sheet, high free cash flow conversion and limited capital requirements.”
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Disclosure: None. 10 Best High Yield Dividend Stocks Under $50 is originally published on Insider Monkey.
