In this article, we discuss the 10 cheap dividend stocks with high yields. If you want to skip our detailed analysis of the these dividend stocks, go directly to 5 Cheap Dividend Stocks with High Yields.
Dividend stocks are an attractive option during times of uncertainty in the market. For one, they pay monthly, quarterly, or yearly payouts to shareholders, which makes holding these stocks less of a risk as compared to stocks that don’t pay dividends. Investors can also opt to reinvest their dividend payments in the company, so that instead of receiving cash, they are automatically given more shares. This compounding strategy works wonders if you get it right, and Warren Buffett has used it quite brilliantly, having held certain stocks for decades.
Although the pandemic forced big dividend-paying companies to decrease or withhold their dividends, the trend is reversing and we are seeing sunny dividend days again. 2020 marked a 8% decrease in dividend payments around the globe, but 2021 saw an increase of 21%, as the world economy started recovering. In 2022, dividend payments are expected to rise 6%, and reach $2.09 trillion, according to a report by IHS Markit.
So how can investors make sure to protect their money when the world economy is experiencing turbulence (read: Putin’s war antics), and simultaneously take advantage of companies paying you money to hold their shares? We picked 10 cheap dividend stocks to buy that offer high dividend yields. Some of the best dividend stocks include Johnson & Johnson (NYSE:JNJ), Vale S.A. (NYSE:VALE), and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), along with many others mentioned below.
Photo by Dan Dennis on Unsplash
Our Methodology
For the following list, we picked dividend stocks under $40 with high yields. We also looked for solid business fundamentals and growth potential. Hedge fund sentiment around each stock was derived from Insider Monkey’s database of 924 elite hedge funds, and has been used to discern investor sentiment on these stocks.
10 Cheap Dividend Stocks with High Yields
10. The Williams Companies, Inc. (NYSE:WMB)
Number of Hedge Fund Holders: 38
Dividend Yield: 5.09%
Share Price (as of March 7): $33.40
The Williams Companies, Inc. (NYSE:WMB) starts off our list of cheap dividend stocks with high yields. As of March 7, shares of the firm trade at $33.40 on the New York Stock Exchange, and have gained 37.68% in the last 12 months, and 28.26% year to date.
The Williams Companies, Inc. (NYSE:WMB) is an energy infrastructure company based in the United States, and operates 30,000 miles of natural gas pipelines. On February 22, The Williams Companies, Inc. (NYSE:WMB) declared a quarterly dividend of $0.425 per share, which was an increase of 3.7% from the previous dividend of $0.410. This brought the forward yield to 5.09%.
On February 23, Barclays analyst Marc Solecitto maintained an ‘Overweight’ rating on The Williams Companies, Inc. (NYSE:WMB) shares, and upped the price target to $34 from $33. The analyst noted that the company looked strongly positioned to execute on its outlook for 2022, which included a positive fundamental outlook for its natural gas assets.
EPS for the fourth quarter came in at $0.39 for The Williams Companies, Inc. (NYSE:WMB), which was above estimates by $0.05. Quarterly revenue of $3.26 billion was also above analysts’ forecasts by $867.23 million.
38 hedge funds reported bullish bets on The Williams Companies, Inc. (NYSE:WMB) at the close of the fourth quarter, with combined holdings of $498.2 million. Southeastern Asset Management held the biggest stake in The Williams Companies, Inc. (NYSE:WMB), with 7.2 million shares worth $188.7 million.
ClearBridge Investments talked about The Williams Companies, Inc. (NYSE:WMB) in its Q3 2021 investor letter. Here’s what the fund said:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
Along with Vale S.A. (NYSE:VALE), and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), The Williams Companies, Inc. (NYSE:WMB) is a cheap dividend stock that offers a high yield.
9. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 21
Dividend Yield: 7.33%
Share Price (as of March 7): $25.36
Enterprise Products Partners L.P. (NYSE:EPD) is a Houston-based energy company which produces and transmits natural gas and other petrochemicals. The firm offered a quarterly dividend of $0.465 per share in January, which was an increase of 3.3% from its prior dividend of $0.450.
Out of all the hedge funds tracked by Insider Monkey, 21 were long Enterprise Products Partners L.P. (NYSE:EPD) at the close of the fourth quarter, with aggregate positions worth $181 million. This is down from 25 hedge funds in the preceding quarter. First Eagle Investment Management was the top shareholder in Enterprise Products Partners L.P. (NYSE:EPD), with 3.14 million shares worth roughly $69 million, signaling an increase of 12% in holding from the previous quarter.
Enterprise Products Partners L.P. (NYSE:EPD) posted $11.4 billion in revenue for Q4, which was up from $7.04 billion in the year-ago period. The company also recorded a 50% year-on-year growth in revenue for 2021, which came in at $40.8 billion. Enterprise Products Partners L.P. (NYSE:EPD) boasts sound financial health and a sustainable dividend, and its isolation from geopolitical turmoil makes it a solid buy without much room for risk. The firm recently acquired Navitas Midstream Partners, a natural gas firm, for $3.25 billion. This helped further improve Enterprise Products Partners L.P.’s (NYSE:EPD) asset diversification and ability to generate cash.
ClearBridge Investments, an investment firm, discussed the prospects of Enterprise Products Partners L.P. (NYSE:EPD) in its Q1 2021 investor letter. Here’s what they said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
8. Global Partners LP (NYSE:GLP)
Number of Hedge Fund Holders: 2
Dividend Yield: 9.09%
Share Price (as of March 7): $25.73
Global Partners LP (NYSE:GLP) is an energy supply company based in the United States, and deals in the marketing, storage and transportation of petroleum and related products. As of March 7, shares of the firm saw a jump of 26.56% in the last year, and 25.51% in the last 6 months.
On January 25, Global Partners (NYSE:GLP) declared a quarterly dividend of $0.585 per share, up 1.7% from its previous dividend of $0.575. Q4 earnings for the firm reported EPS (GAAP) at $0.44, outperforming estimates by $0.25. Revenue for Q4 stood at $4.09 billion, exceeding analysts’ forecasts by $107.42 million.
As of the fourth quarter, 2 hedge funds were bullish on Global Partners LP (NYSE:GLP), holding stakes with a combined value of $3.62 million. Arrowstreet Capital was the leading shareholder in Global Partners LP (NYSE:GLP) in Q4 2021, with roughly 99,000 shares worth $2.3 million.
In February, Global Partners (NYSE:GLP) agreed to purchase Miller’s Neighborhood Market, marking an expansion in its retail footprint in the mid-Atlantic region. This acquisition includes 23 convenience stores and fuel supply agreements with 34 locations mostly in Virginia. The terms of the deal were not disclosed.
7. Ellington Financial Inc. (NYSE:EFC)
Number of Hedge Fund Holders: 7
Dividend Yield: 10.35%
Share Price (as of March 7): $17.39
Ellington Financial Inc. (NYSE:EFC) operates as a real estate investment trust based in Connecticut. Of all its investments, 64% of Ellington Financial Inc.’s (NYSE:EFC) portfolio resides in residential mortgages, with 23% in commercial mortgages, and 8% in consumer loans, with the rest invested in other avenues.
As of March 7, shares of Ellington Financial Inc. (NYSE:EFC) gained 9.92% in the last 12 months, and 1.76% year to date. On February 7, Ellington Financial Inc. (NYSE:EFC) declared a monthly dividend of $0.15 per share, in-line with previous, and payable to shareholders as of March 25.
Ellington Financial Inc. (NYSE:EFC) recently acquired an additional 49.6% stake in Longbridge Financial, which is a reverse mortgage loan originator, for $75 million. This will bring Ellington’s stake in Longbridge to nearly 100%, and will strengthen Ellington Financial Inc.’s (NYSE:EFC) foothold in the reverse mortgage market.
Out of all the hedge funds tracked by Insider Monkey, Ellington Financial Inc. (NYSE:EFC) stock was held by 7 hedge funds in the quarter ending December 2021. The total value of these stakes stood at $39.6 million. Omega Advisors upped its stake in Ellington Financial Inc. (NYSE:EFC) by 14% in the fourth quarter, where the hedge fund held 860,000 shares worth $14.7 million, making it the top shareholder of the firm.
6. Ready Capital Corporation (NYSE:RC)
Number of Hedge Fund Holders: 13
Dividend Yield: 11.25%
Share Price (as of March 7): $14.93
Ready Capital Corporation (NYSE:RC) is a real-estate finance company headquartered in New York City. It provides a range of financial services including collateralized mortgage backed securities, residential mortgage loans, and other related investment services to the real estate sector. As of March 7, shares of Ready Capital Corporation (NYSE:RC) have gained 9.06% in the last 12 months, and 3.54% in the last month.
Ready Capital Corporation (NYSE:RC), on December 14, declared a quarterly dividend of $0.42 per share, which fell in-line with the previous dividend. The firm’s dividend yield stood at 11.25% as of March 7.
In December, analyst Matt Howlett of research firm B. Riley maintained a ‘Buy’ rating on Ready Capital Corporation (NYSE:RC) stock, and increased the price target to $18 from $17. Howlett noted that the company is well-positioned for rising interest rates, with 70% of its loans floating rate combined with 70% of its remaining fixed-rate product match funded. The analyst also feels that there is marginal upside to estimates if Ready Capital Corporation (NYSE:RC) can lower its cost of capital earlier than forecast.
Ready Capital Corporation (NYSE:RC) posted an EPS of $0.67 in the fourth quarter, beating estimates by $0.16. The company raked in approximately $122 million in revenue for Q4, which exceeded analysts’ expectations by $11.02 million and signaled an increase of 88.15% from the year-ago period.
13 hedge funds were bullish on Ready Capital Corporation (NYSE:RC) at the end of the fourth quarter, with combined holdings of $50.25 million. The same number of hedge funds were seen holding stakes in the firm a quarter ago as well. Of these 13, Farallon Capital was the biggest shareholder in Ready Capital Corporation (NYSE:RC), holding 1.08 million shares worth $16.89 million.
Along with Vale S.A. (NYSE:VALE), and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), Ready Capital Corporation (NYSE:RC) is an exciting dividend stock offering a high yield.
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Disclosure. None. 10 Cheap Dividend Stocks with High Yields is originally published on Insider Monkey.
